1
EXHIBIT 2.2
VOTING SHARE PURCHASE AGREEMENT
between
1. ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
2. ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
3. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇, ▇-▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
4. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, c/▇ ▇▇▇▇▇▇▇, Gutzwiller & ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
hereinafter referred to as the Sellers
and
DISCOVERY PARTNERS INTERNATIONAL, INC., whose registered office is located at
11149 North ▇▇▇▇▇▇ ▇▇▇▇▇ Road, registered in ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
represented by ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in his capacity as Chief Executive
Officer, duly empowered for the purposes hereof pursuant to the Minutes of
Regular Meeting of the Board of Directors of Discovery Partners International,
Inc., of July 8, 1999, the original of which shall be attached hereto (Appendix
1)
hereinafter referred to as the Buyer
-----------------------------------------
RECITALS
1. Discovery Technologies Ltd. (hereunder referred to as the "Company"), is
a Swiss Company whose registered office is located at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ with an issued Voting Share Capital of
CHF 500'000 (five-hundred thousand Swiss Francs) divided into 2'000
registered shares with a nominal value of CHF 100 each and 300
registered shares with a nominal value of CHF 1,000 each and a
Non-Voting Capital of CHF 1,000,000 (one million Swiss Francs) divided
into 1,000 registered Non-Voting Shares with a nominal value of CHF
1,000 each.
The nominal value of all Voting Shares and of all Non-Voting Shares is
fully paid up.
2. At the date hereof, all Voting Shares of the Company are held and they
will be held on the First Completion Date (such as defined in Clause 6.1
hereunder), by the Sellers.
3. The Sellers wish to sell to the Buyer, and the Buyer wishes to buy from
the Sellers all of the Voting Shares of the Company together with all
rights which are now, or at any time hereafter may become, attached to
them. Therefore, under this Agreement the Buyer will buy and the Sellers
will sell 40% of the Voting Share Capital and the Sellers grant to the
Buyer a right to buy the remaining 60% of the Voting Share Capital of
the Company under certain conditions.
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Voting Share Purchase Agreement -2-
4. At the date hereof, all Non-Voting Shares of the Company are held by
Novartis. The Buyer intends to buy and Novartis agrees to sell (letter
of May 27, ▇▇▇▇ ▇▇▇▇▇▇▇▇ 31) under certain conditions all of the
Non-Voting Shares for a price of CHF 2,500,000 (two million five hundred
thousand Swiss Francs) under a Non-Voting Share Purchase agreement to
the Buyer. The Sellers agree to support in good faith the Buyer in the
acquisition of the Non-Voting Shares currently owned by Novartis. The
Sellers agree to avoid everything that could endanger the Purchase of
all of the Non-Voting Shares by the Buyer.
5. The Buyer is aware of the existence of the Option Agreement between
Novartis AG, represented by Novartis Venture Fund, and Discovery
Technologies AG, as well as ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Bureco AG, dated December 22, 1997 (Appendix 29)
NOW THEREFORE, THE BUYER AND THE SELLERS HAVE AGREED AS FOLLOWS:
CLAUSE 1 - DEFINITIONS
Pursuant to this Agreement, the following terms and expressions are defined as
follows:
ACCOUNTS
The audited balance sheet and profit and loss statement of the Company
for the financial year ended December 31, 1998 and the audited balance
sheet and profit and loss statement of the Company drawn up as at June
30, 1999.
VOTING SHARES/VOTING SHARE CAPITAL
Discovery Technologies Ltd. (hereunder referred to as the "Company") has
an issued Voting Share Capital of CHF 500'000 (five-hundred thousand
Swiss Francs) divided into 2'000 registered shares with a nominal value
of CHF 100 each and 300 registered shares with a nominal value of CHF
1,000 each. According to the by-laws, each Voting Share has one vote.
NON-VOTING SHARES/NON-VOTING SHARE CAPITAL
The Company has an issued Non-Voting Share Capital of CHF 1,000,000 (one
million Swiss Francs) divided into 1000 registered Non-Voting Shares
with a nominal value of CHF 1,000 each (currently held by Novartis AG,
represented by Novartis Venture Fund).
EXPIRY DATE OF THE BUYER'S RIGHT TO BUY THE REMAINING 60% OF THE VOTING
SHARE CAPITAL The Expiry Date of the Buyer's right to buy the remaining
60% of the Voting Share Capital is a date not later than December 31,
1999.
COMPLETION DATE
The first Completion Date: The first Completion Date is a date not later
than August 10, 1999.
The second Completion Date: The second Completion Date is a date not
later than January, 31 2000.
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Voting Share Purchase Agreement -3-
AGREEMENT
The present Agreement and its appendices.
PARTY OR PARTIES
The Buyer and the Sellers or one of them individually or as the case may
be.
DUE DILIGENCE REVIEW
THE FINANCIAL, LEGAL AND TAX REVIEW REPORT made by ATAG Ernst and Young
on behalf of the Buyer and based on the information given by the
Sellers, laid down in the Report dated July 27, 1999 (attached in
Appendix 6);
THE TECHNICAL DUE DILIGENCE REPORT, made by the Buyer and based on the
information given by the Sellers, laid down in the Report dated July
19/20, 1999 (attached in Appendix 14).
CLAUSE 2 - PURCHASE AND SALE OF THE SHARES
Pursuant to the terms and conditions provided for herein, and with the ordinary
and legal guarantees, the Sellers agree to sell and the Buyer, in consideration
of the representations and warranties given by the Sellers, such as set forth
hereunder, agrees to buy 40% of the Voting Shares making up 40% of the Voting
Share Capital of the Company. Furthermore the Sellers will sell and the Buyer
will buy, under the conditions precedent in Clause 4.6 to 4.15, the remaining
60% of the Voting Share Capital of the Company.
Therefore the Buyer will buy from the Sellers and the Sellers will sell to the
Buyer 40% of the Voting Share Capital (40% of the votes and 40% of the nominal
Voting Share Capital) of the Company upon the First Completion Date. Effective
from the First Completion Date the Sellers grant to the Buyer and the Buyer
receives from the Sellers an exclusive and irrevocable right to buy the rest of
the Voting Share Capital of the Company (60% of the votes and 60% of the nominal
Voting Share Capital) to the terms and conditions provided for herein. The
Sellers will sell upon the Buyer exercising his right to buy the rest of the
Voting Shares to the Buyer. The Buyer's right to buy expires latest on December
31, 1999 and has to be communicated to the Sellers by registered mail, posted
latest on the Expiry Date.
CLAUSE 3 - PURCHASE PRICE
The Total Purchase Price for all of the outstanding Voting Share Capital of the
Company shall not exceed CHF 7,000,000 (seven million Swiss Francs) and is
composed of a fixed amount and of an amount depending on the Company's future
results.
a) PURCHASE PRICE FOR 40% OF THE VOTING SHARE CAPITAL OF THE COMPANY:
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Voting Share Purchase Agreement -4-
3.1. The Buyer will buy from the Sellers 40% of the outstanding Voting Share
Capital of the Company for a price of CHF 2,750,000 (two million seven
hundred fifty thousand Swiss Francs) (fixed amount).
3.2. The Buyer shall pay a fixed amount of CHF 2,750,000 (two million seven
hundred and fifty thousand Swiss Francs) upon the First Completion Date.
b) EXCLUSIVE AND IRREVOCABLE RIGHT TO BUY THE REMAINING 60% OF THE VOTING
SHARE CAPITAL OF THE COMPANY:
3.3. If the Buyer exercises his right to buy the remaining 60% of the Voting
Share Capital, the Sellers will sell to the Buyer the remaining 60% of
the Voting Share Capital for a price determined in Clause 3.4 and 3.5
not exceeding CHF 4,250,000 (four million two hundred and fifty thousand
Swiss Francs). The Purchase Price shall be paid in two installments as
follows:
3.4. The Buyer has to pay as a first installment by the later of February 15,
2000 or the day the Company's independent auditors release the December
31, 1999 audited financial statements, up to CHF 2,750,000 (two million
seven hundred fifty thousand Swiss Francs), an amount calculated as a
function (defined in Appendix 2) of total ---------- actual Gross Sales
during calendar 1999 relative to projected Gross Sales of CHF 7,400,000
(seven million four hundred thousand Swiss Francs) and total actual
EBITDA during calendar 1999 relative to projected EBITDA of at least CHF
1,385,000 (one million three hundred eighty five thousand Swiss Francs)
for the same period.
3.5. As a second installment the Buyer has to pay by the later of February
15, 2001 or the day the Company's independent auditors release the
December 31, 2000 audited financial statements, up to CHF 1,500,000 (one
million five hundred thousand Swiss Francs), an amount calculated as a
function (defined in Appendix 2) of total actual Gross Sales during
calendar 2000 relative to projected Gross Sales of CHF 9,900,000 (nine
million nine hundred thousand Swiss Francs) and total actual EBITDA
during calendar 2000 relative to projected EBITDA of at least CHF
2,108,000 (two million one hundred eight thousand Swiss Francs) for the
same period.
3.6. The payments under Clause 3.4 and 3.5 and consequently the Purchase
Price for the remaining 60% of the Voting Share Capital will be reduced
if the projected Gross Sales and EBITDA are not reached by the Company
as provided in Appendix 2.
c) PAYMENT OF PURCHASE PRICE
The Purchase Price referred to in Clauses 3.2, 3.4 and 3.5 hereunder
will be paid by the Buyer by bank checks drawn on a Swiss bank and in
accordance to the allocation instructions of the Sellers according to
Appendix 3. The allocation of the sale price among each of the Sellers
is not the Buyers responsibility.
d) STOCK OPTIONS
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Voting Share Purchase Agreement -5-
The first payment (Clause 3.2) shall be paid by bank checks in
accordance with Clause 3.c above. Each Seller may elect to receive the
rest of the payment, first and/or second installment (Clause 3.4 and
3.5) in cash, preferred stock of the Buyer, or a combination thereof.
Preferred stock will be valued at the price of the most recent preferred
series round prior to the Date of the first installment for the first
installment and of the second installment for the second installment.
The Sellers will inform the Buyer in writing whether and how much of the
respective payments shall be paid in preferred stock of the Buyer at
least 30 days prior to the respective payments (installments).
CLAUSE 4 - CONDITIONS PRECEDENT
a) CONDITIONS PRECEDENT FOR THE ENTERING INTO FORCE OF THIS AGREEMENT
This Agreement is entering into force subject to the following
conditions precedent which must all be satisfied in full and
definitively. The conditions precedent under Clause 4.1 to 4.5 have to
be satisfied at the latest on the first Completion Date. If one or more
conditions precedent are not satisfied within the period mentioned
above, this Agreement will automatically become null and void, without
any claim for compensation for any of the Parties, unless the Parties
agree otherwise.
The conditions precedent under Clause 4.1 to 4.4 are, however,
stipulated in the sole interest of the Buyer. Therefore, if any or all
of the conditions precedent have not been satisfied latest on the First
Completion Date, the Buyer may waive the benefit of said conditions
precedent and request the proper performance of the Agreement.
The conditions precedent are:
4.1. The current management agrees to remain with the Company as follows: ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ agrees to sign an employment agreement prior to the
first Completion Date, in a full-time capacity with the Company for a
term of not less than two years, from the First Completion Date. ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ agrees to sign an employment agreement prior to the
first Completion Date, in a full-time capacity with the Company for a
term of not less than two years, from the First Completion Date. ▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ agrees to sign a consulting agreement prior to the First
Completion Date.
4.2. All of the Clause 7 representations, warranties and convenants are true
on the First Completion Date as if made on and as of the First
Completion Date.
4.3. The Sellers agree, that ATAG Ernst & Young AG, Basel will be elected as
an auditor of the Company up from the financial year 1999.
4.4. The Sellers and the Buyer will sign a Shareholders Agreement along the
lines of Appendix 4.
4.5. The Sellers and the Buyer will sign an Escrow Agreement along the lines
of Appendix 5.
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Voting Share Purchase Agreement -6-
The Parties will immediately notify each other in writing of the
occurrence of any event resulting in or likely to result in the
non-fulfillment of one of these conditions precedent prior to signing of
this Agreement or prior to the First Completion Date.
b) CONDITIONS PRECEDENT FOR THE RIGHT OF THE BUYER TO BUY THE REMAINING 60%
OF THE VOTING SHARE CAPITAL OF THE COMPANY
The right to buy the remaining 60% of the Voting Share Capital of the
Company is entering into force subject to the following conditions
precedent which must all be satisfied in full and definitively. The
conditions precedent under Clause 4.6 to 4.1 0 have to be satisfied at
the latest on December 31, 1 999. If one or more conditions precedent
are not satisfied within the period mentioned above, this right to buy
granted by the Sellers to the Buyer will automatically become null and
void, without any claim for compensation for any of the Parties, unless
the Parties agree otherwise.
The conditions precedent under Clause 4.6 to 4.8 are, however,
stipulated in the interest of the Sellers. The Sellers agree to support
in good faith the fulfillment of the conditions under Clause 4.6 to 4.8
at the latest on December 31, 1999. In case of non-compliance with this
obligation of good faith by the Sellers, it will be deemed that the
Sellers have waived the benefit of said conditions and the Buyer may
request the proper performance of the agreement.
The conditions precedent under Clause 4.9 to 4.1 0 are, however,
stipulated in the sole interest of the Buyer. Therefore, if any or all
of these conditions precedent have not been satisfied at the latest on
December 31, 1999, the Buyer may waive the benefit of said conditions
precedent and request the proper performance of the Agreement.
The conditions precedent are:
4.6. The Buyer has acquired all of the Company's Non-Voting Share Capital
from Novartis for the amount of CHF 2,500,000 (two million five hundred
thousand Swiss Francs) and Novartis has agreed to a repayment of the
loan in the amount of CHF 2,600,000 (two million six hundred thousand
Swiss Francs). The debt restructuring is at the Buyer's responsibility.
4.7. ▇▇▇▇▇▇ Kantonalbank (BKB) has agreed to the termination of the guarantee
in the amount of CHF 1,000,000 (one million Swiss Francs) granted by
Novartis AG, represented by Novartis Venture Fund or another appropriate
solution regarding this guarantee has been found.
4.8. BKB has agreed to the continuation of the loan agreement dated November
6, 1997 (line of credit of CHF 3,000,000 (three million Swiss Francs)),
and October 7, 1998 (working capital credit limit of CHF 950'000 (nine
hundred fifty thousand Swiss Francs)) if and when the Company is
controlled by the Buyer. If BKB does not agree to continue these loans,
the Buyer and the Sellers agree to support any other appropriate
solution.
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Voting Share Purchase Agreement -7-
4.9. The Company granted to the members of the Scientific Advisory Board
(SAB) and separately to ▇▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ the right to participate in
the Non-Voting Capital of the Company. The Sellers confirm, that all the
members of the SAB have waived this right or the Parties have agreed to
another solution.
4.10. Moreover, all individuals or legal entities who have entered into a
contract with the Company, which includes provisions allowing said
persons to terminate the contract if there is a change in the ownership
of the Company or its subsidiaries, have waived said provisions in
writing, or the Sellers will cause them to waive said provisions in
writing by no later than the Second Completion Date, in connection with
the operations provided for under this Agreement.
The Parties will immediately notify each other in writing of the
occurrence of any event resulting in or likely to result in the
non-fulfillment of one of these conditions precedent prior to signing of
this Agreement or prior to the Second Completion Date.
c) CONDITIONS PRECEDENT FOR AN OBLIGATION OF THE BUYER TO PURCHASE THE
REMAINING 60% OF THE VOTING SHARE CAPITAL OF THE COMPANY
The Parties are aware that after completion of the purchase of the first
40% of the Voting Share Capital of the Company, it is in the interest
and intent of both Parties to transfer the remaining 60% of the Voting
Share Capital of the Company from the Sellers to the Buyer. Therefore,
the Buyer agrees to and will be obliged to exercise its right to buy the
remaining 60% of the Voting Share Capital of the Company if the
following conditions precedent are satisfied at the latest on December
31, 1999.
If one or more of the following conditions precedent are not satisfied
within the period mentioned above, the Buyer will not be obliged to
exercise its right to buy the remaining 60% of the Voting Share Capital
of the Company, but may choose to exercise this right at his own
discretion within the confines of Clause 4 section b above (conditions
precedent for the right of the Buyer to purchase the remaining 60% of
the Voting Capital of the Company).
The conditions precedent are:
4.11. The Buyer has completed the sale of its newly created equity capital
which yields net cash proceeds to the Buyer of not less than CHF
16,000,000 (sixteen million Swiss Francs). This sum is in the best
estimation of the Parties equivalent to the highest sum necessary to
purchase all of the Voting and Non-Voting Shares of the Company and to
repay all loans and lines of credit of the Company as per June 30, 1999;
4.12. The transfer of all of the Non-Voting Shares of the Company from
Novartis to the Buyer for a purchase price of CHF 2,500,000 (two million
and five hundred thousand Swiss Francs) has been completed;
4.13. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ and all members of the Scientific Advisory Board
have waived their rights in writing to participate in any Voting or
Non-Voting Capital of the Company;
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Voting Share Purchase Agreement -8-
4.14. All individuals or legal entities who have entered into contracts with
the Company entitling them to terminate said contracts in case of change
in ownership of the Company or its subsidiaries have waived such rights
in writing;
4.15. All of the representations and warranties set forth in Clauses 7.1 to
7.22 below are true and valid on and as of the Second Completion Date.
The Parties will immediately notify each other in writing of the
occurrence of any event resulting in or likely to result in the
non-fulfillment of one of these conditions precedent prior to signing of
this Agreement or prior to the Second Completion Date.
d) CONSEQUENCES OF NON-SATISFACTION OF CLAUSE 4.11
If the condition precedent set forth in Clause 4.11 above is not
satisfied by December 31, 1999, and as a consequence of this, the Buyer
chooses not to exercise its right to buy the remaining 60% of the Voting
Capital of the Company, then the Sellers will have the right to
repurchase from the Buyer the initial 40% of the Voting Shares of the
Company, for the same price initially paid by the Buyer. This right of
repurchase can only be exercised jointly by all Sellers. This right of
repurchase will expire at the latest on June 30, 2000.
Furthermore if the condition precedent set forth in Clause 4.11 above is
not satisfied by December 31, 1999 and as a consequence of this the
Buyer chooses not to exercise its right to buy the remaining 60 % of the
Voting Share Capital of the Company and the Sellers do not exercise
their right to repurchase the 40 % of the Voting Share Capital of the
Company, then the Buyer enters into the following undertakings:
i) The Buyer enters as party holding 40 % of the Voting Share Capital
into the Option Agreement (Appendix 29);
ii)In case of conflict with other provisions of this agreement and the
shareholder agreement (Appendix 4), the preceding provision shall
prevail.
CLAUSE 5 - INCENTIVE COMPENSATION
5.1. If the Buyer has acquired all of the Voting Share Capital of the
Company, then the Buyer agrees to implement appropriate incentive
compensation programs for the Company's employees and officers.
"Appropriateness" shall be determined by reference to the practices of
other companies owned or controlled by the Buyer. Any equity-based
incentives may be tied to the equity of the Buyer rather than of the
Company.
5.2. The Buyer agrees that the Sellers 1 to 3 stay members of the Board of
Directors until the last payment of the Total Purchase Price has been
paid by the Buyer
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Voting Share Purchase Agreement -9-
CLAUSE 6 - COMPLETION OF THE SALE
6.1. Sale of 40% of the Voting Shares will be completed, subject to
fulfillment of the conditions precedent set forth in Clause 4.1 to 4.5
above on a date (the 'First Completion Date') not later than August 10,
1999 at the Basel office of ATAG Ernst & Young.
6.2. The Sale of the remaining 60% of the Voting Share Capital of the Company
will be completed subject to fulfillment of the conditions precedent set
forth in Clause 4.6 to 4.10 above on a date (the 'Second Completion
Date') not later than January 31, 2000 at the Basel office of ATAG Ernst
& Young.
6.3. On the First Completion Date:
a) The Sellers will remit the following documents to the Buyer:
- A copy of the Voting Share Capital register and the Non-Voting
Share Capital register of the Company in which the Buyer has been
registered as the owner of 40 % of the Voting Shares as of the
First Completion Date of this Agreement, signed by the duly
authorized officers of the Company.
- A copy of the Company's records duly updated on the Completion
Date, including the minutes of board meetings and of
shareholders' general meetings.
- A copy of the minutes of the Company's board meeting held at the
latest on the Completion Date approving the Buyer as the new
owner of 40% of the Voting Shares of the Company; said minutes
must be certified true by ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ acting as the
Company's Chairman,
- A copy of the extra ordinary general assembly meeting held at the
latest on the first Completion Date approving ATAG Ernst & Young
AG, Basel as an auditor of the Company for the financial year
1999, appointing one new member of the Board of Directors, in
accordance with the instructions given by the Buyer and a second
member replacing Mr. Ch. ▇▇▇▇▇▇▇ as a member of the Board of
Directors, in accordance with the instructions given by the
Buyer.
- Letter of resignation of ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as member of the
Board of Directors effective as of the first Completion Date.
- A certified true copy of the Company's Articles of Association
and the most recent extract from the Trade Register.
b) The Sellers will remit the following documents to the Escrow Agent
under the Escrow Agreement (Appendix 5):
- The Voting Share Certificates no. 1, 4, 7, 10 and 13 representing
the Voting Shares nos. 1 to 266, 667 to 933, 1334 to 1600, 2001
to 2119 and 2300 duly endorsed to the Buyer and the Share
Certificates nos. 2, 3, 5, 6, 8, 9, 11 and 12 representing the
Shares nos. 267 to 532, 533 to 666, 934 to 1200, 1201 to 1333,
1601 to 1867, 1868 to 2000, 2120 to 2239 and 2240 to 2299.
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Voting Share Purchase Agreement -10-
c) Provided that the Sellers have remitted the documents indicated in
Clause 6.3a) and b) above, the Buyer will make the first Payment as
indicated in Clause 3.l.
6.4. On the Second Completion Date:
a) The Sellers will remit the following documents to the Buyer:
- A copy of the Voting Share Capital register and the Non-Voting
Share Capital register of the Company in which the Buyer has been
registered as the owner of all of the Voting Share Capital and as
the owner of all of the Non-Voting Share Capital as of the Second
Completion Date of this Agreement, signed by the duly authorized
officers of the Company.
- A copy of the minutes of the Company's board meeting held at the
latest on the Second Completion Date approving the Buyer as the
new Owner of all of the Voting Shares and of all of the
Non-Voting Shares of the Company and said minutes must be
certified true by the Company's Chairman.
b) The Sellers will duly endorse the Voting Share Certificates nos. 2,
3, 5, 6, 8, 9, 11 and 12 representing the Voting Shares nos. 267 to
532, 533 to 666, 934 to 1200, 1201 to 1333, 1601 to 1867, 1868 to
2000, 2120 to 2239 and 2240 to 2299 to the Buyer. The Share
Certificates will stay under the Escrow Agreement with the Escrow
agent according to Clause 12.
c) The Buyer will remit the following documents to the Sellers:
- Written Confirmation by the Buyer regarding the purchase of all
of the Non-Voting Capital from Novartis and the repayment of the
loan granted by Novartis to the Company to Novartis (see Clause
4.6).
- Written confirmation by the Buyer regarding the reimbursement of
the credits granted by BKB to the Company or written confirmation
of a new Agreement on the settlement of these credit facilities
(see Clause 4.8).
- Written confirmation by the Buyer that BKB agreed to the
termination of the guarantee granted by Novartis AG, represented
by Novartis Venture Fund of CHF 1,000,000 (one million Swiss
Francs).
d) Provided that the Sellers have remitted the documents indicated in
Clause 6.4a) and fulfilled the requirements in Clause 6.4. b) above,
the Buyer will make payment of the Purchase Price as indicated in
Clause 3.4 and 3.5 and 3.6.
CLAUSE 7 - REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers are deemed to be completely familiar with the Company, its
situation, its activities and commitments and hereby jointly and severally make
the following representations, warranties and covenants to the Buyer, which
representations and warranties and convenants
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Voting Share Purchase Agreement -11-
shall survive the First and the Second Completion Date. Any exceptions to the
representations, warranties and convenants of the Sellers accepted by the Buyer
are identified both completely and entirely under this Clause.
The Company was reviewed regarding financial, tax and legal matters from July 5
to 8, 1999. The Report of the Review is enclosed to this Agreement as Appendix 6
and is an integral part of this Agreement. Any fact mentioned in the Review
Report is deemed to be disclosed. The Company was reviewed regarding technical
matters from July 19 to 20, 1999. The technical Due Diligence Report is enclosed
to this Agreement as Appendix 14. Any fact mentioned in the Review Report is
deemed to be disclosed.
7.1. INCORPORATION OF THE COMPANY, COMPANY REGISTERS
The Company is a Swiss company whose registered office is located at
Allschwil. The Company is registered in the Trade Register according to
Swiss Law. The Company has been duly incorporated and is lawfully
established in accordance with Swiss law.
The certified true copy of the Company's Articles of Association and the
extract from the Trade Register, attached as Appendix 7 and 8, are up to
date on the date of signature hereof.
The Company's registers and all other records which must be drawn up or
kept by the Company in accordance with current laws and regulations are
in good order, complete and exact and up to date on the date of
signature hereof.
7.2. AUTHORIZED CAPITAL, SHAREHOLDERS, INVESTMENT SECURITIES, DISTRIBUTIONS
The Company has an issued Voting Share Capital of CHF 500'000 (five
hundred thousand Swiss Francs) which is divided into 2'000 registered
Voting Shares with a nominal value of CHF 100 each and 300 registered
Voting Shares with a nominal value of CHF 1,000 each and a Non-Voting
Share Capital of CHF 1'000'000 (one million Swiss Francs) divided into
1,000 registered Non-Voting Share certificates with a nominal value of
CHF 1,000 each. The Voting Shares and the Non-Voting Shares are validly
issued and fully paid up.
The Company has not given any option, warrant, convertible security, or
other undertaking of any kind whatsoever concerning the issue of new
shares or other investment securities in the Company or concerning a
change in its issued capital except those granted to three members of
the Scientific Advisory Board (Appendix 9) and to ▇▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ in
the side letter of February 12, 1999 (Appendix 9).
No payment of dividends and no other distribution of any sums by the
Company has been decided or made on the date of signature hereof and no
payment of dividends or any other distribution of sums will be decided
by the Company for the financial year in progress or for the previous
year until after the Completion Date.
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Voting Share Purchase Agreement -12-
7.3. VOTING SHARES
The Sellers warrant that they are the sole owner of the 2,300 Voting
Shares and have good and valid title in all such Voting Shares and have
the authority to and will in fact sell the Voting Shares free and clear
of all liens, options, guarantees, security interests, pledges, priority
rights, pre-emptive rights or other rights, requests, claims or other
restrictions whatsoever to the free transferability thereof. As of the
date of signing of this Agreement the Sellers have the full right and
capacity to sell complete title of the Voting Shares.
7.4. SUBSIDIARIES AND HOLDINGS
The Company does not own any subsidiary or any stake or partnership
interest in other companies or legal entities except of Discovery
Technologies USA LLC and its participation in Myocontract GmbH.
The Company does not belong to any de facto company or joint venture
company and is not associate or member of any partnership or of any
economic interest grouping, pool or consortium or any structure of the
same type except of 'Interessengemeinschaft Innovationszentrum
Nordwestschweiz'.
7.5. ACCOUNTS
A copy of the Company's accounts drawn up as at December 31,1998,
including the balance sheet (assets and liabilities), the notes thereto
and the profit and loss account and the auditors report dated January
28, 1999, as well as the Company's accounts drawn up as at June 30, 1999
including the balance sheet (assets and liabilities), the notes thereto
and the profit and loss account and the auditors report dated July 22,
1999 and the management letter dated July 23, 1 999 are set forth in
Appendix 10 and 11 hereto.
The Accounts have been drawn up in the form required by law and
accurately reflect the Company's financial position and the results of
its operations and have been prepared according to generally accepted
accounting principles and practices in Switzerland. The Company has
consistently applied said principles and practices since the
constitution of the Company.
On the date of December 31, 1998 and June 30, 1999 the Company had no
liabilities or obligations other than those and, as the case may be,
depreciated, in the Accounts.
7.6. PROPERTY AND ASSETS
The Company validly and fully owns all the assets posted in the accounts
of its business and all assets necessary to successfully function.
This property is free of all liens, pledges with or without
dispossession, retention of title, all mortgages, easements, guarantees,
promises, security interest or other encumbrances.
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Voting Share Purchase Agreement -13-
7.7. RECEIVABLES AND DEBTS
The Company's trade and other receivables, net of provisions funded for
returns, claims and bad debts, such as they are posted in the Accounts,
and, more generally, all receivables arising since June 30, 1999
(Appendix 12 Debitors and Creditors List as per June 30, 1999), are
valid and can be recovered in full, or have been recovered, within 90
days from the invoice date except of CHF 34,000 (thirty four thousand
Swiss Francs) of Myocontract GmbH.
The Company does not owe any sum whatsoever and has not undertaken to
pay any sum whatsoever to any of its shareholders, company directors,
employees, sales representatives, agents or distributors, whether past
or present, or to any of their spouses, children or relatives or any
person acting on their behalf or any legal entity in which the Seller
directly or indirectly holds more than 10% of the voting rights,
otherwise than in payment for services provided at customary commercial
rates and board fees. Appendix 13 (List of sums owed to EPR
Labautomation AG) identifies all sums owed to any spouses, children or
relatives of any of its shareholders, company directors, employees,
sales representatives, agent or distributors and to any legal entity in
which the Seller directly or indirectly holds more than 10% of the
voting rights.
No shareholder, company director, employee, sales representative, agent
or distributor and none of their spouses, children or relatives or
anybody acting on their behalf or in which the Seller directly or
indirectly holds more than 1 0% of the voting rights owes any sums
whatsoever to the Company, or has, within the past 18 months, had any
such liability relieved other than by cash payment in full.
Any interest paid to the Company's shareholders prior to the date hereof
has never exceeded the maximum amount authorised by current tax law.
7.8. STOCKS AND WORK IN PROCESS
The Company's stocks and work in process posted in the Accounts
constitute the whole of the Company's stocks and work in process as at
June 30, 1999.
Said stocks are posted in the Accounts at their cost price or their
present market value, if less.
The Company does not keep goods in consignment owned by third parties or
which are subject to retention of title clauses in its stocks except of
the chemical libraries of the four providers Analyticon AG, Bionet
Research Ltd., ComGenex Inc., SPECS and BioSPECS bv.
7.9. OFF BALANCE SHEET COMMITMENTS, GUARANTEES, ENDORSEMENTS. SECURITY
INTERESTS
There are no off balance sheet commitments as per June 30, 1999.
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Voting Share Purchase Agreement -14-
The Company has not given any guarantee, security interest or
endorsement relating to the fulfillment of obligations contracted by
third parties (including by its shareholders, company directors or by
the members of its own personnel) except the guaranties given by BKB for
the rent of the building in Allschwil (CHF 140,000 (hundred and forty
thousand Swiss Francs)) and for the credit card of Mr. ▇▇▇ ▇▇▇▇▇▇ (CHF
20'000 (twenty thousand Swiss Francs)).
7.10. BANKRUPTCY PROCEEDINGS
The Company is not insolvent and is not concerned by any receivership or
liquidation subject to court supervision or any conciliation, voluntary
settlement or other bankruptcy proceedings provided for under current
law.
There is nothing, at the date hereof, to lead one to believe that the
Company may subsequently be insolvent or be concerned by any bankruptcy
proceedings other than the auditor's report regarding the Company's
Financials as per December 31, 1998 (Appendix 10) and the auditor's
report regarding the Company's Financials as per June 30, 1999 (Appendix
11)
7.11. DISPUTES/PRODUCT LIABILITIES
The Company is not involved in any litigation or disputed claims, in
particular, in court, administrative or arbitration proceedings and is
not subject to any court, administrative or other supervision. It is not
concerned by any claim or other request that may entail such proceedings
or such supervision except of the potential cases 'Roche' and 'Liconic'
mentioned in the financial, legal and tax review report and the
technical due diligence report (Appendix 6 and 14).
The Sellers are not aware of any current or potential claim with regard
to product liability or of facts on which such a claim could be based.
7.12. ENVIRONMENTAL LAW
The Company's activities have always been and are, at today's date,
carried out in compliance with current laws and regulations concerning
the protection of the environment. The Company has obtained all permits,
licenses or other authorizations required under current laws and
regulations and has made all the necessary declarations in relations
thereto.
7.13. CONTRACTS
All the written or oral contracts, agreements, undertakings or
arrangements entered into by the Company constitute valid and binding
undertakings for each of the parties in question. None of said
undertakings was entered into in breach of current laws or regulations.
The Company, as well as the other concerned parties, have duly fulfilled
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Voting Share Purchase Agreement -15-
their obligations under these undertakings except of the cases 'Roche'
and 'Liconic' mentioned above.
Said undertakings all concern the Company's day-to-day business and were
entered into at arm's length as part of the Company's usual business.
There are no outstanding written or oral contracts, agreements,
undertakings or arrangements entered into by the Company which have a
contractual value in excess of CHF 25,000 except of those mentioned in
Appendix 15.
The Company is not a party to any agreement and has not entered into any
undertaking which cannot be freely terminated by the Company, without
compensation and subject to less than three months' notice except of
those mentioned in Appendix 16.
There are no agreements entered into between the Company and the Sellers
or between the Company and other companies or entities in which the
Sellers are directly or indirectly involved or which are directly or
indirectly involved in the Sellers except of the contracts with EPR
Labautomation AG mentioned in Appendix 17.
7.14. LEASING AGREEMENTS
The Company is not a party to any leasing agreement except of the two
agreements with Credit Suisse Leasing dated January 14, 1999 and April
29, 1999 (Appendix 18 and 19).
7.15. TRADEMARKS, LOGOS, PATENTS, INDUSTRIAL OR INTELLECTUAL PROPERTY RIGHTS
The Company does not own any trademark, logo, patent, software or other
industrial or intellectual property right, other than those identified
in Appendix 20.
The Company has not infringed and will not infringe to its best
knowledge any right whatsoever owned by a third party concerning any
patent, trademark logo, software, business name, corporate name or other
industrial or intellectual property right.
7.16. INSURANCE
The Company is adequately insured with creditworthy insurance companies
for the risks and the amounts that companies engaged in similar
activities normally insure for and, in particular, for the risks
inherent in its civil liability and its product liability except of
Discovery Technologies USA LLC and of activities in the US and in
Canada.
The Company has validly fulfilled all its obligations to said insurance
companies, in particular, with regard to the declaration of risks or
losses and the payment of premiums.
On the date hereof, any declared or reasonably foreseeable loss is duly
covered by the insurance policies taken out by the Company.
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Voting Share Purchase Agreement -16-
7.17. TAXES, SOCIAL SECURITY CONTRIBUTIONS, CUSTOMS
The Company has duly filed with the relevant government services within
the required time limits all its tax, special tax, social security and
customs returns of any kind as well as all statements or other documents
required under the laws and regulations concerning its tax, special tax,
social security and customs expenses, and has kept a copy of the
original documents filed.
The Company has duly paid the relevant government services within the
required time limits all the taxes, contributions, duties and other tax,
special tax, social security or customs expenses owed by it except
social security contributions in an amount of CHF 13,740.20 as included
in the audited Company's financials as per June 30, 1999.
7.18. PERSONNEL
As of August 1, 1999, the Company employs 22 employees. The entire
personnel and all the outstanding employment agreements are listed in
Appendix 21.
The Company has not granted any benefits to its employees which go
beyond the usual standards for similar Companies in Switzerland or
fringe benefits in excess of those listed in Appendix 22.
The Company has not entered into any profit sharing scheme, incentive
scheme or other labour agreement apart from those listed in Appendix 23.
The Company is up to date with all its legal, regulatory and contractual
obligations towards its personnel, both on individual and group levels,
and in particular with regard to employee representative bodies. It has
complied with its obligations with regard to health and safety of
working conditions.
No retirement gratuity has been granted or promised to any past or
present employee or company director of the Company except of those
granted in the retirement plan (bel etage) for management (Appendix 24).
7.19. POWERS/BANK ACCOUNTS
Appendix 25 lists the names and addresses of each person who has
received a general or special power of attorney from the Company or its
legal representatives, including any power concerning the Company's bank
accounts. All Company bank accounts are listed in Appendix 26.
7.20. MAJOR EVENTS
No fact or event of any kind whatsoever, apart from as specified in this
Agreement, is likely to have a negative effect on the Company's assets,
liabilities, business or activities. No fact or event of this type
exists which the buyer may not have been informed about
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Voting Share Purchase Agreement -17-
and which one could reasonably consider, given the nature or importance
thereof, that it would have affected the Buyer's decision to buy the
Voting Shares at the agreed price.
7.21. INTERIM PERIOD
a) The Company has and the Sellers will cause the Company to carry
out until the Second Completion Date its activities solely in the
normal and usual course of business, with care and
responsibility, so as to protect its relations and reputation
vis-a-vis third parties, the public authorities and any other
persons maintaining business relations with it.
Since June 30,1999, especially there has not been and will not be
one of the following operations:
(i) any change in the Company's financial position, earnings,
assets, liabilities, business, operations or budgets other
than normal changes falling within the normal scope of
business,
(ii) any purchase or sale of stock by the Company,
(iii) any issue, division or pooling by the Company of shares or
other investment securities, any granting of rights or
options to buy or to subscribe for shares of the Company
or that may grant the right to buy or subscribe for stock
representing a share of the Company's capital,
(iv) any payment of dividends, prepaid dividends or other sums
(in particular by capital reduction or redemption) and
more generally any operation that may lead to the
allocation of assets, and/or earnings, and/or reserves or
premiums between the Company's shareholders.
(v) any loan granted or promised by the Company or any
increase of its overall indebtedness by loans, overdrafts,
credit facilities or otherwise,
(vi) any security, guarantee or endorsement granted by the
Company to third parties,
(vii) any assumption by the Company of any obligation or
liabilities other than normal obligations or liabilities
assumed in the normal course of business,
(viii) any expiry, termination, waiver or any amendment or breach
of any contract or other undertaking to which the Company
is a party, other than in the normal course of business,
except Liconic.
(ix) any increase or promise to increase salaries of the
Company's employees, sales representatives, agents,
distributors and company directors or benefits to which
they are entitled (bonus, profit sharing schemes, pension,
retirement or other annuities or benefits of the same
kind) other than normal increases, not in
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Voting Share Purchase Agreement -18-
excess of 10%, justified by the individual results of
employees or imposed by employment contracts,
(x) any cancellation or waiver by the Company of one of its
receivables or claims against third parties,
(xi) any lien, pledge with or without dispossession, mortgage,
easement, security, promise, security interest or other
right or encumbrance granted on a tangible or intangible
asset of the Company,
(xii) any operation or undertaking which has been carried out or
assumed outside the normal course of the Company's
day-to-day business,
(xiii) any undertaking relating to all or part of the items
mentioned in (i) to (xiii) above or which could bring
about the occurrence of one of these items,
(xiv) any element or fact that may harm the Company's reputation
vis-a-vis its customers and suppliers, in particular,
(xv) any industrial disturbance, conflict, strike or similar
event affecting the Company.
7.22. HTS FACTORY
In addition to the representations and warranties set forth in Clause
7.1 to 7.21 above ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ makes the following
representations and warranties: Appendix 27 contains the latest
estimates of the Company to complete the development, installation and
debugging of the Company's HTS factory. These estimates are sufficient.
The Rolimans purchased from EPR Labautomation Ltd. by the Company are
free of defects in material and workmanship and, if operated and
maintained in accordance with any written instructions provided, shall
perform in accordance with its specifications for a period of 12 months
from the date of installation.
If requested by the Buyer, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, through EPR
Labautomation or other resources, agrees to provide ongoing maintenance
and support of the units at fair market conditions once the initial 12
months have elapsed.
Drawings and all of the engineering documentation and lists of suppliers
and subcontractors relating to the Roliman will be placed in escrow
prior to the Second Completion Date by ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. In the case
of non-compliance with this obligation, the Buyer has the right to
retain the payments to ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ under Clause 3.4 and 3.5 and
3.6 until this obligation is fulfilled.
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Voting Share Purchase Agreement -19-
7.23. COMPLETION DATE
All the representations and warranties set forth in Clauses 7.1 to 7.22
above are true and valid on and as of the date of this Agreement and
also will be true and valid on the First and Second Completion Date.
CLAUSE 8 - INDEMNIFICATION OF THE BUYER
a) THE SELLERS' OBLIGATIONS
8.1. The Sellers irrevocably agree and undertake to compensate the Buyer by
reducing the Purchase Price or by way of damages, at the Buyer's option,
of any and all loss, liability or costs incurred, of any kind
whatsoever, including reasonable advisers' and legal fees and costs,
which the Buyer or the Company may bear or incur by reason of any
fraudulent breach in the covenants, representations or warranties given
in this Agreement by the Sellers, provided that the Buyer shall notify
the Seller in writing of such breach or inaccuracy. latest on June 30,
2001. The Sellers are liable jointly and severally and without
limitation for fraudulent breach as mentioned under this Clause.
8.2. The liability of the Sellers in respect of any breach of contract or
breach of duty or fault or negligence or otherwise whatsoever arising
out of or in connection with this engagement will be considered a breach
by all Sellers. The liability under this Clause 8.2 will be limited in
total to the amount of the Total Purchase Price to be paid by the Buyer
to the Sellers. The Sellers agree and undertake to compensate the Buyer
by reducing the Purchase Price or by way of damage, at the buyer's
option up to this limit including reasonable advisers' and legal fees
and costs, which the Buyer or the Company may bear or incur by reason of
any breach in the convenants, representations or warranties given in
this Agreement by the Sellers, provided that the Buyer shall notify the
Sellers in writing of such breach or inaccuracy latest on June 30, 2001.
Up to the Total Purchase Price to be paid by the Buyer, the Sellers are
jointly and severally liable to the Buyer. However the liability of each
Seller is limited to the amount of the purchase price allocated to him.
If the Buyer is unable to collect compensation under Clause 8.2 from one
Seller, he cannot go after the other Sellers for his share.
The Buyer agrees to reduce the liability of ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ under
this Clause by the amount of Income Tax paid by the latter on this
transaction which is not refunded back to ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as a
consequence of the reduction in the net purchase price paid. ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ must make all reasonable efforts to receive the maximum tax
refund available.
8.3 For any breach of the representations and warranties set forth in Clause
7.22 (HTS factory), ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall be solely liable under the
same terms as stated in Clause 8.1 and 8.2 above.
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Voting Share Purchase Agreement -20-
b) THE BUYER'S OBLIGATIONS
8.4. The Buyer will notify the Sellers in writing within 30 days of the
discovery of any fact or an event that may bring the Sellers' warranty
into play. This notice shall include a short description of the claim,
fact or event in question and the amount or estimated amount of the loss
incurred or which could be sustained by the Buyer or the Company.
In case of non compliance with these obligations, the Buyer will not be
entitled to any compensation by the Sellers.
CLAUSE 9 - NON COMPETE
9.1. Each selling founder of the Company (Sellers 1 to 3) undertakes, for a
three year period as from the First Completion Date (i) not to hire
without the prior written consent of the Buyer any current or future
member of the Company's personnel, (ii) not to carry on directly or
indirectly, as a proprietor or an employee, a business which competes
with that of the Company except those listed in Appendix 28 and (iii)
not to become, directly or indirectly, a shareholder, company director,
de jure or de facto director, consultant, representative or distributor
of any company which has a business which competes with that of the
Company without the prior written consent of the Buyer.
9.2. In the event that any one of the selling founders of the Company
(Sellers 1 to 3) breach any of their obligations contained in the
previous provisions of Clause 9, they shall immediately, without any
action or formality being required to be taken or fulfilled forfeit for
the benefit of Buyer (or at Buyer's discretion for the benefit of the
Company) an immediately payable contractual penalty of CHF 50,000 for
each infringement and of CHF 1,000 for each day such infringement will
continue, without any damages or losses being required to be proven. In
addition, the Buyer reserves its full right to claim indemnification for
any damage or loss incurred by the Buyer and the Company and its full
right to seek an injunction.
9.3. In addition to any other remedies, the Buyer may deduct any monies it is
owed under Clause 9 from any contingent Purchase Price payments not yet
made.
CLAUSE 10 - CONFIDENTIALITY
Each party undertakes not to make any public disclosure or to disclose the
details of the financial terms of this Agreement to any third party whomsoever
and in particular to the Company's personnel without the other Party's prior
agreement in writing, except to the extent strictly required by the law and to
information to be given by the Buyer to potential investors .
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Voting Share Purchase Agreement -21-
CLAUSE 11 -ASSIGNMENT OF THE AGREEMENT
The Sellers may not assign or delegate all or part of their rights or
obligations hereunder without the prior agreement in writing of the Buyer.
CLAUSE 12 - GUARANTEES BY THE BUYER
All the Voting Shares of the Company remain in escrow in accordance with the
Escrow Agreement (Appendix 5).
CLAUSE 13 - TERM
This Agreement shall be binding from the date of signature hereof.
CLAUSE 14 - GOVERNING LAW AND COMPETENT JURISDICTION
This Agreement shall be governed, with regard to the interpretation and
performance thereof, by Swiss law.
The exclusive place of jurisdiction is Allschwil.
CLAUSE 15 - DISPUTES
With regard to any dispute relating to the interpretation, performance or
termination of this Agreement, the parties will make their best efforts to come
to an amicable settlement, in particular, by organising a mediation meeting
between their respective advisers, if this may be useful.
CLAUSE 16 - MODIFICATIONS
Any modifications of this Agreement must be in writing and signed by both
parties.
Executes in 6 original counterparts of which one copy for each of the Sellers,
one copy for the Buyer and one copy for the Company's documentation.
SELLERS: BUYER:
Date: 10/8/99 Date: 10/8/99
/s/ illegible /s/ illegible
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Voting Share Purchase Agreement -22-
Date: 10/8/99
/s/ illegible
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Date: 10/8/99
/s/ illegible
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Date: 10/8/99
/s/ illegible
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