Exhibit 2.3
SHARE PURCHASE AGREEMENT
AMONG
PHOENIX INTERNATIONAL LIFE SCIENCES INC.
AND
XX. XXXXXX XXXXX XXXXXXXXXXXX
AND
XXXXXX & CO.
AND
DR. XXXXX XXXXXXX
AND
INNOVENT CAPITAL LTD.
AND
XXXXXX XXXXXXX
AND
XX. XXXXX XXXXXX
AND
XX. XXXXX XXXXXXXXXX
AND
XX. XXXXXXX XXXXX
AND
ANAWA HOLDING AG
--------------------------
DATED AS OF APRIL 30, 1998
--------------------------
SHARE PURCHASE AGREEMENT dated as of April 30, 1998
AMONG: PHOENIX INTERNATIONAL LIFE SCIENCES INC., a
corporation incorporated under the Canada
Business Corporations Act, having its head
office at 0000, Xxxxx Xxxxxx, Xxxxx-Xxxxxxx,
Xxxxxx, Xxxxxx, X0X 0X0, herein acting and
represented by Xxxxxxx Xxxxxxx, its duly
authorized representative;
(hereinafter "Phoenix")
AND: XX. XXXXXX XXXXX XXXXXXXXXXXX, residing at
Xxxxxxxxxxxxxxxx 00, 0000 Xxxxxx,
Xxxxxxxxxxx;
(hereinafter "Xxxxxxxxxxxx")
AND: XXXXXX & CO., a Swiss partnership having its
head office at Xxxxxxxxxxxxx 00, 0000
Xxxxxx, Xxxxxxxxxxx, herein acting and
represented by Xx. Xxxxxx Xxxxx
Xxxxxxxxxxxx, its duly authorized
representative;
(hereinafter "Xxxxxx")
AND: DR. XXXXX XXXXXXX, residing at
Xxxxxxxxxxxxxxxx 00, 0000 Xxxxxxxxx,
Xxxxxxxxxxx;
(hereinafter "Xxxxxxx")
AND: INNOVENT CAPITAL LTD., a company
incorporated under the laws of the Cayman
Islands, with a corporate seat at Midland
Bank Trust Building, P.O. Box 1109, Fort
Street, Grand Cayman, B.W.I., herein acting
and represented by Xx. Xxxxxx Xxxxx
Xxxxxxxxxxxx, its duly authorized
representative;
(hereinafter "Innovent")
AND: XXXXXX XXXXXXX, residing at Xxxxxxxxxxxxxx
00, 0000, Xxxxxxxxx, Xxxxxxxxxxx;
(hereinafter "Xxxxxxx")
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AND: XX. XXXXX XXXXXX, residing at
Xxxxxxxxxxxxxxxxx 0, 0000 Xxxxxx,
Xxxxxxxxxxx;
(hereinafter "Joller")
AND: XX. XXXXX XXXXXXXXXX, residing at Xxxxxx
Xxxxxxx 00, 0000 Xxxxxxxx, Xxxxxxxxxxx;
(hereinafter "Karabelnik")
AND: XX. XXXXXXX XXXXX, residing at Xxxxxxxxxxx
00, 0000 Xxxxxxxx, Xxxxxxxxxxx;
(hereinafter "Wicki")
(Xxxxxxxxxxxx, Albers, Fischer, Innovent,
Hassler, Joller, Karabelnik and Wicki are
hereinafter collectively referred to as the
"Vendors")
AND: ANAWA HOLDING AG, a Swiss corporation with
capital of SFr3,000,000, registered in the
Commercial Register of the Canton of Zug
under number CH-170.3.016.195-4 and having
its head office at Xxxxxxxxxxxxxxxx 00x,
0000 Xxx, Xxxxxxxxxxx, herein acting and
represented by Xx. Xxxxxx Xxxxx
Xxxxxxxxxxxx, its duly authorized
representative;
(hereinafter "Anawa")
WHEREAS, the Vendors hold, directly or indirectly, as more fully set
out in Schedule A, all of the outstanding shares and voting rights of Anawa;
WHEREAS, ANAWA Laboratorien AG ("Laboratories"), a Swiss corporation,
with capital of SFr1,110,000, registered in the Commercial Register of the
Canton of Zurich under number CH- 020.3.901.417-4 and having its head office at
Xxxxxxxxxxxxxxxx 00, 0000 Xxxxxx-Xxxxxxxxxxxx, Xxxxxxxxxxx, is a subsidiary of
Anawa, held as to 100% by Anawa. The capital structure of Laboratories is set
forth in Schedule B;
WHEREAS, ANAWA Trading AG ("Trading"), a Swiss corporation, with
capital of SFr100,000, registered in the Commercial Register of the Canton of
Zurich under number CH-020.3.901.440-9 and having its head office at
Xxxxxxxxxxxxxxxx 00, 0000 Xxxxxx-Xxxxxxxxxxxx, Xxxxxxxxxxx, is a subsidiary of
Anawa, held as to 100% by Anawa. The capital structure of Trading is set forth
in Schedule C;
WHEREAS the Vendors have agreed to sell all of the outstanding shares
of Anawa to Phoenix in consideration for the issuance to the Vendors of common
shares of Phoenix;
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NOW, THEREFORE, the parties hereto agree as follows:
1. INTERPRETATION AND DEFINITIONS
Except as the context otherwise explicitly requires, (a) the
capitalized term "Section" refers to sections of this Agreement; (b) the
capitalized terms "Schedules" and "Exhibit" refer to schedules and exhibits to
this Agreement; (c) references to a particular Section include all subsections
thereof; (d) the word "including" shall be construed as "including without
limitation"; (e) accounting terms not otherwise defined herein have the meaning
provided under GAAP (as defined below); (f) references to a particular law,
statute or regulation include all rules and regulations thereunder and any
successor, law, statute, regulation or rules, in each case as from time to time
in effect; (g) references to a particular Person include such Person's
successors and assigns to the extent not prohibited by this Agreement; (h)
references to dollars or $ in this Agreement are to Canadian dollars. In this
Agreement, unless the context otherwise requires, the following terms shall have
the respective meanings assigned to them:
1.1 "AFFILIATE" means, with respect to any Person, any Person
which, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with such Person. For the purposes of this Agreement,
"Affiliate" also means an affiliate as such term is defined by
the SEC.
1.2 "ANAWA AFFILIATE" means any of Xxxxxxxxxxxx, Albers, Fischer,
Innovent, Karabelnik and Wicki.
1.3 "ARTICLES" means the original or restated articles of
incorporation, articles of amendment, articles of
amalgamation, articles of continuance, articles of
reorganization and articles of arrangement, including
amendments thereto, as in effect from time to time, of Anawa.
1.4 "COMPENSATION" as applied to any Person means the aggregate of
all salaries, compensation, remuneration or bonuses of any
character, retirement or pension benefits of any kind, or
other payments of any kind whatsoever (other than health and
medical benefits made available to employees generally and
advances and reimbursements of business expenses) made
directly or indirectly by Anawa, any of the Subsidiaries or
other specified Persons to such Person and affiliates of such
Person.
1.5 "COMPLETION DATE" means the date of this Agreement, i.e. April
30, 1998.
1.6 "CONSOLIDATED", when used with reference to any term, means
that term as applied to the accounts of Anawa or other
indicated Person and each of its respective Subsidiaries,
consolidated or combined in accordance with GAAP after
eliminating all inter-company operations and with appropriate
deductions for minority interests in Subsidiaries.
1.7 "CONTRACTUAL OBLIGATION" means, with respect to any Person,
any contracts, agreements, deeds, hypothecs, mortgages,
indentures, leases, licenses, other instruments, commitments,
undertakings, arrangements or understandings, written or oral,
or other documents or instruments, including any provisions of
its articles of incorporation or other constituting documents
or by-laws and any document or instrument evidencing
Indebtedness, to which any such Person is a
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party or otherwise subject to or bound by or to which any
property or asset of any such Person is subject.
1.8 "DISTRIBUTION" means (a) the declaration or payment of any
dividend on or in respect of the shares of any class or series
of shares of Anawa, any of the Subsidiaries or other specified
Person, other than dividends payable solely in common shares
of the share capital of the payor; (b) the purchase,
redemption or other retirement of any shares of any class of
Anawa, any of the Subsidiaries or other specified Person
directly, or indirectly through a Subsidiary or otherwise; or
(c) any other distribution on or in respect of any shares of
any class or series of shares of Anawa, any of the
Subsidiaries or other specified Person.
1.9 "ESCROW AGENT" means Montreal Trust Company.
1.10 "ESCROW AGREEMENT" means the escrow agreement entered between
the parties hereto and the Escrow Agent a copy of which is
attached hereto as Schedule 1.10.
1.11 "ESCROWED SECURITIES" means the Phoenix Shares escrowed
pursuant to Section 2.4 together with all Proceeds (as defined
in the Escrow Agreement).
1.12 "ESCROWED SHARE PRICE" means the amount obtained by adding the
opening and closing prices of the common shares of Phoenix on
each of the Montreal Exchange and The Toronto Stock Exchange
for the ten trading days preceding the date of execution of
the present Agreement, divided by 40.
1.13 "ENVIRONMENTAL LAWS" means all Legal Requirements (including
consent decrees, administrative orders and contractual
obligations) relating to public health and safety, workers
health and safety and pollution or protection of the
environment.
1.14 "GAAP" means generally accepted accounting principles, as in
effect from time to time, consistently applied.
1.15 "GUARANTEE" means (a) any guarantee of the payment or
performance of, or any contingent obligation in respect of,
any indebtedness or other obligation of any other Person, (b)
any other arrangement whereby credit or financial assistance
is extended to one obligor on the basis of any promise or
undertaking of another Person (i) to pay the Indebtedness of
such obligor, (ii) to purchase any obligation owed by such
obligor, or (iii) to maintain the capital, working capital,
solvency or general financial condition of such obligor,
whether or not such arrangement is disclosed in the balance
sheet of such other Person or is referred to in a footnote
thereto or appears in a "keep well" agreement, "comfort
letter" or "take or pay" agreement, and (c) any liability of
Anawa or any of the Subsidiaries as general partner of a
partnership or as a venturer in a joint venture in respect of
Indebtedness or other obligations of such partnership or
venture; provided, however, that in no event shall Guarantees
include product warranties given or the endorsement of
negotiable instruments for deposit or collection in the
ordinary course of business.
1.16 "INDEBTEDNESS" means (a) all indebtedness, obligations and
liabilities for borrowed money and similar monetary
obligations evidenced by bonds, notes debentures, evidences of
indebtedness,
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capitalized lease obligations, deferred purchase price of
property (other than ordinary trade payables) or otherwise,
whether direct or indirect; and (b) all indebtedness,
obligations and liabilities secured by any Liens existing on
property owned or acquired, whether or not the liability
secured thereby shall have been assumed.
1.17 "LEGAL REQUIREMENT" means any national, provincial, regional,
municipal, local or foreign law, statute, standard, ordinance,
code, order, rule, regulation, resolution, promulgation,
by-law, policy, guideline, directive, standard and any other
provision having the force or effect of law or any final
order, judgment or decree of any court, arbitrator, tribunal
or governmental authority, or any license, franchise, permit,
certificate, authorization, registration or similar right
granted under any of the foregoing.
1.18 "LIEN" means (a) any hypothec, priority, mortgage, pledge,
lien, charge, security interest or other similar encumbrance
upon any property or assets of any character, or upon the
income or profits therefrom, whether arising by agreement or
under law, or otherwise (b) any conditional sale or other
title retention agreement or arrangement (including a
capitalized lease); (c) any sale, assignment, pledge or other
transfer for security of any accounts, general intangibles, or
chattel paper, with or without recourse, or (d) any
transaction (regardless of form) which is intended to create
any charge or encumbrance on property to secure the payment or
performance of an obligation.
1.19 "MANAGEMENT" means each of Wicki, Vollenweider, Hassler,
Karabelnik and Joller.
.
1.20 "MATERIAL ADVERSE EFFECT" means any (a) material adverse
effect whatsoever upon the validity, performance or
enforceability of this Agreement, (b) material adverse effect
upon the business, assets, financial condition, income or
prospects of Anawa and the Subsidiaries on a Consolidated
basis, or (c) material adverse effect upon the ability of the
Vendors to perform their obligations under this Agreement.
1.21 "PERMITTED LIEN" means those Liens indicated on Schedule 1.21.
1.22 "PERSON" means an individual, partnership, corporation,
company, association, trust, joint venture, unincorporated
organization, business trust, limited liability company and
any governmental or administrative department or agency or
political subdivision.
1.23 "PHOENIX AFFILIATES" means Xxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxx
Xxxxxx, Xxxx-Xxxx Xxxxx, Xxx Xxxxxxxx, Xx. Xxxxxxx Xxxxxxx,
Xxxxx Xxxxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxx Xxxxxxxxx, Xxxxx
Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxx Xxxxxxxxxx,
Xxxxxx Xxxxxxx, Ebi Kimanani, Xxxx Xxxxxxx, Xxxx Xxxxxxxxxxx,
Xxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx,
Xxxxxx X. Forget, Xxxxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxxxx
and Xxxxxxx Xxxxxxx.
1.24 "SEC" means the United States Securities and Exchange
Commission.
1.25 "SECURITIES ACT" means the United States Securities Act of
1933, as amended, and all rules and regulations promulgated
thereunder.
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1.26 "SHARES" means 9,016 bearer shares with a nominal value of
SFr200 each and 11,968 registered shares with a nominal value
of SFr100 each of Anawa being all of the issued and
outstanding shares of Anawa.
1.27 "SUBSIDIARIES" means Laboratories and Trading and "SUBSIDIARY"
means any of the Subsidiaries on an individual basis.
2. SALE AND PURCHASE OF SHARES
2.1 AGREEMENT TO PURCHASE AND SELL SHARES
Upon the terms and subject to the conditions hereof and in
reliance on the representations and warranties of Phoenix set forth in
Section 4, Xxxxxxxxxxxx, Albers, Fischer, Innovent, Hassler, Joller,
Karabelnik and Wicki hereby sell to Phoenix and, upon the terms and
subject to the conditions hereof and in reliance on the representations
and warranties of the Vendors set forth in Section 3, Phoenix hereby
purchases from Xxxxxxxxxxxx, Albers, Fischer, Innovent, Hassler,
Joller, Karabelnik and Wicki, the Shares, as set forth below:
VENDOR NUMBER OF ANAWA REGISTERED AND BEARER SHARES
------ --------------------------------------------
REGISTERED BEARER
-------------- ----------
Xxxxxxxxxxxx 3,430 797
Xxxxxx 0 2,350
Xxxxxxx 1,973 275
Innovent 0 2,600
Xxxxxxx 200 75
Joller 1,480 0
Karabelnik 3,429 797
Wicki 1,456 2,122
----- -----
TOTAL 11,968 9,016
2.2 PRICE OF SHARES
The purchase price of the bearer shares is payable by the issuance by
Phoenix to Xxxxxxxxxxxx, Albers, Fischer, Innovent, Xxxxxxx, Karabelnik and
Wicki of an aggregate of 315,954 common shares of Phoenix. The aggregate
purchase price for the bearer shares is to be allocated among Xxxxxxxxxxxx,
Albers, Fischer, Innovent, Xxxxxxx, Karabelnik and Wicki as follows:
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VENDOR NUMBER OF PHOENIX SHARES
------ ------------------------
Xxxxxxxxxxxx 27,930
Xxxxxx 82,352
Xxxxxxx 9,637
Innovent 91,114
Xxxxxxx 2,627
Karabelnik 27,931
Wicki 74,363
--------
TOTAL 315,954
The purchase price of the registered shares is payable by the issuance
by Phoenix to Vollenweider, Fischer, Hassler, Joller, Karabelnik and Wicki of an
aggregate of 209,697 common shares of Phoenix. The aggregate purchase price for
the registered shares is to be allocated among Vollenweider, Fischer, Hassler,
Joller, Karabelnik and Wicki as follows:
VENDOR NUMBER OF PHOENIX SHARES
------ ------------------------
Xxxxxxxxxxxx 60,099
Xxxxxxx 34,570
Xxxxxxx 3,505
Joller 25,932
Karabelnik 60,080
Wicki 25,511
--------
TOTAL 209,697
(The common shares of Phoenix issued to the Vendors pursuant to this
Section 2.2 are hereinafter collectively referred to as the "Phoenix
Shares".)
2.3 DELIVERY OF SHARES AND PAYMENT OF PURCHASE PRICE
2.3.1 Phoenix hereby acknowledges receipt from each of
Xxxxxxxxxxxx, Albers, Fischer, Innovent, Hassler,
Joller, Karabelnik and Wicki of certificates
representing the Shares duly endorsed in blank for
transfer by Xxxxxxxxxxxx, Albers, Fischer, Innovent,
Hassler, Joller, Karabelnik and Wicki.
2.3.2 Xxxxxxxxxxxx, Albers, Fischer, Innovent, Hassler,
Joller, Karabelnik and Wicki hereby acknowledge
receipt from Phoenix of certificates registered in
the names of Xxxxxxxxxxxx, Albers, Fischer, Innovent,
Hassler, Joller, Karabelnik and Wicki representing
66.4% of the purchase price for the Shares.
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2.4 ISSUANCE INTO ESCROW
Notwithstanding any provision of this Agreement, upon delivery
of the Phoenix Shares pursuant to Section 2.3, 10% of the aggregate
number of the Phoenix Shares and Phoenix Shares representing the total
amount of the specific contingencies referred to in Section 8 hereof
calculated using an amount of SFr220,000 in respect of the specific
contingency referred to in Section 8.2 hereof shall be delivered
immediately to the Escrow Agent, on a pro rata basis among the Vendors,
to be held and released by the Escrow Agent pursuant to the terms of
this Agreement and the Escrow Agreement. All such Phoenix Shares shall
be issued in the name of the Escrow Agent, as escrow agent under the
Escrow Agreement. The Vendors hereby acknowledge receipt of such 33.6%
of the purchase price of the Shares on their behalf by the Escrow
Agent.
3. REPRESENTATIONS AND WARRANTIES OF VENDORS
In order to induce Phoenix to enter into this Agreement and to purchase
the Shares hereunder, the Vendors hereby make the following representations and
warranties to Phoenix. The Vendors' liability for the following representations
and warranties shall be joint, and not solidary i.e. pro rata to the number of
Phoenix Shares received by each Vendor according to Section 2.2, except in the
event of fraud with respect thereto.
3.1 SHARES
The Vendors own the Shares free and clear of all Liens and
there are no rights or other obstacles of any nature whatsoever to the
sale of the Shares to Phoenix.
3.2 ORGANIZATION
3.2.1 DUE INCORPORATION, ETC. Each of Anawa and the
Subsidiaries is duly incorporated or organized and
validly exists under the laws of its jurisdiction of
incorporation, and is in good standing under the laws
applicable to it and has all necessary corporate
capacity and power to own and lease its property and
assets and to carry on the businesses now conducted
or presently proposed to be conducted by it.
3.2.2 SUBSIDIARIES. Anawa does not own or control, directly
or indirectly, or have an interest in, any other
corporation, partnership, association or business
entity other than the Subsidiaries.
3.2.3 MANAGEMENT. The Management of Anawa and the
Subsidiaries is exclusively comprised of the Persons
referred to in Section 1.19.
3.2.4 AUTHORIZATIONS AND APPROVALS. All authorizations,
approvals, licences, permits, certificates,
registrations, consents, exemptions or declarations
required in order for each of Anawa and the
Subsidiaries to own or lease their property and
assets and to carry on their business in all
jurisdictions in which such property and assets are
located or such business is carried on have been duly
obtained or effected and are in full force and effect
except for authorizations, approvals, licences,
permits, certificates, registrations, consents,
exemptions or declarations, the absence of which,
individually or in the aggregate, does not and shall
not result in a Material Adverse Effect.
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In particular:
(a) except for permits, certificates, licences,
registrations and other authorizations, the
absence of which, individually or in the
aggregate, does not and shall not result in
a Material Adverse Effect, each of Anawa and
the Subsidiaries hold all permits,
certificates, licenses, registrations and
other authorizations required under
applicable Environmental Laws for their
operations (the "Environmental Permits");
each such Environmental Permit is valid and
in force and the operations of Anawa and the
Subsidiaries are in compliance with the
conditions set out in such Environmental
Permits and their is no ground for
revocation, expiry or annulment of any such
Environmental Permits;
(b) except for permits, certificates, licences,
registrations and other authorizations, the
absence of which, individually or in the
aggregate, does not and shall not result in
a Material Adverse Effect, each of Anawa and
the Subsidiaries hold all permits,
certificates, licenses, registrations and
other authorizations required under
applicable Legal Requirement for clinical
research for the pharmaceutical industry and
pharmaceutical research (the "Research
Permits"); each such Research Permit is
valid and in force, the operations of Anawa
and the Subsidiaries are in compliance with
the conditions set out in such Research
Permits and there is no ground for
revocation, expiry or annulment of any such
Research Permits;
3.2.5 CORPORATE RECORDS. The Corporate records of Anawa and
each of the Subsidiaries are complete and up to date.
3.2.6 OFFICERS AND DIRECTORS. The officers and directors of
Anawa and each of the Subsidiaries have been properly
elected or appointed in accordance with applicable
laws and the relevant articles of incorporation or
other constituting documents.
3.2.7 CORPORATE ACTION. All necessary corporate action has
been taken by Anawa, to authorize the execution of
this Agreement and the consummation of the
transactions contemplated hereby. The Board of
directors of Anawa has agreed to register Phoenix in
the share ledger of Anawa as the owner of 11,968
registered shares.
3.3 CAPITALIZATION
3.3.1 SHARE CAPITAL OF ANAWA. The outstanding share capital
of Anawa is exhaustively set forth in Schedule A, all
of which has been validly issued and is fully paid
and non-assessable and, subject to no Lien, adverse
claim or restriction on transfer, except restrictions
on transfer under this Agreement.
3.3.2 OPTIONS, ETC. Other than as set forth in Schedule A
and Schedule 3.3.5, Anawa does not have outstanding
(a) any rights (either preemptive or otherwise) or
options to subscribe for or purchase, or any warrants
or other agreements providing for or requiring the
issuance of, any shares or any securities convertible
into or exchangeable for its shares, (b) any
obligation to redeem, purchase or otherwise acquire
or retire any of its shares,
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any securities convertible into or exchangeable for
its shares or any rights, options or warrants with
respect thereto, (c) any rights to require Anawa to
qualify for distribution for securities laws
purposes, or (d) any restrictions on voting.
3.3.3 CAPITAL STOCK OF THE SUBSIDIARIES. The issued and
outstanding shares of each Subsidiary are as set
forth in Schedules B and C. The issued and
outstanding shares of each Subsidiary are validly
issued, and paid and non-assessable and subject to no
Lien, adverse claim or restriction on transfer, other
than as set forth in Schedule 3.3.3.
3.3.4 SUBSIDIARY OPTIONS, ETC. Other than as set forth in
Schedule 3.3.4, none of the Subsidiaries has
outstanding (a) any rights (either preemptive or
otherwise) or options to subscribe for or purchase,
or any warrants or other agreements providing for or
requiring the issuance of, any shares or any
securities convertible into or exchangeable for its
shares, (b) any obligation to redeem, purchase or
otherwise acquire or retire any of its shares, any
securities convertible into or exchangeable for its
shares or any rights, options or warrants with
respect thereto, (c) any rights to require the
Subsidiary to qualify for distribution for securities
laws purposes, or (d) any restrictions on voting.
3.3.5 NO COMMITMENTS AFFECTING SHARES, ETC. Other than as
set forth in Schedule 3.3.5, neither Anawa nor any of
the Subsidiaries is a party to or bound by any
agreement, commitment or understanding, whether
verbal or written, affecting its shares or the
participating or voting rights attached thereto.
3.4 REPORTS, FINANCIAL STATEMENTS AND OTHER DOCUMENTS
Phoenix has been provided with complete and correct copies of
audited financial statements of Anawa and its Subsidiaries for the
years ended December 31, 1994, 1995, 1996 and 1997, copies of which are
attached hereto as Schedule 3.4A.
The financial statements of Anawa and the Subsidiaries
referred to above have been prepared in accordance with Swiss GAAP and
all such financial statements fairly present the financial condition of
Anawa and the Subsidiaries at the dates thereof and the results of
their operations for the periods covered thereby. Other than as set
forth in Schedule 3.5, neither Anawa nor any of the Subsidiaries has
material liabilities, contingent or otherwise, which are not referred
to in the financial statements.
The financial statements for the year ended December 31, 1994,
1995, 1996 and 1997, copies of which are attached hereto as Schedule
3.4A have been properly approved by the annual general meetings of
shareholders of the relevant entities in due form without reservation.
For purposes of financial presentation, Anawa recognizes net
revenue from its contracts on a percentage of completion basis as work
is performed. The percentage of completion, and consequently the
revenue to be recorded, of each individual contract is determined
through detailed analysis and discussion between all appropriate
operational and financial department management. Although Anawa does
not require collateral for unpaid balances, credit losses have
consistently been within Management's expectations. Certain contracts
contain provisions for price adjustment for cost overruns. Such
adjusted amounts are included in service revenue when realization is
assured and the amounts can be reasonably
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determined. In the period in which it is determined that a loss will
result from the performance of a contract, the entire amount of the
estimated ultimate loss is charged against income.
Since January 1, 1998, the business of Anawa and the
Subsidiaries has been operated in the customary fashion and no revenues
that would have been earned by Anawa or the Subsidiaries have been
earned by any Person who is an Affiliate of any of the Vendors.
Notwithstanding anything else in this Agreement, including,
without limitation, the provisions of this Section 3.4, the Vendors
make no representation or warranty of any kind whatsoever with respect
to future business, financial performance or future profitability of
Anawa.
3.5 OFF BALANCE SHEET OBLIGATIONS
Schedule 3.5 contains a complete list of the off-balance sheet
obligations of Anawa and the Subsidiaries, including all guarantees and
obligations to the benefit of the Vendors, members of their families or
third parties.
3.6 CHANGES IN CONDITION
Since January 1, 1998:
3.6.1 MATERIAL ADVERSE EFFECT. No event having a
Material Adverse Effect has occurred.
3.6.2 EXTRAORDINARY TRANSACTIONS, ETC. Other than as set
forth in Schedule 3.4A, neither Anawa nor any of the
Subsidiaries has (a) made any Distribution, (b) other
than as set forth in Schedule 3.6.2, made any payment
(other than Compensation of its directors, officers
and employees in amounts in effect prior to January
1, 1998 or for bonuses accrued in accordance with
normal practice prior to January 1, 1998) to any of
the Vendors, (c) other than as set forth in Schedule
3.6.2, increased the Compensation, including bonuses,
payable or to be payable to any of its directors,
officers or employees by more than 5%, or (d) entered
into any Contractual Obligation, or entered into or
performed any other transaction, not in the ordinary
and usual course of business and consistent with past
practice.
3.6.3 INVENTORY AND WORK-IN-PROGRESS. The value of
inventory and work-in-progress reflected in the
financial statements of Anawa and the Subsidiaries
has been established in accordance with Swiss GAAP
and there has been no material change in the period
subsequent to December 31, 1997, other than in the
ordinary and usual courses of business.
3.6.4 REVENUES. The business of Anawa and the Subsidiaries
has been operated in the customary fashion and no
revenues that would have been earned by Anawa or the
Subsidiaries have been earned by any Person which is
an Affiliate of any of the Vendors.
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3.7 SOLVENCY
Each of Anawa and the Subsidiaries shall be able to pay its
liabilities existing at the time of the signing of this Agreement and
based on the financial condition of Anawa and the Subsidiaries at the
time of signing this Agreement as they become due.
3.8 CONTRACTUAL OBLIGATIONS, ETC.
3.8.1 CERTAIN CONTRACTS. Schedule 3.8.1 contains, together
with a reference to the subparagraph pursuant to
which each item is being disclosed, a correct and
complete list of all Contractual Obligations of Anawa
and the Subsidiaries of the types described below:
(a) All collective bargaining agreements; all
employment agreements, all profit sharing,
profit participation, deferred compensation,
bonus, stock option, stock purchase,
pension, retainer, consulting, retirement,
welfare or incentive plans or agreements;
and all plans, agreements or practices which
constitute Compensation or "fringe benefits"
to any of the employees of Anawa or the
Subsidiaries, including vacation programs,
sick leave programs, group medical
insurance, group life insurance, disability
insurance and related benefits.
(b) All Contractual Obligations under which
Anawa or the Subsidiaries are restricted
from carrying on any business, venture or
other activities anywhere in the world.
(c) All Contractual Obligations (including
options) to sell, lease (as lessor),
exchange or otherwise dispose of or transfer
any of the properties or assets of Anawa or
the Subsidiaries except in the ordinary
course of business.
(d) All Contractual Obligations pursuant to
which Anawa or the Subsidiaries guarantees
or otherwise assumes any liability of or
gives financial assistance to any Person, or
pursuant to which any Person guarantees or
otherwise assumes any liability of Anawa or
the Subsidiaries.
(e) All Contractual Obligations constituting
license agreements, service agreements,
consulting agreements or other similar
arrangements, the termination of which,
individually or in the aggregate, would
result in a Material Adverse Effect.
(f) All Contractual Obligations under which
Anawa or any of the Subsidiaries leases
immovable property or is obligated to lease
or purchase immovable property or incur
capital expenditures in excess of SFr100,000
annually.
(g) All Contractual Obligations of Anawa or the
Subsidiaries relating to the borrowing of
money or to the creation of a Lien, other
than a Permitted Lien, on any property or
asset of Anawa, or the Subsidiaries.
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(h) All Contractual Obligations of Anawa or any
of the Subsidiaries requiring a notice
exceeding 6 (six) months for termination.
3.8.2 NATURE OF CONTRACTS. All of the Contractual
Obligations of Anawa and the Subsidiaries at the
Completion Date are enforceable against Anawa and the
Subsidiaries, the other parties thereto, in
accordance with their terms; except for Contractual
Obligations the failure of which to be so enforceable
does not and shall not, individually or in the
aggregate, result in a Material Adverse Effect.
Except for breaches, defaults and liabilities which
do not and shall not individually or in the aggregate
result in a Material Adverse Effect, neither Anawa
nor any of the Subsidiaries is now in default, and no
event has occurred which with notice or lapse of time
or both would constitute a default under, nor are
there any liabilities arising from any breach or
default by any of them or event which with notice or
lapse of time or both would constitute a default by
any of them prior to the Completion Date of, any
provision of any such Contractual Obligation.
3.8.3 ARTICLES. Neither Anawa nor any of the Subsidiaries
is in violation of, or in default under, any
provision of its articles or constituting documents
and Phoenix has been provided with complete and
correct copies of such articles or constituting
documents.
3.8.4 INSURANCE. Each of Anawa and the Subsidiaries carries
insurance policies with independent third party
insurers which, with respect to their amounts and
types of coverage, are adequate to insure against
risks to which each of Anawa and the Subsidiaries and
their respective property and assets are normally
exposed in the operation of their respective
businesses, including without limitation professional
liability. All policies, the absence of which,
individually or in the aggregate, would result in a
Material Adverse Effect, are in full force and
effect. There are no outstanding unpaid premiums
except in the ordinary course of business, and
neither Anawa nor any Subsidiary has received any
notice of cancellation or non-renewal of any such
policy. Neither Anawa nor any Subsidiary is aware of
any risks, situations, occurrences or other matters
which have been disclosed, or should have been
disclosed, to insurance carriers or brokers in
connection with any application for such insurance as
a result of which an insurance carrier would have a
right to cancel the corresponding insurance policy or
deny coverage with respect to any rights under any
such policies. There exists no event of default or
event, occurrence, condition or act (including the
transactions contemplated by this Agreement) which,
with the giving of notice, the lapse of time or the
happening of any further event or condition, would
become a default or occasion a material premium
increase under any such policy or give rise to, and
neither Anawa nor any Subsidiary has any anticipation
of, any termination or cancellation thereof or
material premium increase therefor.
3.8.5 DISPUTE. Neither Anawa nor any of the Subsidiaries
has received any notice from any supplier, vendor,
contractor, customer or client with which Anawa or
such Subsidiary has conducted business during the
one-year period ending on the date of this Agreement
confirming such Person's intention to reduce the
volume under, terminate or otherwise alter any
Contractual Obligation with Anawa or any Subsidiary,
the effect of which, individually or in the
aggregate, would result in a Material Adverse Effect.
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3.9 OPERATIONS IN CONFORMITY WITH LAW, ETC.
The operations of Anawa and the Subsidiaries as now conducted,
and their properties, assets, equipments, buildings, immoveables and
leased or occupied properties, are not, and have not been, in violation
of, nor is Anawa or any of the Subsidiaries in default and no event has
occurred which with notice or lapse of time or both would constitute a
default under, any applicable Legal Requirements including, in
particular, any applicable Environmental Laws or Legal Requirements
regarding clinical research and experimentation on animals, except for
such violations and defaults as do not and shall not, in the aggregate,
have a Material Adverse Effect. Neither Anawa nor any of the
Subsidiaries has received notice of any such violation or default and
there are no basis on which the operations of Anawa or any of the
Subsidiaries, when conducted as currently proposed to be conducted
after the Completion Date, would be held so as to violate or to give
rise to any such violation or default. Anawa and the Subsidiaries have
all franchises, licenses, permits, certificates, authorizations,
registrations or other authority presently necessary for the conduct of
their business as now conducted, except for franchises, licences,
permits, certificates, authorizations, registrations or other
authority, the absence of which, individually or in the aggregate, does
not and shall not result in a Material Adverse Effect. Based on the
facts presently known to the Vendors and Management, all future
expenditures on the part of Anawa and the Subsidiaries required to meet
the provisions of any presently existing applicable Legal Requirements
(including Legal Requirements relating to employment practices or to
occupational or health standards or to environmental considerations)
shall not, in the aggregate, have a Material Adverse Effect. Anawa and
the Subsidiaries have complied and are in compliance with applicable
competition regulations and have never infringed fair competition in
the markets where they operate, either with or towards third companies
or between themselves. Anawa and the Subsidiaries do not hold
separately or together a dominant position on the markets involved and
their market share and net aggregate turnover do not meet the European
and Swiss thresholds which authorizes European or domestic competition
authorities to control the operation and impede the completion of the
transaction contemplated hereby.
3.10 INTELLECTUAL PROPERTY
Schedule 3.10 contains a list of all the trade-marks, trade
names and patents used by any of Anawa or the Subsidiaries
(collectively "Used Intellectual Property"). The entity indicated in
said Schedule as owner of Used Intellectual Property is the registered
and beneficial owner of such Used Intellectual Property or the
registration thereof, if applicable, (except as set forth in Schedule
3.10), with good and marketable title, unencumbered (except for
Permitted Liens), and with full right to sell, assign or otherwise
transfer or license to others and subject to no pending challenge,
refutation, expiry or termination other than as set forth in Schedule
3.10. To the best of Vendors' knowledge, other than as set forth in
Schedule 3.10, none of Anawa or the Subsidiaries uses any intellectual
property not owned by it, other than software purchased "off the
shelf", all of which each entity using said property has the right to
use (collectively "Licenced Intellectual Property"). (Used Intellectual
Property and Licensed Intellectual Property are sometimes hereinafter
referred to collectively as "Intellectual Property"). None of Anawa or
the Subsidiaries is required to pay royalties, fees or other
consideration to any other person with respect to the use of any of the
Intellectual Property or in connection with the conduct of its business
or otherwise. To the best of Vendors' knowledge, none of Anawa or the
Subsidiaries has infringed the intellectual or industrial property
rights of any other person, nor has any of them used any intellectual
or industrial property (including, without limitation, trade-marks,
trade names, patents, models, designs and copyrights) which it does not
own or have the right to use other than as set forth in Schedule 3.10.
There are no outstanding claims asserted against any of Anawa or the
Subsidiaries alleging the infringement or
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the misappropriation by any of them of any intellectual or industrial
property. None of Anawa or the Subsidiaries has granted any licences or
sub-licences to third parties with respect to any of the Intellectual
Property other than as set forth in Schedule 3.10 and neither the
Vendors nor Management has any knowledge of any infringement or
misappropriation by any other Person of any of the Intellectual
Property. Neither the execution nor delivery of this Agreement will
constitute a breach of or a default under any agreement relating to the
Intellectual Property.
3.11 ENVIRONMENTAL MATTERS
3.11.1 Anawa and the Subsidiaries, their employees, agents,
shareholders, directors and officers (acting in their
capacity of employees, agents, shareholders,
directors or officers of Anawa or of one of the
Subsidiaries) have never been declared guilty of
committing an offence for a violation of
Environmental Laws and have never been fined for such
an offence or have otherwise settled such a
prosecution in connection with the activities of
Anawa and the Subsidiaries;
3.11.2 There are no contaminants, waste or pollutants of any
kind whatsoever in, on or under the equipment,
buildings, immoveables or properties owned, leased or
occupied by Anawa or any of the Subsidiaries and
caused by Anawa, the Subsidiaries or their employees,
agents, shareholders, directors or officers (acting
in their capacity of employees, agents, shareholders,
directors or officers of Anawa or one of the
Subsidiaries), the presence of which constitutes a
violation of applicable Environmental Laws and the
presence of which, individually or in the aggregate,
constitutes a Material Adverse Effect;
3.11.3 Neither Anawa nor any of the Subsidiaries has
received any written notice or request for
information in the context of any national,
supra-national, provincial, regional, local or
municipal environmental investigation or inspection;
3.11.4 There are no PCBs, asbestos or urea formaldehyde
insolation in, on or under the equipment, buildings,
immoveables or properties owned, leased or occupied
by Anawa or the Subsidiaries;
3.11.5 There is no action, suit or proceeding pending in
relation to environmental matters against Anawa or
the Subsidiaries, its employees, agents,
shareholders, directors and officers (acting in their
capacity of employees, agents, shareholders,
directors or officers of Anawa or of one of the
Subsidiaries), or involving Anawa or the Subsidiaries
or its assets, before any judicial body, tribunal,
commission, agency or other governmental entity, and
to the Vendors' knowledge and to the knowledge of
Management, there is no threat of, or event or fact
based on which, such action, suit or proceeding may
be instituted;
3.11.6 To the knowledge of Management and the Vendors, Anawa
and the Subsidiaries are in compliance with all
applicable Environmental Laws.
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3.12 LABOUR AND EMPLOYMENT MATTERS
3.12.1 Without limiting the generality of Section 3.9, each
of Anawa and the Subsidiaries has complied with all
applicable laws relating to the employment of labour,
including provisions thereof relating to wages, hours
and collective bargaining rights.
3.12.2 There is no collective agreement by which Anawa or
any of the Subsidiaries is bound which relates to the
employees of Anawa or the Subsidiaries. To the best
knowledge of the Vendors and to the knowledge of
Management, there are no threatened or pending
attempts to organize or establish any labour union or
employee association in connection with the business
of Anawa or any of the Subsidiaries. To the best
knowledge of the Vendors and to the best knowledge of
Management, there is no pending or threatened labour
dispute, grievance, strike, or work stoppage
materially affecting the business of any of Anawa or
any of the Subsidiaries. Neither Anawa nor any of the
Subsidiaries is a party to any other written
employment agreement, contract, arrangement,
management contract or service contract affecting
employees other than as set forth in Schedule 3.8.1,
nor are any such contracts, agreements, arrangements,
management contracts or service contracts being
currently negotiated or proposed other than in the
ordinary course of business.
3.12.3 There exist no retirement plans, profit sharing,
option or incentive plans, or other employee benefit
plans for employees of Anawa or any of the
Subsidiaries other than as set forth in Schedule
3.8.1 for which adequate arrangements have been made
since January 1, 1998 to set aside the requisite
amounts in the prescribed fashion, and neither Anawa
nor any of the Subsidiaries has promised or intends
to implement other such plans.
3.12.4 Neither Anawa nor any of the Subsidiaries has any
employee who cannot be dismissed without further
liability upon such notice period not exceeding what
it is required by the applicable Legal Requirement.
3.12.5 None of Anawa's or any of the Subsidiary's employees
has signed non-compete covenants in favour of Anawa
or the Subsidiary.
3.13 TAXES
Other than as set forth in Schedule 3.13, all tax returns
required to be filed by Anawa and the Subsidiaries in any jurisdiction
have been filed and all taxes, assessments, levies and other
governmental charges upon Anawa and the Subsidiaries or upon any of
their properties or income, including any tax in respect of value
added, have been paid if and when due unless such payment is being
contested in good faith and by appropriate proceedings and adequate
reserves with respect thereto determined in accordance with applicable
policies have been established by Anawa and the Subsidiaries. There is
no tax revision threatened in writing against Anawa and any of the
Subsidiaries and there is no basis for such assessment.
- 17 -
3.14 WITHHOLDINGS
Each of Anawa and the Subsidiaries has withheld from each
payment made to any of its shareholders, officers, directors,
non-resident creditors and employees the amount of all taxes and other
deductions required to be withheld and has remitted all such amounts to
the appropriate authorities within the prescribed times, and has
otherwise fulfilled all requirements of all Legal Requirements
governing such deductions and withholdings. Each of Anawa and the
Subsidiaries has remitted to the proper authorities all employer
contributions due and payable under all social security, occupational
health and safety and pension plans.
3.15 GOOD TITLE
Other than as set forth in Schedule 3.15 each of Anawa and the
Subsidiaries has good and marketable title to all assets in the balance
sheets as per December 31, 1997 free and clear of Liens and other
adverse claims.
3.16 LITIGATION
Other than as set forth in Schedule 3.16, no litigation or
proceeding before, or investigation by, any foreign, national,
supra-national or municipal, judicial, tax or customs tribunal or board
or other governmental or administrative agency or any arbitrator, is
pending or threatened (or does any basis exist therefor), against Anawa
or the Subsidiaries or, to the Vendors' best knowledge or to the best
knowledge of Management, any director or officer of Anawa or any of the
Subsidiaries, which individually or in the aggregate could result in a
Material Adverse Effect, or which seeks rescission of, seeks to enjoin
the consummation of, or which questions the validity of, this Agreement
or any of the transactions contemplated hereby. Neither Anawa nor the
Subsidiaries has been charged, nor to the Vendors' knowledge or to the
knowledge of Management, is it threatened to be charged, with
infringement of any trademark, trade name, service xxxx, copyright,
patent, patent right or other proprietary right of any Person.
3.17 PRESS COVERAGE
Neither Anawa nor any of the Subsidiaries has been the object
of any demonstrations, press campaigns or other attacks due to the
nature of its activities.
3.18 VIOLATION OF OTHER INSTRUMENTS
Neither the execution and delivery of this Agreement by the
Vendors, the consummation of any of the transactions contemplated
hereby or in Schedule 3.18, shall (a) constitute a breach of or a
default or an event which with notice or lapse of time or both would
constitute a default under any Contractual Obligation of Anawa or any
of the Subsidiaries, (b) result in acceleration in the time for
performance of any obligation of Anawa or the Subsidiaries under any
such Contractual Obligation, (c) result in the creation of any Lien
upon any property or asset of Anawa or the Subsidiaries, (d) require
any consent, waiver or amendment to any such Contractual Obligation
that has not been obtained and remains in full force and effect, (e)
give rise to any severance payment, right of termination, securities
purchase or redemption right or other right under any such Contractual
Obligation, or (f) violate or give rise to a default or an event which
with notice or lapse of time or both could constitute a default under
any Legal
- 18 -
Requirements, except for events or conditions described in clauses (a)
through (f) above which shall not, individually or in the aggregate,
have any Material Adverse Effect or (g) result in any state of facts
which could have a Material Adverse Effect.
3.19 APPROVALS, CONSENTS, ETC.
Other than as set forth in Schedule 3.19, no approval,
consent, authorization or other order of, and no declaration, filing,
registration, qualification or recording with, any governmental
authority or any other Person is required to be made by or on behalf of
the Vendors, Anawa or any of the Subsidiaries in connection with the
execution, delivery or performance of this Agreement or any of the
transactions contemplated hereby.
3.20 INVESTMENT OR DIVESTITURE
Schedule 3.20 contains a complete list of all investments and
divestitures in process which are not mentioned in the financial
statements of Anawa and the Subsidiaries (balance sheet, statement of
earnings and schedules) for the period ended December 31, 1997.
3.21 FULL DISCLOSURE
Disclosure made by the Vendors in respect of one of the
representations contained in this Section 3 is considered being made in
respect of all other representations. There is no fact that the
Vendors, to the best of their knowledge, have not disclosed to Phoenix
which could have a Material Adverse Effect on the properties, business,
prospects or condition (financial or otherwise) of Anawa or any of the
Subsidiaries. Neither the reports, financial statements and other
documents referred to in Section 3.4, nor any certificate, statement or
document delivered by the Vendors to Phoenix in connection with this
Agreement contains any untrue statement of a fact or omits to state any
fact necessary to keep the statements contained herein or therein from
being misleading in a manner that would constitute a Material Adverse
Effect.
4. REPRESENTATIONS AND WARRANTIES OF PHOENIX
Phoenix represents and warrants to the Vendors that:
4.1 DUE INCORPORATION, ETC.
Phoenix is duly incorporated, validly exists and is in good
standing under the Canada Business Corporations Act and has all
necessary corporate capacity and power to own and lease its property
and assets and to carry on the business now conducted by it.
4.2 SHARE CAPITAL OF PHOENIX
The authorized share capital of Phoenix is composed of an
unlimited number of common shares and an unlimited number of preferred
shares issuable in series of which, as at April 17, 1998, there were
24,291,208 common shares issued and outstanding.
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4.3 OPTIONS
Other than the options to acquire common shares of Phoenix
granted pursuant to Phoenix's Key Employee Share Option Plan and shares
to be issued to Xxxx Xxxx under an earn-out formula which has been
disclosed to the Vendors, Phoenix does not have any rights or options
to subscribe for, or any warrants or other agreements providing for or
requiring the issuance of common shares or preferred shares.
4.4 DUE AUTHORIZATION
All necessary corporate action has been taken by Phoenix to
authorize the execution of this Agreement and the consummation of the
transactions contemplated hereby, including the issuance of the Phoenix
Shares as fully paid and non-assessable in consideration for the
purchase of the Shares.
4.5 CONFORMITY WITH APPLICABLE SECURITIES LAWS
All documents have been filed, all requisite proceedings have
been taken and all approvals, exemptions, consents, orders and
authorizations required under applicable securities laws have been
obtained in order to validly and lawfully issue and deliver the Phoenix
Shares issued hereunder. The execution of this Agreement and the
issuance of the Phoenix Shares by Phoenix to the Vendors will be exempt
from the prospectus and registration requirements of the applicable
Canadian securities legislation.
4.6 STOCK EXCHANGE APPROVALS
The listing of the Phoenix Shares on The Montreal Exchange and
the Toronto Stock Exchange has been approved by such exchanges, subject
to Phoenix fulfilling all of the standard requirements of such
exchanges before April 30, 1998.
4.7 REPORTING ISSUER
Phoenix is a reporting issuer under the laws of the provinces
of Ontario and Quebec and is not in default of any requirements of the
securities legislation of such provinces.
4.8 PHOENIX SHARES
The Phoenix Shares will at the time of issuance be duly
authorized, validly issued, fully paid and non-assessable.
4.9 HOLD PERIOD
The Phoenix Shares shall not be subject to any hold period
(whether prescribed by applicable securities legislation or the
policies of The Toronto Stock Exchange or Montreal Exchange) during
which the Phoenix Shares may not be sold without a prospectus or
reliance on a statutory exemption from the prospectus requirements of
applicable securities legislation.
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4.10 PUBLIC INFORMATION
No material change (as defined in the Securities Act (Quebec))
has occurred in the affairs of Phoenix which had not been generally
disclosed to the public, nor has Phoenix any knowledge of any other
material adverse information in regard to the current and prospective
operations of Phoenix which have not been generally disclosed to the
public.
5. POOLING OF INTERESTS
5.1 ACCOUNTING TREATMENT
Phoenix, Anawa and the Vendors intend and desire for the
transactions contemplated by this Agreement to qualify for "pooling of
interests" treatment for US GAAP purposes in accordance with Accounting
Principles Board Opinion No. 16.
5.2 SUCCESSFUL APPLICATION OF "POOLING OF INTERESTS"
The Vendors acknowledge that the successful application of
"pooling of interests" accounting is one of the principal
considerations in Phoenix purchasing the Shares. The Vendors represent
that they have not taken any action listed in the letter attached
hereto as Schedule 5.3 that would preclude the application of "pooling
of interests" accounting nor will they agree or participate to any such
action in the future.
5.3 POOLING LETTER
On or prior to the Completion Date, Anawa shall cause to be
executed and delivered to Phoenix a letter substantially in the form
attached hereto as Schedule 5.3 dated the Completion Date from Anawa's
management related to the compliance by Anawa with applicable "pooling
of interests" criteria in form and substance reasonably satisfactory to
Phoenix and its auditors.
5.4 PLACEMENT AND STOCK TRANSFER RESTRICTIONS AND RELATED MATTERS
Each party to this Agreement agrees that from and after the
date of this Agreement, such party shall not knowingly take any action,
or knowingly fail to take any action, which action or failure is
reasonably likely to disqualify the transactions contemplated by this
Agreement from pooling of interests accounting treatment by Phoenix,
and that such party shall take all reasonable actions necessary to
cause the transactions contemplated by this Agreement to qualify as a
pooling of interest, if such characterization shall be jeopardized by
action taken by such party. Without limiting the foregoing, each Vendor
who is a Pooling Affiliate of Anawa agrees that such Vendor shall not
sell, transfer, pledge, or otherwise dispose of such Vendor's interests
in or reduce such Vendor's risk relative to any of the Phoenix Shares
until Phoenix shall have published financial results (including
combined sales and net income) covering at least thirty (30) days of
combined operations of Phoenix and Anawa after the Completion Date. No
later than July 30, 1998, Phoenix shall prepare and publish such
financial results for the first full month of operations following the
Completion Date. Each of the Vendors and Anawa acknowledge and agree
with Phoenix that none of the Vendors or Anawa is a party to any
agreement or arrangement among themselves or with third parties
regarding the transactions contemplated by this Agreement or the
subject matter hereof.
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Prior to the Completion Date, Phoenix shall deliver to Anawa a
list of names and addresses of those persons who are or may be, in
Phoenix's reasonable judgement, Affiliates of Phoenix within the
meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act or applicable SEC accounting releases with respect to
pooling of interests accounting treatment (each such persons, a
"Pooling Affiliate"). Phoenix also shall provide Anawa with such
information and documents as Anawa shall reasonably request for
purposes of reviewing such list. Prior to the Completion Date, Phoenix
shall deliver to Anawa an affiliate letter, in form and substance
reasonably satisfactory to Anawa, executed by each of the Pooling
Affiliates identified in the foregoing list.
Prior to the Completion Date, Anawa shall deliver to Phoenix a
list of names and addresses of those persons who are or may be, in
Anawa's reasonable judgment, Pooling Affiliates of Anawa. Anawa also
shall provide Phoenix with such information and documents as Phoenix
shall reasonably request for purposes of reviewing such list. Prior to
the Completion Date, Anawa shall deliver to Phoenix an affiliate
letter, in form and substance reasonably satisfactory to Phoenix,
executed by each of the Pooling Affiliate of Anawa identified in the
foregoing list.
6. EMPLOYMENT AGREEMENT
6.1 EMPLOYMENT AGREEMENT WITH WICKI
Wicki and Phoenix shall execute an employment agreement.
7. SURVIVAL OF REPRESENTATIONS; INDEMNITY
7.1 SURVIVAL OF REPRESENTATIONS
The respective representations and warranties of the Vendors
contained in this Agreement or in any schedule attached hereto shall
survive the consummation of the transactions contemplated hereby and
shall remain in full force and effect notwithstanding any investigation
or examination of, or knowledge with respect to, the subject matter
thereof by or on behalf of Phoenix until the earlier of November 30,
1998 or the date of completion of the audit of the combined financial
statements of Phoenix and Anawa (the period ending on such date being
referred to herein as the "Representations Period"), except that such
representations and warranties shall survive indefinitely in the event
of fraud with respect thereto. No claim for indemnification pursuant to
Section 7.2.1 below may be brought after the expiration of the
Representations Period, except for claims made in good faith in writing
prior to such expiration and setting forth in reasonable detail the
claim, regardless of whether any action or demand has been commenced
against Phoenix (it being understood without limitation, that any and
all Losses (as defined below) arising after the expiration of the
Representations Period shall be recoverable upon notice properly given
prior to the expiration of the Representations Period in accordance
with this Section 7.1). The representations and warranties of Phoenix
contained in this Agreement or in any schedule attached hereto shall
terminate upon and not survive the Completion Date, except in the event
of fraud by Phoenix with respect thereto, in which case they shall
survive indefinitely.
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7.2 INDEMNIFICATION
7.2.1 From and after the Completion Date, Phoenix and its
Affiliates (including Anawa and the Subsidiaries) and
all of their respective officers, directors,
employees, agents and shareholders (each, an
"Indemnitee") shall be defended, indemnified and held
harmless by the Vendors pursuant to this Agreement
and the Escrow Agreement to the full extent permitted
by law, from and against any and all losses, claims,
actions, damages, liabilities, costs and expenses
(including attorneys' fees and expenses)
(collectively, "Losses") relating to or arising from
or in connection with (i) any misrepresentation or
any non-fulfilment of any representation, warranty,
covenant, obligation or agreement by any Vendor
contained in or made pursuant to this Agreement or
any other document, agreement, officer's certificate
or other certificate delivered to Phoenix in
connection with this Agreement, and (ii) the
enforcement by Phoenix of its rights pursuant to this
Section 7.2, or any litigation, proceeding or
investigation relating to any of the foregoing. The
indemnification obligations of the Vendors pursuant
hereto shall be joint and not solidary, i.e. prorata
to the number of Phoenix Shares received by each
Vendor in accordance with Section 2.2.
7.2.2 Notwithstanding the foregoing provisions of this
Section 7.2, but except with respect to any Losses
resulting from or arising out of fraud or other
intentional or knowing misconduct or
misrepresentation, (i) the maximum aggregate recourse
by the Indemnitees pursuant to Section 7.2.1 above
shall not exceed the aggregate value (calculated by
adding together the opening and closing prices of the
common shares of Phoenix on each of the Toronto Stock
Exchange and The Montreal Exchange for each of the
ten trading days preceding the Completion Date, and
dividing this sum by 40) of the Escrowed Securities
(the "Indemnity Cap"), and (ii) the sole recourse of
any Indemnitee in respect of Losses (but not in
respect of fraud or other intentional or knowing
misconduct or misrepresentation) shall be from, out
of, and to the extent of the Escrowed Securities. Any
indemnification shall be payable by the return of
Escrowed Securities to Phoenix in accordance with the
provisions of the Escrow Agreement. In particular,
the number of Escrowed Shares to be remitted to
Phoenix in payment of any indemnification obligation
shall be calculated on the basis of the average price
of the Escrowed Shares obtained by adding together
the opening and closing prices of the common shares
of Phoenix on each of the Toronto Stock Exchange and
The Montreal Exchange for each of the ten trading
days preceding the Completion Date, and dividing this
sum by 40. All dividends or other distributions
received by a Vendor in respect of common shares of
Phoenix which are remitted to Phoenix in satisfaction
of an indemnification obligation under this Section
7, shall also be repaid to Phoenix at the time of
payment of indemnification.
7.2.3 Notwithstanding any other provision of this
Agreement, as of and after the Completion Date, Anawa
shall not have any liability under this Agreement,
and no Vendor shall threaten or bring any claim or
action whatsoever against Anawa for contribution to
any amounts payable under this Section 7.2 by such
Vendor.
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8. SPECIFIC CONTINGENCIES
The Vendors hereby undertake to indemnify Phoenix in respect
of the occurrence, in whole or in part, of any of the specific
contingencies described below, each of which exists at the Completion
Date and will only be finally resolved or determined at some time in
the future. The provision for these contingencies is not made as an
attempt to anticipate future events, but merely to provide for a
reasonable period of time within which such contingencies may be
resolved. Any indemnification pursuant to this Section shall be payable
by all of the Vendors, pro rata to the number of common shares of
Phoenix issuable to each of them pursuant to this Agreement.
In the event of the realization of any of the specific
contingencies contemplated in this Section 8, the Vendors shall
indemnify Phoenix by remitting to Phoenix for cancellation such number
of Phoenix Shares as corresponds to the amount of indemnification owed
(calculated on the basis of the Escrowed Share Price). Any obligation
to remit common shares of Phoenix upon the occurrence of a specific
contingency shall be satisfied by return of Escrowed Shares in
accordance with the Escrow Agreement. In the event that there does not
remain a sufficient number of Escrowed Shares or Proceeds (as defined
in the Escrow Agreement) to satisfy an obligation under this Section,
such shortfall always to be calculated on the basis of the Escrowed
Share Price, the balance of such indemnification obligation shall be
paid in cash. All dividends or other distributions received by a Vendor
in respect of Phoenix Shares which are remitted to Phoenix in
satisfaction of an indemnification obligation under this Section 8,
shall also be repaid to Phoenix at the time of payment of
indemnification.
8.1 Any liability related to the cessation of employment of Xxxxxxx.
The maximum amount payable in respect of this contingency is SFr220,000
plus any interest due to the plaintiff(s) from the date of this
Agreement to the final settlement of this specific contingency.
Notwithstanding any other provision of this Agreement, the Vendors'
indemnification obligation with respect to this contingency shall
survive until any possible claims have been prescribed under applicable
law.
8.2 Any liability related to the alleged termination of a strategic
alliance (or similar matters) with Xx. Xxxxxx AG. The maximum amount
payable in respect of this contingency is SFr1,100,000 plus any
interest due to the plaintiff(s) from the date of this Agreement to the
final settlement of this specific contingency. Notwithstanding any
other provision of this Agreement, the Vendors' indemnification
obligation with respect to this contingency shall survive until any
possible claims have been prescribed under applicable law.
8.3 Any liability related to the VAT treatment for the analysis of
samples sent to foreign customers. The maximum amount payable in
respect of this contingency is SFr100,000 plus any interest due to the
relevant taxation authorities from the date of this Agreement to the
final settlement of this specific contingency. Notwithstanding any
other provision of this Agreement, the Vendors' indemnification
obligation with respect to this contingency shall survive until any
possible claims have been prescribed under applicable law.
8.4 Any liability related to the payment guarantee issued by
Schweizerische Volksbank on behalf of Anawa for the benefit of Wybert
GmbH, Lorrach, Germany. The maximum amount payable in respect of this
contingency is SFr200,000 plus any commission due to the
Scheweizerische Volksbank. Notwithstanding any other provision of this
Agreement, the Vendors indemnification obligation with respect to this
contingency shall survive until any possible claims have prescribed
under applicable law.
- 24 -
8.5 Any impairment in value of the account receivable in the amount of
SFr1,000,000 as set out in the financial statements of Anawa as at
December 31, 1997.
The maximum amount payable in respect of this contingency is
SFr1,000,000. Notwithstanding any other provision of this Agreement,
the Vendors' indemnification obligation with respect to this
contingency shall survive until payment.
9. NOTICES
Any demand, notice or other communication to be given in connection
with this Agreement shall be given in writing and shall be given by personal
delivery, by registered mail or by electronic means of communication addressed
to the recipient as follows:
9.1 To Phoenix:
Phoenix International Life Sciences Inc.
0000, Xxxxx Xxxxxx
Xxxxx-Xxxxxxx, Xxxxxx
X0X 0X0 Xxxxxx
Telecopier No.: (000) 000-0000
ATTENTION: XXXX-XXXX XXXXX
9.2 To Xxxxxxxxxxxx:
Xx. Xxxxxx Xxxxx Xxxxxxxxxxxx
Xxxxxxxxxxxxxxxx 00
0000 Xxxxxx, Xxxxxxxxxxx
9.3 To Xxxxxx:
Xxxxxx & Co.
Xxxxxxxxxxxxx 00
0000 Xxxxxx, Xxxxxxxxxxx
Postal address:
Xxxxxxxxxxxxx 00
Xxxxxxxx 0000
0000 Xxxxxx, Xxxxxxxxxxx
Telecopier No.: (000) 000-0000
- 25 -
9.4 To Xxxxxxx:
Dr. Xxxxx Xxxxxxx
Xxxxxxxxxxxxxxxx 00
0000 Xxxxxxxxx, Xxxxxxxxxxx
9.5 To Innovent:
Innovent Capital Ltd.
Midland Bank Trust Building
P.O. Box 1109, Fort Street
Grand Cayman, B.W.I.
Telecopier No.: (000) 000-0000
9.6 To Xxxxxxx:
Xxxxxx Xxxxxxx
Xxxxxxxxxxxxxx 00
0000 Xxxxxxxxx, Xxxxxxxxxxx
9.7 To Joller:
Xx. Xxxxx Xxxxxx
Xxxxxxxxxxxxxxxxx 0
0000 Xxxxxx, Xxxxxxxxxxx
9.8 To Karabelnik:
Xx. Xxxxx Xxxxxxxxxx
Xxxxxx Xxxxxxx 00
0000 Xxxxxxxx, Xxxxxxxxxxx
9.9 To Wicki:
Xx. Xxxxxxx Xxxxx
Xxxxxxxxxxx 00
0000 Xxxxxxxx, Xxxxxxxxxxx
9.10 To Anawa:
ANAWA Holding AG
Xxxxxxxxxxxxxxxx 00x
0000 Xxx, Xxxxxxxxxxx
Telecopier No.: (000) 000-0000
- 26 -
10. MODIFICATION
All modifications or amendments of any provision of this Agreement
shall be effective only if the same shall be in writing and then shall be
effective only in the specific instance and for the purpose for which given.
11. WAIVER
No failure to exercise, and no delay in exercising, on the part of a
party hereto, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. No waiver of any provision of this
Agreement shall be effective unless in writing. No notice or demand given in any
case shall constitute a waiver of the right to take other action in the same,
similar or other instances without such notice or demand.
12. CONFIDENTIALITY
The parties agree to treat this Agreement as confidential and not to
disclose its contents to third parties other than their advisers, except to the
extent necessary to enforce performance of obligations hereunder, or as is
required to comply with applicable laws or regulations, including regulations of
any stock exchange on which the securities of Phoenix are listed following
consultations with Xxxxxxxxxxxx.
13. FURTHER ASSURANCES
The parties shall, with all reasonable diligence, do all such things
and provide all such reasonable assurances as may be required to consummate the
transactions contemplated hereby, and each party shall provide such further
documents or instruments required by another party as may be reasonably
necessary or desirable to give effect to the purpose of this Agreement and to
carry out its provisions.
14. GOVERNING LAWS
This Agreement shall be governed by the laws of the Province of Quebec
and the laws of Canada applicable therein.
15. ARBITRATION
All disputes arising out of or in connection with the present Agreement
shall be finally settled under the Rules of Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in accordance with the
said Rules.
The place of arbitration shall be Zurich.
The language of the arbitration shall be English.
16. GENERAL
The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. The headings in this Agreement are for convenience of reference only and
shall not alter or otherwise affect the meaning hereof. This Agreement and the
other documents
- 27 -
and instruments referred to herein constitute the entire understanding of the
parties hereto with respect to the subject matter hereof and thereof and
supersede all present and prior agreements, whether written or oral. No
investigation made by or on behalf of a party hereto shall mitigate, diminish or
affect the representations and warranties made herein by the Vendors. This
Agreement may be executed in any number of counterparts which together shall
constitute one instrument and shall be governed by and construed in accordance
with the laws of the Province of Quebec and the laws of Canada applicable
therein, and shall bind and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and assigns. The parties hereto have expressly required that this
Agreement and all documents and notices related hereto be drafted in English.
LES PARTIES AUX PRESENTES ONT EXPRESSEMENT EXIGE QUE LE PRESENT CONTRAT ET TOUS
LES DOCUMENTS ET AVIS Y AFFERENTS SOIENT REDIGES EN ANGLAIS.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed as of the Completion Date.
PHOENIX INTERNATIONAL LIFE SCIENCES INC.
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxx
Title: Senior Vice-President Analytical Services
/s/ Johann Xxxxx Xxxxxxxxxxxx
--------------------------------------
DR. JOHANN XXXXX XXXXXXXXXXXX
XXXXXX & CO.
By: /s/ Johann Xxxxx Xxxxxxxxxxxx
--------------------------------------
Xx. Xxxxxx Xxxxx Xxxxxxxxxxxx
/s/ Xxxxx Xxxxxxx
--------------------------------------
DR. XXXXX XXXXXXX
INNOVENT CAPITAL LTD.
By: /s/ Johann Xxxxx Xxxxxxxxxxxx
--------------------------------------
Xx. Xxxxxx Xxxxx Xxxxxxxxxxxx
/s/ Xxxxxx Xxxxxxx
--------------------------------------
XXXXXX XXXXXXX
- 28 -
/s/ Xxxxx Xxxxxx
--------------------------------------
XX. XXXXX XXXXXX
/s/ Xxxxx Xxxxxxxxxx
--------------------------------------
XX. XXXXX XXXXXXXXXX
/s/ Xxxxxxx Xxxxx
--------------------------------------
XX. XXXXXXX XXXXX
ANAWA HOLDING AG
By: /s/ Johann Xxxxx Xxxxxxxxxxxx
--------------------------------------
Xx. Xxxxxx Xxxxx Xxxxxxxxxxxx
LIST OF SCHEDULES
Schedule A Outstanding shares and voting rights of Anawa
Schedule B The capital structure of Laboratories
Schedule C The capital structure of Trading
Schedule 1.10 Escrow Agreement
Schedule 1.21 Permitted Lien
Schedule 3.3.3 Capital Stock of the Subsidiaries
Schedule 3.3.4 Subsidiary Options
Schedule 3.3.5 Commitments affecting shares or voting rights of
Anawa or the Subsidiaries
Schedule 3.4A Financial Statements
Schedule 3.5 Material liabilities, contingent or otherwise of
Anawa or any of the Subsidiaries and off-balance
sheet obligations of Anawa and the Subsidiaries
Schedule 3.6.2 Extraordinary Transactions after January 1, 1998
Schedule 3.8.1 Contractual Obligations
Schedule 3.10 Intellectual Property
Schedule 3.13 Taxes
Schedule 3.15 Title to assets
Schedule 3.16 Litigation
Schedule 3.18 Violation of Other Instruments
Schedule 3.19 Approvals, Consents, etc.
Schedule 3.20 Investment or Divestiture
Schedule 5.3 Pooling Letter
Schedule 1.10
ESCROW AGREEMENT dated as of April 30, 1998.
AMONG: PHOENIX INTERNATIONAL LIFE SCIENCES INC., a corporation
incorporated under the Canada Business Corporations Act, having
its head office at 0000, Xxxxx Xxxxxx, Xxxxx-Xxxxxxx, Xxxxxx,
Xxxxxx, X0X 0X0, herein acting and represented by Xxxxxxx
Xxxxxxx, its duly authorized representative;
(hereinafter "Phoenix")
AND: XX. XXXXXX XXXXX XXXXXXXXXXXX, residing at Xxxxxxxxxxxxxxxx 00,
0000 Xxxxxx, Xxxxxxxxxxx;
(hereinafter "Xxxxxxxxxxxx")
AND: XXXXXX & CO., a Swiss partnership having its head office at
Xxxxxxxxxxxxx 00, 0000 Xxxxxx, Xxxxxxxxxxx, herein acting and
represented by Xx. Xxxxxx Xxxxx Xxxxxxxxxxxx, its duly
authorized representative;
(hereinafter "Xxxxxx")
AND: DR. XXXXX XXXXXXX, residing at Xxxxxxxxxxxxxxxx 00, 0000
Xxxxxxxxx, Xxxxxxxxxxx;
(hereinafter "Xxxxxxx")
AND: INNOVENT CAPITAL LTD., a company incorporated under the laws of
the Cayman Islands, with corporate seat at Midland Bank Trust
Building, P.O. Box 1109, Fort Street, Grand Cayman, B.W.I.,
herein acting and represented by Xx. Xxxxxx Xxxxx Xxxxxxxxxxxx,
its duly authorized representative;
(hereinafter "Innovent")
AND: XXXXXX XXXXXXX, residing at Xxxxxxxxxxxxxx 00, 0000, Xxxxxxxxx,
Xxxxxxxxxxx;
(hereinafter "Xxxxxxx")
AND: XX. XXXXX XXXXXX, residing at Xxxxxxxxxxxxxxxxx 0, 0000 Xxxxxx,
Xxxxxxxxxxx;
-2-
(hereinafter "Joller")
AND: XX. XXXXX XXXXXXXXXX, residing at Xxxxxx Xxxxxxx 00, 0000
Xxxxxxxx, Xxxxxxxxxxx;
(hereinafter "Karabelnik")
AND: XX. XXXXXXX XXXXX, residing at Xxxxxxxxxxx 00, 0000 Xxxxxxxx,
Xxxxxxxxxxx;
(hereinafter "Wicki")
AND: MONTREAL TRUST COMPANY, 0000 XxXxxx Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxx, X0X 0X0, as escrow agent, herein represented by its duly
authorized representatives Xxxxxxxxxx XxXxxx and Xxxxxxxx
Xxxxxxxxxx;
(hereinafter the "Escrow Agent")
WHEREAS Phoenix and the Vendors are parties to a share purchase
agreement dated April 30, 1998 (the "Purchase Agreement");
WHEREAS the Purchase Agreement provides that certain shares of Phoenix
issued to the Vendors pursuant thereto are to be held in escrow for the purposes
described therein;
NOW THEREFORE the parties hereby agree as follows:
1. INTERPRETATION AND DEFINITIONS
1.1 Whenever used in this Agreement:
1.1.1 "AFFILIATE" means any of Xxxxxxxxxxxx, Albers, Fischer,
Innovent, Karabelnik, and Wicki and "Affiliates" means
more than one of them;
1.1.2 "CLAIM" means any claim by Phoenix against and the
Vendors under Section 7.2 or a claim for a Specific
Contingency under Section 8 of the Purchase Agreement;
1.1.3 "DISTRIBUTIONS" has the meaning ascribed thereto in
Section 2.3 hereof;
1.1.4 "ESCROWED SHARES" has the meaning ascribed thereto in
Section 2.1 hereof;
1.1.5 "ESCROWED SHARE PRICE" means the amount obtained by
adding the opening and closing prices of the common
shares of Phoenix on each of the Montreal
-3-
Exchange and The Toronto Stock Exchange for the ten
trading days preceding the date of execution of the
Purchase Agreement, divided by 40;
1.1.6 "NOTICE OF CLAIM" means a written notice of any Claim
given by Phoenix setting forth the details of each Claim
referred to therein including the amount thereof, if
known to Phoenix, or Phoenix's reasonable estimate
thereof, as well as the provisions of the Purchase
Agreement upon which such Claim is based;
1.1.7 "NON-AFFILIATE" means Xxxxxxx and Xxxxxx, and
"Non-Affiliates" means more than one of them;
1.1.8 "OBJECTION" means, in respect of any Claim, any
objection raised in the Response by any of the Vendors
to such Claim;
1.1.9 "PROCEEDS" has the meaning ascribed thereto in Section
3.2 hereof;
1.1.10 "PURCHASE AGREEMENT" has the meaning ascribed thereto in
the preamble to this Agreement;
1.1.11 "RELEASED SHARES" has the meaning ascribed thereto in
Section 3.5.1.1 hereof;
1.1.12 "RESPONSE" means, in respect of any Claim, the joint
written response of the representatives of the Vendors
duly appointed in the manner set forth in Section 3.1
hereof indicating whether they accept or dispute such
Claim;
1.1.13 "SPECIFIC CONTINGENCY" means any of the specific
contingencies referred to in Section 8 of the Purchase
Agreement; and
1.1.14 "VENDORS" means Xxxxxxxxxxxx, Albers, Fischer, Innovent,
Hassler, Joller, Karabelnik and Wicki.
1.2 Each capitalized term used in this Agreement but not defined
herein as the meaning ascribed thereto in the Purchase
Agreement.
1.3 In the event of (i) any subdivision, consolidation or
reclassification of the class of shares comprising the Escrowed
Shares or (ii) any reorganization of the share capital of
Phoenix affecting the Escrowed Shares or (iii) the amalgamation
of Phoenix with any other company, the number of Escrowed Shares
and Escrowed Share Price shall be adjusted, if required, so that
none of the parties hereto shall be in a position less favorable
to it than as provided in this Agreement as a result of any of
the foregoing actions.
1.4 For all purposes of this Agreement, the amount of any Claim in a
currency other than Canadian dollars shall be converted to
Canadian dollars at the exchange rate between Canadian and such
currency shall be the "Spot Rate" of the alternate currency on
the business day preceding the day as of which the conversion
from one currency to the other is to be effected, as reported in
the Financial Post of Canada on that day.
1.5 In any calculation hereunder of the applicable number of
Escrowed Shares results in fractional shares, the result shall
be rounded up or down, as the case may be, to the nearest
-4-
whole number and, if such result represents exactly one-half of
a whole number, then such fraction shall be rounded up to the
next whole number.
2. ESTABLISHMENT OF ESCROW
2.1 Phoenix hereby delivers in escrow to the Escrow Agent
certificates representing an aggregate of 176,507 common shares
of Phoenix registered in the name of the Escrow Agent, as escrow
agent (the "Escrowed Shares"). The Vendors' interests in the
Escrowed Shares are as set forth below:
VENDOR ESCROWED SHARES
------ ---------------
Xxxxxxxxxxxx 29,559
Xxxxxx 27,653
Xxxxxxx 14,844
Innovent 30,595
Xxxxxxx 2,059
Joller 8,708
Karabelnik 29,553
Wicki 33,536
2.2 The Escrow Agent hereby accepts delivery and acknowledges
receipt of the Escrowed Shares and agrees to act as escrow agent
and to hold, safeguard and release the Escrowed Shares in
accordance with the provisions of this Agreement. The Escrowed
Shares shall not be assigned, hypothecated, alienated, released
from escrow, transferred within escrow or dealt with in any
manner whatsoever except as provided in this Agreement.
2.3 Notwithstanding the registration of the Escrowed Shares in the
name of the Escrow Agent, the Vendors shall, subject to the
provisions hereof, remain the owners thereof in the proportion
contemplated by Section 2.1 hereof and be entitled to the
exercise of all voting rights related thereto and to receive all
dividends, income and other distributions in respect thereof
(collectively, "Distributions"). In the event that any Escrowed
Shares are remitted to Phoenix for cancellation pursuant to the
provisions of Section 3 hereof, the Vendors shall repay to
Phoenix any Distributions received in respect of such Escrowed
Shares.
3. INSTRUCTIONS TO ESCROW AGENT
3.1 All communications made by the Vendors, including instructions
to the Escrow Agent or Responses hereunder, shall be made by
Wicki and Xxxxxxxxxxxx jointly on behalf of the Vendors. All of
the Vendors hereby authorize Wicki and Xxxxxxxxxxxx jointly to
duly represent them in accordance with all communications under
this Agreement. Should the Vendors wish to withdraw this
authorization and to designate new representatives they have
-5-
to do so jointly and by notifying Phoenix and the Escrow Agent
in accordance with Section 7 hereof.
3.2 At any time while the Escrowed Shares are held by the Escrow
Agent, a Non-Affiliate may instruct the Escrow Agent in writing
to sell all or part of such Non-Affiliate's portion of the
Escrowed Shares. Upon receipt of such written instruction, the
Escrow Agent shall sell such Escrowed Shares on the open market
and shall retain the proceeds of sale, less any expenses
incurred in realizing such sale (the "Proceeds") as escrowed
property for such Non-Affiliate. The Escrow Agent shall invest
such Proceeds according to the written instructions of such
Non-Affiliate for the duration of the escrow. The Escrow Agent
shall keep complete records of any such sales of Escrowed
Shares.
3.3 At any time after receipt by the Escrow Agent of written notice
by Phoenix of the release, in the format prescribed by the SEC,
of at least 30 days of post-combination financial results of
Phoenix and ANAWA Holding AG, and provided that the Escrowed
Shares are not then subject to any restrictions on transfer
imposed by any Regulatory Authority, an Affiliate may also
instruct the Escrow Agent to sell all or part of their portion
of the Escrowed Shares in the manner set forth in Section 3.2.
In such event, the Escrow Agent shall proceed as set forth in
Section 3.2.
3.4 Whenever Phoenix has a Claim it shall promptly give a Notice of
Claim in respect thereof to the Vendors and the Escrow Agent.
Upon receipt of a Notice of Claim, the Escrow Agent shall
immediately reserve for distribution in accordance with the
provisions of Section 3.5 hereof (but shall not release from
escrow except in accordance with the provisions hereof) that
number of the Escrowed Shares which is equal in value to the
amount provided for in the Notice of Claim, calculated on the
basis of the Escrowed Share Price for such Claim.
3.5 Within 15 days of receipt of a Notice of Claim, the Vendors (or
any of them) shall give to Phoenix and the Escrow Agent a
Response with respect to each Claim set forth therein. If:
3.5.1 the Response indicates that the Vendors accept a Claim
set forth in the Notice of Claim, or if the Escrow Agent
does not receive a Response with respect to a Claim
within said 15 day period, the Vendors shall be deemed
to have irrevocably consented to each Claim so accepted
or in respect of which no Response is so received, as
made, and the Escrow Agent shall forthwith give written
notice thereof to Phoenix:
3.5.1.1 setting forth the total amount of all Claims which have
been consented to and the number of shares from the
Escrowed Shares to be released from escrow for the
benefit of Phoenix (the "Released Shares"), being that
number of the Escrowed Shares which is equal in value to
the amount of the admitted Claims set forth in such
Notice of Claim, calculated on the basis of the Escrowed
Share Price for such Claim; and
3.5.1.2 surrender for cancellation to Phoenix the share
certificate(s) in its possession representing the
Released Shares, duly endorsed for transfer, and the
Escrow Agent shall retain in its possession the other
share certificate(s) representing the balance of the
Escrowed Shares, if any, to be held by it in escrow and
dealt with in accordance with the terms hereof; or
-6-
3.5.2 the Response indicates that the Vendors (or any of them)
dispute a Claim set forth in the Notice of Claim
(whether or nor arbitration proceedings have been
instituted), the Escrow Agent shall retain in its
possession and continue to hold in escrow that number of
the Escrowed Shares which is equal in value to the
amount provided for in the disputed Claims, calculated
on the basis of the Escrowed Share Price for such Claim:
3.5.2.1 until the Escrow Agent receives a joint
written notice from Phoenix and the Vendors
directing the Escrow Agent as to the manner
in which such Escrowed Shares and the share
certificate(s) representing same are to be
dealt with, in which case the Escrow Agent
shall deal with same in accordance with such
joint written instructions; or
3.5.2.2 in the absence of such a joint written notice
within 10 business days of the Escrow Agent's
receipt of the Response, the Escrow Agent
shall deal with such Escrowed Shares and the
share certificate(s) representing same in
accordance with a final arbitration order in
respect of such disputed Claim(s) pursuant to
the arbitration contemplated by Section 12
hereof. Any arbitration order shall be
accompanied by a legal opinion by counsel for
the presenting party satisfactory to the
Escrow Agent to the effect that the said
order is final and non-appealable.
3.6 If, at the time of receipt by the Escrow Agent of any Notice of
Claim as provided for in Section 3.4 hereof, the Escrowed Shares
remaining in escrow for the account of any Vendor calculated on
the basis of the Escrowed Share Price is insufficient to meet
such Vendor's pro rata portion of the number of Released Shares
to be remitted to Phoenix, the balance of such Vendor's pro rata
portion of the admitted Claims shall be satisfied by payment in
cash from the Proceeds of those Escrowed Shares sold by the
Escrow Agent at the direction of such Vendor pursuant to Section
3.2 or 3.3 hereof.
3.7 On the earlier of (i) November 30, 1998, or (ii) the date at
which the Escrow Agent receives a notice from Phoenix confirming
that the audit of the combined financial statements of Phoenix
and ANAWA Holding AG has been completed, the Escrow Agent will
deliver the Escrowed Shares and all Distributions and Proceeds
to the Vendors, pro rata to their respective interests in the
Escrowed Shares, Distributions and Proceeds, if any, with the
exception of such number of Escrowed Shares calculated on the
basis of the Escrowed Share Price as may be necessary to satisfy
any obligation to indemnify for a Specific Contingency which has
not yet occurred. The notice from Phoenix referred to above
shall indicate the maximum amount of Specific Contingencies
which have not been prescribed or definitively settled and the
number of Escrowed Shares, calculated on the basis of the
Escrowed Share Price, which may not be released from the escrow
for such Specific Contingencies. In calculating the maximum
amount of Specific Contingencies which have not been prescribed
or definitively settled and the number of Escrowed Shares which
may be released, Phoenix and the Vendors acknowledge that the
number of Escrowed Shares relating to the Specific Contingency
referred to in Section 8.2 of the Purchase Agreement is
calculated using the Escrowed Share Price provided in Section
1.1.5 hereof and an amount of SFr220,000 as opposed to
Sfr1,100,000. The number of Escrowed Shares relating to any
other Specific Contingency is calculated using the amounts
mentioned in
-7-
Section 8 of the Purchase Agreement and the Escrowed Share Price
provided in Section 1.1.5 hereof.
3.8 Upon receipt by the Escrow Agent from Phoenix of a written
notice instructing it to release, pro rata to the Vendors, such
further number of Escrowed Shares as is no longer necessary to
satisfy remaining indemnification obligations in respect of the
maximum amount of remaining Specific Contingencies which have
been prescribed or definitively settled, the Escrow Agent shall
so release such number of Escrowed Shares to the Vendors, pro
rata to their respective interests in the Escrowed Shares,
Distributions and Proceeds, if any. It is agreed between Phoenix
and the Vendors that the Specific Contingency referred to in
Section 8.2 of the Purchase Agreement will be considered
prescribed or definitively settled for the purposes hereof if on
the third anniversary hereof no legal proceedings have been
instituted against ANAWA Holding AG by Xx. Xxxxxx AG. Phoenix
hereby undertakes to notify the Escrow Agent promptly when a
Specific Contingency becomes prescribed or definitively settled.
4. VOTING RIGHTS
4.1 The Escrow Agent shall provide to each of the Vendors a proxy
entitling such Vendor to vote those of the Escrowed Shares which
are owned by it, forthwith upon the Escrow Agent's receipt
thereof in its capacity as registered shareholder of Phoenix, in
order to allow each Vendor to vote its Escrowed Shares in the
same manner as if it were the registered owner thereof.
5. RIGHTS AND OBLIGATIONS OF THE ESCROW AGENT
5.1 The Escrow Agent is not a party to, and is not bound by, any
provisions which may be evidenced by, or arise out of, any
agreement other than as therein set forth under the express
provisions of this Agreement.
5.2 The Escrow Agent acts hereunder as a depositary only and is not
responsible or liable in any manner whatever for the
sufficiency, correctness, genuineness or validity of any
instrument deposited with it, or for the form of execution of
such instrument or for the identity or authority or right of any
person or party executing or depositing it.
5.3 The Escrow Agent shall not be under any duty to give the
Escrowed Shares, Distributions and Proceeds, if any, held by it
hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds
held hereunder except as directed in this Agreement. Uninvested
funds held hereunder shall not earn or accrue interest.
5.4 The Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to
claims based upon such gross negligence or willful misconduct
that are successfully asserted against the Escrow Agent, the
other parties hereto shall solidarily indemnify and hold
harmless the Escrow Agent (and any successor Escrow Agent) from
and against any and all losses, liabilities, claims, actions,
damages and expenses, including reasonable attorney's fees and
disbursements, arising out of and in connection with this
Agreement. Without limiting the foregoing, the Escrow Agent
shall in no event be liable in connection with its investment or
reinvestment of any cash held by it hereunder in good faith, in
accordance with the terms hereof.
-8-
5.5 The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other
writing delivered to it hereunder without being required to
determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of the service thereof. The
Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the
person purporting to give receipt or advice or make any
statement or execute any document in connection with the
provisions hereof has been duly authorized to do so. The Escrow
Agent may conclusively presume that the undersigned
representative of any party hereto which is an entity other than
a natural person has full power and authority to instruct the
Escrow Agent on behalf of that party unless written notice to
the contrary is delivered to the Escrow Agent.
5.6 The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Agreement and shall not
be liable for any action taken or omitted by it in good faith in
accordance with such advice.
5.7 The Escrow Agent makes no representation as to the validity,
value, genuineness or the collectability of any security or
other document or instrument held by or delivered to it.
5.8 The Escrow Agent shall not be called upon to advise any party as
to the wisdom in selling or retaining or taking or refraining
from any action with respect to any securities or other property
deposited hereunder.
5.9 The Escrow Agent (and any successor Escrow Agent) may at any
time resign as such by delivering the Escrowed Shares,
Distributions and Proceeds, if any, to any successor Escrow
Agent jointly designated by the other parties hereto in writing,
or to any court of competent jurisdiction, whereupon Escrow
Agent shall be discharged of and from any and all further
obligations arising in connection with this Agreement. The
resignation of Escrow Agent will take effect on the earlier of
(a) the appointment of a successor (including a court of
competent jurisdiction) or (b) the day which is 30 days after
the date of delivery of its written notice of resignation to the
other parties hereto. If at that time Escrow Agent has not
received a designation of a successor Escrow Agent, Escrow
Agent's sole responsibility after that time shall be to retain
and safeguard the Escrowed Shares and Proceeds, if any, until
receipt of a designation of successor Escrow Agent or a joint
written disposition instruction by the other parties hereto or a
final non-appealable order of a court of competent jurisdiction.
5.10 Phoenix and the Vendors shall pay Escrow Agent compensation (as
payment in full) for the services to be rendered by Escrow Agent
hereunder in the amount of $1,500 at the time of execution of
this Agreement and agree to reimburse Escrow Agent for all
reasonable expenses, disbursements and advances incurred or made
by Escrow Agent in performance of its duties hereunder
(including reasonable fees, expenses and disbursements of its
counsel).
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6. LIMITED RESPONSIBILITY
This Agreement expressly sets forth all the duties of Escrow Agent with
respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Agreement against the Escrow Agent.
The Escrow Agent shall not be bound by the provisions of any agreement
among the other parties hereto except this Agreement. No trust is
created by this Agreement and the Escrow Agent does not act in any
capacity as a trustee. In the event of any disagreement between any of
the parties to this Agreement, or between them or either of them and any
other person, resulting in demands or adverse claims being made in
connection with or for any asset involved herein or affected hereby, the
Escrow Agent shall be entitled, at its discretion, to refuse to comply
with any demands or claims on it, as long as such disagreement shall
continue, and in so refusing the Escrow Agent may make no delivery or
other disposition of any asset involved herein or affected hereby, and
in so doing the Escrow Agent shall not be or become liable in any way or
to any person or party for its failure or refusal to comply with such
conflicting demands or adverse claims, and it shall be entitled to
continue so to refrain from acting and so to refuse to act until the
right of person or party shall have been finally settled as provided in
Section 12 hereof, or all differences shall have been adjusted by
agreement and the Escrow Agent shall have been notified thereof in
writing signed by all persons and parties interested.
7. NOTICES
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt) provided that
a copy is mailed by registered mail, return receipt requested, or (c)
when received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case the
appropriate addresses and telecopier numbers set forth below (or to such
other addresses and telecopier numbers as a party may designate by
notice to the other parties):
7.1 To Phoenix:
Phoenix International Life Sciences Inc.
0000, Xxxxx Xxxxxx
Xxxxx-Xxxxxxx, Xxxxxx
X0X 0X0 Xxxxxx
Telecopier No.: (000) 000-0000
ATTENTION: XXXX-XXXX XXXXX
To the Vendors:
7.2 To Xxxxxxxxxxxx:
Xx. Xxxxxx Xxxxx Xxxxxxxxxxxx
Xxxxxxxxxxxxxxxx 00
0000 Xxxxxx, Xxxxxxxxxxx
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7.3 To Xxxxxx:
Xxxxxx & Co.
Xxxxxxxxxxxxx 00
0000 Xxxxxx, Xxxxxxxxxxx
Postal address:
Xxxxxxxxxxxxx 00
Xxxxxxxx 0000
0000 Xxxxxx, Xxxxxxxxxxx
Telecopier No.: (000) 000-0000
7.4 To Xxxxxxx:
Dr. Xxxxx Xxxxxxx
Xxxxxxxxxxxxxxxx 00
0000 Xxxxxxxxx, Xxxxxxxxxxx
7.5 To Innovent:
Innovent Capital Ltd.
Midland Bank Trust Building
P.O. Box 1109, Fort Street
Grand Cayman, B.W.I.
Telecopier No.: (000) 000-0000
7.6 To Xxxxxxx:
Xxxxxx Xxxxxxx
Xxxxxxxxxxxxxx 00
0000 Xxxxxxxxx, Xxxxxxxxxxx
7.7 To Joller:
Xx. Xxxxx Xxxxxx
Xxxxxxxxxxxxxxxxx 0
0000 Xxxxxx, Xxxxxxxxxxx
7.8 To Karabelnik:
Xx. Xxxxx Xxxxxxxxxx
Untere Xxxxxxx 00
0000 Xxxxxxxx, Xxxxxxxxxxx
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7.9 To Wicki:
Xx. Xxxxxxx Xxxxx
Xxxxxxxxxxx 00
0000 Xxxxxxxx, Xxxxxxxxxxx
7.10 To the Escrow Agent:
Montreal Trust Company
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxxxxx (Xxxxxx)
X0X 0X0
Telecopier No.: (000) 000-0000
8. GOVERNING LAW
This Agreement shall be governed by the laws of the Province of Quebec
and the laws of Canada applicable therein.
9. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original and all of which, when taken
together, will be deemed to constitute one and the same.
10. SECTION HEADINGS
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.
11. WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one party, in whole
or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other parties; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party
giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in
this Agreement.
-12-
12. ARBITRATION
All disputes arising out of or in connection with the present Agreement
shall be finally settled under the Rules of Arbitration of the
International Chamber of Commerce by one or more arbitrators appointed
in accordance with the said Rules. The place of arbitration shall be
Montreal. The language of the arbitration shall be English.
13. CONFIDENTIALITY
The parties agree to treat this Agreement as confidential and not to
disclose its contents to third parties other than their advisers, except
to the extent necessary to enforce performance of obligations hereunder,
or as is required to comply with applicable laws or regulations,
including regulations of any stock exchange on which the securities of
Phoenix are listed.
14. FURTHER ASSURANCES
The parties shall, with all reasonable diligence, do all such things and
provide all such reasonable assurances as may be required to consummate
the transactions contemplated hereby, and each party shall provide such
further documents or instruments required by another party as may be
reasonably necessary or desirable to give effect to the purpose of this
Agreement and to carry out its provisions.
15. GENERAL
The invalidity or unenforceability of any term or provision hereof shall
not affect the validity or enforceability of any other term or provision
hereof. This Agreement and the other documents and instruments referred
to herein constitute the entire understanding of the parties hereto with
respect to the subject matter hereof and thereof and supersede all
present and prior agreements, whether written or oral. This Agreement
shall bind and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and assigns.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
PHOENIX INTERNATIONAL LIFE SCIENCES INC.
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxx
Title: Senior Vice-President Analytical
Services
/s/ Johann Xxxxx Xxxxxxxxxxxx
-------------------------------------
XX. XXXXXX XXXXX XXXXXXXXXXXX
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XXXXXX & CO.
By: /s/ Johann Xxxxx Xxxxxxxxxxxx
-------------------------------------
Xx. Xxxxxx Xxxxx Xxxxxxxxxxxx
/s/ Xxxxx Xxxxxxx
-------------------------------------
DR. XXXXX XXXXXXX
INNOVENT CAPITAL LTD.
By: /s/ Johann Xxxxx Xxxxxxxxxxxx
-------------------------------------
Xx. Xxxxxx Xxxxx Xxxxxxxxxxxx
/s/ Xxxxxx Xxxxxxx
-------------------------------------
XXXXXX XXXXXXX
/s/ Xxxxx Xxxxxx
-------------------------------------
XX. XXXXX XXXXXX
/s/ Xxxxx Xxxxxxxxxx
-------------------------------------
XX. XXXXX XXXXXXXXXX
/s/ Xxxxxxx Xxxxx
-------------------------------------
XX. XXXXXXX XXXXX
MONTREAL TRUST COMPANY
By: /s/ Xxxxxxxxxx Xxxxxx
-------------------------------------
XXXXXXXXXX XXXXXX
Title: Senior Trust Officer
By: /s/ Xxxxxxxx Xxxxxxxxxx
-------------------------------------
XXXXXXXX XXXXXXXXXX
Title: Account Manager
