EXHIBIT 4.8
SUBSCRIPTION AGREEMENT
THIS AGREEMENT is made in the City of Montreal, Province of Quebec, as of
March 28, 2002;
AMONG: SGF SANTE INC., a company duly incorporated pursuant to the
laws of Quebec, having its head office at 600 de La Gauchetiere
Street West, Suite 1700, Xxxxxxxx, Xxxxxx, X0X 0X0, acting and
represented herein by Xxxxxx Xxxxx, its vice-president, and by
Michel Sainte-Xxxxx, its assistant secretary, duly authorized
as they so declare;
(hereinafter referred to as "SGF Sante")
AND: DRAXIS HEALTH INC., a corporation duly incorporated under the
laws of Canada, having its head office at 0000 Xxxxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxx, X0X 0X0, acting and represented herein
by Xxx Xxxxxx, its Senior Vice President, Finance and Chief
Financial Officer, duly authorized as he so declares;
(hereinafter referred to as "Draxis Health")
AND: DRAXIS PHARMA INC., a corporation duly incorporated under the
laws of Canada, having its head office at 0000 Xxxx Xxxxxx,
0xx Xxxxx, Xxxxxxxx, Xxxxxx, X0X 0X0, acting and represented
herein by Xxxxxxx Xxxxxx, its secretary, duly authorized as he
so declares;
(hereinafter referred to as the "Corporation")
WHEREAS, subject to the terms hereof, each of SGF Sante and Draxis Health
wishes to subscribe for, respectively, 279,930 and 577,402 Common Shares in the
capital of the Corporation, representing, respectively, 1.36% and 2.80% of the
outstanding Common Shares of the Corporation on a non-diluted basis after such
subscription and after the subscription by Xxxxxxxx Xxxxxx pursuant to the
Equity Participation Plan referred to hereinafter;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants,
agreements, warranties and payments herein set out and provided for, the hereto
hereby respectively, covenant and agree as follows:
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ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, where used in this Agreement, unless there is something in
the context or the subject matter inconsistent therewith, the following
terms shall have the following meanings respectively:
"Additional Subscription" has the meaning set forth in section 2.2
"Agreement" means this subscription agreement including all attached
Schedules, as the same may be supplemented, amended, restated or
replaced from time to time;
"Applicable Law" means any domestic or foreign statute, law, ordinance,
regulation, by-law (zoning or otherwise), or order that applies to the
Corporation;
"Articles" means the documents of incorporation of a corporation, as
amended from time to time or the equivalent in any applicable
jurisdiction or with respect to any other entity;
"Assets" means all of the assets and properties, moveable and
immoveable, tangible and intangible of a Person;
"Business" means the business carried on by the Corporation which
consists, inter alia, of contract manufacturing of pharmaceutical
products;
"Business Day" means a day other than a Saturday or Sunday, on which
Canadian chartered banks are open for the transaction of domestic
business in the City of Montreal, Province of Quebec;
"By-laws" has the meaning set forth in subsection 3.1.3;
"Capital Plan" means the capital plan of the Corporation providing for
the addition of a second lyophilizer and ancillary equipment,
debottlenecking of production lines, upgrading of warehouse and
technical services, the whole as set out in Schedule 1.1(a) attached
hereto as it may be amended from time to time in accordance with the
Shareholders' Agreement;
"Claims" has the meaning set forth in section 7.2;
"Closing" means the completion of the subscription by SGF Sante and
Draxis Health for the portion of the Subscribed Shares provided for in
section 2.1 and the completion of all other transactions contemplated
by this Agreement which are to occur contemporaneously with the
subscription for the Subscribed Shares;
"Closing Date" has the meaning set forth in section 6.1;
"Closing Document" means any document delivered at or subsequent to the
Closing Date as provided in or pursuant to this Agreement;
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"Common Shares" means the common shares of the share capital of the
Corporation;
"Convertible Security" means a security of a body corporate, including
a debt obligation, which is convertible into, exchangeable for or which
carries a right or obligation to purchase, one or more shares, voting
securities or participating securities of such body corporate,
including for greater certainty, options and warrants;
"Corporation" has the meaning ascribed thereto in the preamble;
"Corporation Indemnified Persons" has the meaning set forth in section
7.3;
"DHI Subscribed Shares" means the 577,402 Common Shares hereby
subscribed by Draxis Health which are issued at the Closing and,
provided the Second Closing is not cancelled as a result of the
application of section 2.3 of this Agreement, the 2,244,957 Common
Shares which Draxis Health hereby agrees to subscribe for at the Second
Closing;
"Dispute" has the meaning set forth in section 8.2;
"Draxis Health Indemnified Persons" has the meaning set forth in
section 7.3;
"Encumbrance" means any security interest, mortgage, lien, hypothec,
pledge, servitude, assignment, charge, call, commitment, right of first
refusal, prior claim, demand, restriction, deemed trust, voting trust
or pooling agreement with respect to securities, an adverse claim or
any other right or option affecting any Assets or shares;
"Equity Participation Plan" means the equity participation plan adopted
by the Corporation, a copy of which is attached to the Initial
Subscription Agreement as Schedule 1.1(c);
"GAAP" means generally accepted accounting principles from time to time
approved by the Canadian Institute of Chartered Accountants, or any
successor institute, applicable as at the date on which any calculation
or determination is required to be made in accordance with generally
accepted accounting principles, and where the Canadian Institute of
Chartered Accountants includes a recommendation in its Handbook
concerning the treatment of any accounting matter, such recommendation
shall be regarded as the only generally accepted accounting principle
applicable to the circumstances that it covers;
"Governmental Authority" means any domestic or foreign government
whether federal, provincial, state or municipal and any governmental
agency, governmental authority, governmental tribunal, governmental
body or governmental commission of any kind whatever;
"including" means "including without limitation" and the term
"including" shall not be construed to limit any general statement which
it follows to the specific or similar items or matters immediately
following it;
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"Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money (including any negative cash balance or intercompany
advance), (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for which interest charges are customarily paid,
(iv) under conditional sale or other title retention agreements
relating to property or assets purchased by such Person, (v) issued or
assumed as the deferred purchase price of property or services (other
than trade accounts payable and accrued obligations incurred in the
ordinary course of business), (vi) under capital leases, (vii) in
respect of interest rate protection agreements, foreign currency
exchange agreements or other interest or exchange rate hedging
arrangements, (viii) as an account party in respect of letters of
credit and bankers' acceptances, (ix) with respect to Indebtedness of
others, secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any
Encumbrance on property owned or acquired by such Person, or (x) in the
nature of guarantees of Indebtedness of others;
"Indemnitee" has the meaning set forth in subsection 7.5.1;
"Indemnitor" has the meaning set forth in subsection 7.5.1;
"Initial Subscription Agreement" means the subscription agreement dated
February 18, 2000 by and between SGF Sante and the Corporation;
"knowledge", "to the best of the knowledge" and similar expressions
mean, with respect to any particular fact or other matter, in the case
of an individual:
(a) that such individual is actually aware of such fact or other
matter, or
(b) that a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the
course of conducting a reasonably comprehensive investigation
concerning the existence of such fact or other matter;
and, in the case of a Person other than an individual, that any
individual who is serving as an officer or director of such Person (or
in any similar capacity) has, or at any time had, or would be
considered to have knowledge of such fact or other matter in accordance
with the above;
"Management Shareholder" means Xxxxxxxx Xxxxxx;
"Management Subscription" means the subscription letter for shares of
the Corporation executed by the Management Shareholder on the Closing
Date;
"Merck Frosst Agreement" means the agreement entered into as of June
12, 0000 xxxxx Xxxxx Xxxxxx Xxxxxx Inc., the Corporation, Draxis Health
and Draximage Inc.;
"Notice to Arbitrate" has the meaning set forth in section 8.2;
"Person" shall be broadly interpreted and includes an individual, body
corporate, partnership, joint venture, trust, association,
unincorporated organization, the Crown, any Governmental Authority or
any other entity recognized by law;
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"Rights" means any options, rights, warrants or subscription privileges
issued or granted by any Person (whether or not currently exercisable
or exercisable on conditions) to purchase securities or shares or other
interests of such Person;
"Second Closing" has the meaning set forth in section 2.2
"SGF Sante Indemnified Persons" has the meaning set forth in section
7.2;
"SGF Share of the Underlying Loss" has the meaning set forth in section
7.7;
"Shareholders' Agreement" means the amended and restated unanimous
shareholders' agreement entered into on the Closing Date among Draxis
Health, SGF Sante, the Corporation, Xxxxxx Xxxxxx, Xxxxxxxx Xxxxxx and
Xxxxxx Xxxxxxxxx;
"SGF Subscribed Shares" means the 279,930 Common Shares hereby
subscribed by SGF Sante which are issued at the Closing and, provided
the Second Closing is not cancelled as a result of the application of
section 2.3 of this Agreement, the 1,088,376 Common Shares which SGF
Sante hereby agrees to subscribe for at the Second Closing;
"Shareholders' Subordinated Debt" means the secured convertible loan
agreement entered into as of the date hereof by and between Draxis
Health and SGF Sante as lenders and the Corporation as borrower for the
aggregate capital amount of $9,139,335;
"Subscribed Shares" means the SGF Subscribed Shares and the DHI
Subscribed Shares, collectively;
"Subscription Price" means the aggregate subscription price payable for
all the Subscribed Shares, being $1,286,000 at the Closing and,
provided the Second Closing is not cancelled as a result of the
application of section 2.3 of this Agreement, $5,000,000 at the Second
Closing;
"Subsidiary" means, with respect to any Person, any other Person of
which more than 50% of the outstanding shares having ordinary voting
power of such other Person (irrespective of whether or not at the time
shares of any other class or classes of such other Person shall have or
might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly owned by the first mentioned
Person, or by one or more of its subsidiaries;
"Third-Party Claim" has the meaning set forth in subsection 7.5.1;
"Underlying Loss" has the meaning set forth in section 7.7.
1.2 GAAP. All accounting and financial terms used herein, unless
specifically provided to the contrary, shall be interpreted and applied
in accordance with GAAP consistently applied.
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1.3 INTERPRETATION NOT AFFECTED BY HEADINGS. The division of this
Agreement into articles and the insertion of headings are for
convenience and reference only and shall not affect the construction or
interpretation of this Agreement.
1.4 EXTENDED MEANINGS. Words importing the singular number include the
plural and vice versa and words importing the masculine gender include
the feminine and neuter genders.
1.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and
supersedes all prior agreements, negotiations, discussions and
understandings, written or oral, between the parties and, in
particular, the term sheet dated January 30, 2002 signed by Draxis
Health on January 30, 2002 and by SGF Sante and the Corporation on
January 31, 2002. Notwithstanding the foregoing, this Agreement does
not supersede the Initial Subscription Agreement which remains in full
force and effect in accordance with its terms.
1.6 AMENDMENT. This Agreement may be amended, modified or supplemented
only by a written agreement signed by each party.
1.7 WAIVER OF RIGHTS. Any waiver of, or consent to depart from, the
requirements of any provision of this Agreement shall be effective only
if it is in writing and signed by the party giving it, and only in the
specific instance and for the specific purpose for which it has been
given. No failure on the part of any party to exercise, and no delay in
exercising, any right under this Agreement shall operate as a waiver of
such right. No single or partial exercise of any such right shall
preclude any other or further exercise of such right or the exercise of
any other right.
1.8 SCHEDULES. The following Schedules form part of this Agreement:
Schedule Description of Schedule
-------- -----------------------
1.1 (a) Capital Plan
3.1.2 Authorized and Issued Capital of the Corporation
3.1.4 Consents and Approvals
1.9 APPLICABLE LAW. This Agreement shall be deemed to have been made in
the Province of
Quebec and shall be interpreted in accordance with and
governed by the laws of
Quebec and the laws of Canada applicable
therein.
1.10 FUNDS. All dollar amounts referred to in this Agreement are in lawful
money of Canada.
1.11 BUSINESS DAY. In the event that any action to be taken hereunder falls
on a day which is not a Business Day, then such action shall be taken
on the next succeeding Business Day.
1.12 THIRD PARTY BENEFICIARIES. Nothing in this Agreement or in any Closing
Document is intended expressly or by implication to, or shall, confer
upon any Person other than the parties, any Rights or remedies of any
kind.
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ARTICLE 2
SUBSCRIPTION, ALLOTMENT AND ISSUE OF SUBSCRIBED SHARES
AND ADDITIONAL COMMITMENTS
2.1 SUBSCRIPTION. Subject to the terms and conditions hereof:
2.1.1 SGF Sante hereby subscribes for and agrees to purchase and take
up, and the Corporation hereby agrees to allot and issue from
treasury to SGF Sante, as at the Closing Date, an aggregate of
279,930 Common Shares for a subscription price of $1.50 per
Share, and
2.1.2 Draxis Health hereby subscribes for and agrees to purchase and
take up and the Corporation hereby agrees to allot and issue
from treasury to Draxis Health, as at the Closing Date, an
aggregate of 577,402 Common Shares for a subscription price of
$1.50 per Share,
the whole representing an aggregate subscription price of $1,286,000.
The above-mentioned Subscribed Shares shall represent, after the
Closing and the Management Subscription, 4.16% of the outstanding
Common Shares of the Corporation on a non-diluted basis.
2.2 ADDITIONAL SUBSCRIPTION. Subject to section 2.3, on the date (the
"Second Closing") that is the earlier of (i) May 31, 2002 and (ii) the
date on which an aggregate of $5,000,000 of payments becomes due by the
Corporation with respect to capital expenditures contracted for after
January 1, 2002 pursuant to the Capital Plan, Draxis Health and SGF
Sante hereby agree to subscribe for and to purchase and take up, and
the Corporation hereby agrees to allot and issue from treasury to
Draxis Health and SGF Sante, the Common Shares set out below (the
"Additional Subscription") for a subscription price of $1.50 per share:
Number and Aggregate
Subscriber Class of Shares Subscription Price
---------- --------------- ------------------
Draxis Health 2,244,957 Common Shares $ 3,367,436
SGF Sante 1,088,376 Common Shares $ 1,632,564
The Common Shares issued pursuant to such Additional Subscription shall
represent, after the Second Closing and the Management Subscription,
13.92% of the outstanding Common Shares of the Corporation on a
non-diluted basis.
2.3 CONDITION PRECEDENT. In the event that there is, before the Second
Closing, a refinancing by the Corporation of its senior debt which
ranks prior to the Shareholders' Subordinated Debt on terms and
conditions satisfactory to Draxis Health and SGF Sante, the parties
hereby agree to negotiate in good faith with respect to a reduction in
the amount of the Additional Subscription. The total of the new
financing and Additional Subscription, as reduced, must be sufficient
to enable the Corporation to implement the Capital Plan.
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Failing agreement between Draxis Health and SGF Sante on any such
reduction, the obligation to make the full Additional Subscription
shall remain in full force and effect.
2.4 SUBSCRIPTION PRICE. The Subscription Price of the Subscribed Shares
shall be payable by wire transfer, cheque or banker's draft to the
order of the Corporation at the Closing Date, or, as the case may be,
the Second Closing with respect to the Additional Subscription, against
delivery by the Corporation of:
2.4.1 certificates representing the SGF Subscribed Shares, duly
registered in the name of SGF Sante, and
2.4.2 certificates representing the DHI Subscribed Shares, duly
registered in the name of Draxis Health.
The Subscribed Shares shall be duly allotted and issued as fully paid
and non-assessable.
2.5 USE OF PROCEEDS. The Corporation hereby agrees to use the Subscription
Price as well as the proceeds from the subscription by the Management
Shareholder to implement the Capital Plan in accordance therewith.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
REGARDING THE CORPORATION
3.1 REPRESENTATIONS AND WARRANTIES REGARDING THE CORPORATION. Each of the
Corporation and Draxis Health, solidarily, represents and warrants to
SGF Sante as follows and acknowledges that SGF Sante is relying upon
such representations and warranties in entering into this Agreement and
in agreeing to pay its share of the Subscription Price for the
Subscribed Shares and the Corporation represents and warrants to Draxis
Health as follows and acknowledges that Draxis Health is relying upon
such representations and warranties in entering into this Agreement and
in agreeing to pay its share of the Subscription Price for the
Subscribed Shares.
3.1.1 Corporate Matters
(a) The Corporation (i) is a corporation duly incorporated,
organized and validly existing and in good standing under
the laws of its jurisdiction of incorporation; (ii) is
licensed, authorized and qualified to carry on business in
all jurisdictions where, by virtue of the nature of its
Business or the vocation or character of its Assets, such
licensing, authorization or qualification is necessary; and
(iii) the only jurisdiction in which the Corporation has a
permanent establishment or owns Assets is the province of
Quebec.
(b) The Corporation, to the extent necessary, has all necessary
power and authority, and has taken all actions required (i)
to execute, deliver and perform this Agreement and (ii) to
issue, sell and deliver the
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Subscribed Shares and to register them in the names of SGF
Sante and Draxis Health. This Agreement, the Shareholders'
Agreement and all other documents and instruments executed
by the Corporation pursuant hereto when delivered, are and
will be duly authorized, valid and binding obligations of
the Corporation, enforceable against the Corporation in
accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and
the relief of debtors, equitable principles limiting rights
to specific performance or other equitable remedies. Upon
the issue, sale, delivery and registration of the
Subscribed Shares in the names of SGF Sante and Draxis
Health in accordance with the terms hereof, the Subscribed
Shares will be validly issued and fully paid and
non-assessable, and will be free and clear of all
Encumbrances and Rights, subject only to restrictions on
transfer in the Articles of the Corporation and under the
Shareholders' Agreement.
(c) The Corporation has the corporate power, authority and
capacity to own its Assets and to carry on its Business in
the manner and to the extent currently carried on in all
jurisdictions in which it presently carries on business and
to perform its obligations hereunder and consummate the
transactions contemplated hereby.
(d) The Corporation is in compliance with the terms and
provisions of its Articles and By-laws, each as amended and
in effect on the Closing Date.
3.1.2 Authorized and Issued Capital of the Corporation
The authorized and issued share capital of the Corporation is
as described in Schedule 3.1.2 and is held by the Persons set
out therein. Upon the subscription by SGF Sante and Draxis
Health pursuant to this Agreement and the subscription by the
Management Shareholders as stated in the Management
Subscription, the issued share capital of the Corporation will
be as set forth in Schedule 3.1.2 hereto and held by the
Persons set out therein in the percentages indicated opposite
their names. Except as described in Schedule 3.1.2 or as
otherwise contemplated by this Agreement, the Shareholders'
Agreement or any Schedules attached to this Agreement or the
Shareholders' Agreement, the Merck Frosst Agreement or the
Equity Participation Plan: (a) there are no Rights to purchase
shares of the share capital of the Corporation, or Convertible
Security, authorized, issued or outstanding, and the
Corporation is not obligated in any manner to issue any shares
of its share capital or Convertible Securities or any Right to
acquire shares of its share capital, or to distribute to
holders of any of its share capital any evidence of
Indebtedness or Assets; (b) no Person has any preemptive right,
right of first refusal or similar Right to acquire additional
shares of share capital in connection with the sale and
purchase of the Subscribed Shares pursuant to this Agreement or
otherwise; (c) there are no restrictions on the transfer of the
shares of share
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capital of the Corporation other than as set forth in its
Articles; (d) no Person has any right to cause the Corporation
to effect the registration under the relevant securities laws
of any shares of share capital or any other securities
(including debt securities) of the Corporation; (e) the
Corporation has no obligation to purchase, redeem or otherwise
acquire any of its equity securities or any interests therein,
or to pay any dividend or make any other distribution in
respect thereof other than pursuant to its Articles; and (f)
there are no voting trusts, shareholders' agreements, or
proxies relating to any securities of the Corporation.
3.1.3 No Violation
The execution, delivery and performance of this Agreement, the
Shareholders' Agreement and any documents or instruments
delivered, executed and performed in connection herewith or
therewith, the consummation of the transactions contemplated
hereby or thereby (including the issuance, sale and delivery of
the Subscribed Shares) and compliance with the provisions
hereof and thereof (a) will not violate to the best of the
knowledge of the Corporation and of Draxis Health any provision
of any Applicable Law, (b) violate any provision of the
Corporation's Articles, By-laws, as amended (the "By-laws") or
directors' or shareholders' resolutions, (c) violate or
constitute a default under, or cause or permit the acceleration
of the maturity of, any debt, obligation or contract,
commitment or other agreement, written or oral, to which the
Corporation is bound, (d) result in the creation or imposition
of any Encumbrance except in accordance with the Shareholders'
Subordinated Debt and the financing offer from Investissement
Quebec dated January 23, 2002 (i) on the Subscribed Shares,
(ii) the Corporation, (iii) any of its Assets or (iv) under any
agreement or commitment to which the Corporation is a party or
by which the Corporation or any of its Assets may be bound, or
conflict with, result in the breach of or constitute (with due
notice or lapse of time or both) a default under any such
agreement or commitment or (e) violate any judgment, decree,
order, regulation, or rule of any Governmental Authority
applicable to the Corporation or any of its Assets.
3.1.4 Consents, Approvals
Except as disclosed in Schedule 3.1.4, no consent, approval,
permit or authorization of, or declaration, filing,
qualification, designation or registration with, any third
party or Governmental Authority is required in connection with
the execution, delivery and performance of this Agreement, the
Shareholders' Agreement and any documents or instructions
delivered, executed and performed in connection herewith or
therewith, by the Corporation and the consummation of the
transactions contemplated hereby or thereby (including the
subscription, issuance and delivery of the Subscribed Shares).
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SGF SANTE
AND DRAXIS HEALTH
4.1 REPRESENTATIONS AND WARRANTIES. Each of SGF Sante and Draxis Health
represents and warrants, individually and only in respect of itself, to
the Corporation as follows and acknowledges that the Corporation is
relying upon such representations and warranties in entering into this
Agreement.
4.1.1 Corporate Matters
(a) It (i) is a corporation duly incorporated, organized and
validly existing and in good standing under the laws of its
jurisdiction of incorporation; and (ii) has full corporate
power and authority to own and hold its Assets and to carry
on its business as presently conducted.
(b) To the extent necessary, it has all necessary power and
authority, and has taken all actions required (i) to
execute, deliver and perform this Agreement, the
Shareholders' Agreement and all agreements executed
pursuant thereto. This Agreement, the Shareholders'
Agreement and all other documents and instruments executed
by it pursuant hereto when delivered, are and will be duly
authorized, valid and binding obligations enforceable
against it in accordance with their respective terms,
subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors, equitable
principles limiting rights to specific performance or other
equitable remedies.
(c) It has the corporate power, authority and capacity to own
its Assets and to carry on its business in the manner and
to the extent currently carried on in all jurisdictions in
which it presently carries on business and to perform its
obligations hereunder and consummate the transactions
contemplated hereby.
(d) It is in compliance with the terms and provisions of its
Articles and by-laws, each as amended and in effect on the
Closing Date.
(e) SGF Sante is a Subsidiary of the Societe generale de
financement du
Quebec.
4.1.2 No Violation
The execution, delivery and performance of this Agreement, the
Shareholders' Agreement and any documents or instruments
delivered, executed and performed in connection herewith or
therewith, the consummation of the transactions contemplated
hereby or thereby (including the subscription for the
Subscribed Shares) and compliance with the provisions hereof
and thereof (a) will not, to the best of its knowledge, violate
any provision of any
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Applicable Law, (b) violate any provision of its Articles,
By-laws, as amended, or directors' or shareholders'
resolutions, (c) violate or constitute a default under, or
cause or permit the acceleration of the maturity of, any debt,
obligation or contract, commitment or other agreement, written
or oral, to which it is bound, (d) result in the creation or
imposition of any Encumbrance (i) on the Subscribed Shares,
(ii) on it, (iii) any of its Assets or (iv) under any agreement
or commitment to which it is a party or by which it or any of
its Assets may be bound, or conflict with, result in the breach
of or constitute (with due notice or lapse of time or both) a
default under any such agreement or commitment or (e) violate
any judgment, decree, order, regulation, or rule of any
Governmental Authority applicable to it or any of its Assets.
4.1.3 Consents, Approvals
No consent, approval, permit or authorization of, or
declaration, filing, qualification, designation or registration
with, any third party or Governmental Authority is required
which has not been duly obtained in connection with the
execution, delivery and performance by it of this Agreement,
the Shareholders' Agreement and any documents or instructions
delivered, executed and performed in connection herewith or
therewith, and the consummation of the transactions
contemplated hereby or thereby (including the subscription for
the Subscribed Shares).
ARTICLE 5
SPECIAL PROVISIONS
5.1 SPECIAL REPRESENTATION. Each of the Corporation and Draxis Health,
solidarily, represents and warrants to SGF Sante as follows and
acknowledges that SGF Sante is relying upon such representations and
warranties in entering into this Agreement and in agreeing to pay its
share of the Subscription Price.
5.1.1 Initial
Subscription Agreement
The Corporation has at all times complied with all its
covenants, obligations and undertakings set out in Article 5 of
the Initial
Subscription Agreement.
5.1.2 Shareholders' Agreement
The Corporation has at all times respected and complied with
the obligations incumbent on it pursuant to Article 3 of the
unanimous shareholders' agreement entered into by and among the
Corporation, SGF Sante, Draxis Health, Xxxxxx Xxxxxx and
Xxxxxxxx Xxxxxx as of February 18, 2000, to which Xxxxxx
Xxxxxxxxx intervened on January 5, 2001.
5.2 SPECIAL INDEMNIFICATION. Each of the Corporation and Draxis Health,
solidarily, further acknowledges and agrees that, in addition to the
representations, warranties and covenants provided herein, SGF Sante is
also relying on the representations and
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warranties set out in Article 3 of the Initial
Subscription Agreement
in entering into this Agreement and in agreeing to pay its share of the
Subscription Price. In recognition thereof, each of the Corporation
and Draxis Health, solidarily, agrees that the recourses available to
SGF Sante under the Initial
Subscription Agreement, in particular,
without limitation, under Article 7 of the Initial Subscription
Agreement, shall also be available to SGF Sante in accordance with
their terms with respect to the investment by it for SGF Subscribed
Shares as provided in this Agreement as if the representations,
warranties, covenants, obligations, undertakings and indemnification
set out in the Initial Subscription Agreement had been repeated in this
Agreement, and the Initial Subscription Agreement is hereby amended to
the extent necessary to give effect hereto.
5.3 ACTIONS TO SATISFY COVENANTS. Each of the Corporation, Draxis Health
and SGF Sante hereby agrees to take all such actions as are within its
power to control and to use all reasonable commercial efforts to cause
other actions to be taken which are not within its power to control so
as to ensure compliance with any of its covenants and conditions set
forth herein.
ARTICLE 6
CLOSING
6.1 CLOSING. The Closing of the transaction contemplated by this Agreement
shall be held at the offices of XxXxxxxx Xxxxxxxx llp, Le Windsor, 0000
Xxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxx, Xxxxxx, X0X 0X0, on March 28, 2002 or
on such other date and at such other time as may be agreed upon by the
parties hereto (the "Closing Date").
ARTICLE 7
SURVIVAL AND RELIANCE ON REPRESENTATIONS
AND WARRANTIES AND INDEMNIFICATION
7.1 SURVIVAL NOTWITHSTANDING INVESTIGATION. The parties hereto shall be
entitled to rely upon the representations and warranties set forth
herein and the covenants and obligations of the parties hereto which
shall survive the Closing Date and shall continue in full force and
effect in accordance with and subject to the terms of this Article 7
notwithstanding any due diligence investigation by SGF Sante or Draxis
Health.
7.2 INDEMNIFICATION BY THE CORPORATION AND DRAXIS HEALTH. Subject to the
limitations provided in this Agreement, the Corporation and Draxis
Health shall be solidarily liable to SGF Sante and its respective
directors, officers and employees (collectively, the "SGF Sante
Indemnified Persons" and singly a "SGF Sante Indemnified Person") and
shall defend, indemnify and hold harmless all of the SGF Sante
Indemnified Persons against any and all loss, including a decrease in
value of the SGF Subscribed Shares, liability, cost, fine or expense of
any kind (other than indirect, consequential or incidental losses or
damages such as losses of profits or of business opportunities),
including the reasonable cost of legal representation in respect
thereof and any interest or penalty in connection
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therewith ("Claims"), incurred or suffered by or imposed upon any of
the SGF Sante Indemnified Persons arising directly or indirectly out of:
7.2.1 the breach of any representation or warranty of the Corporation
contained in Article 3 or Article 5 of this Agreement;
7.2.2 the breach or non-fulfilment of any agreement, covenant,
undertaking or obligation of the Corporation contained in this
Agreement.
7.3 INDEMNIFICATION BY THE CORPORATION. Subject to the limitations
provided in this Agreement, the Corporation shall be liable to Draxis
Health and its respective directors, officers and employees
(collectively, the "Draxis Health Indemnified Persons" and singly a
"Draxis Health Indemnified Person") and shall defend, indemnify and
hold harmless all of the Draxis Health Indemnified Persons against any
and all loss, including a decrease in value of the Draxis Health
Subscribed Shares, liability, cost, fine or expense of any kind (other
than indirect, consequential or incidental losses or damages such as
losses of profits or of business opportunities), including the
reasonable cost of legal representation in respect thereof and any
interest or penalty in connection therewith ("Claims"), incurred or
suffered by or imposed upon any of the Draxis Health Indemnified
Persons arising directly or indirectly out of:
7.3.1 the breach of any representation or warranty of the Corporation
contained in Article 3 of this Agreement;
7.3.2 the breach or non-fulfilment of any agreement, covenant,
undertaking or obligation of the Corporation contained in this
Agreement.
7.4 INDEMNIFICATION BY SGF SANTE AND DRAXIS HEALTH. Each of SGF Sante and
Draxis Health, individually and only in respect of its own acts or
omissions, shall be liable to each of the Corporation and its
directors, officers and employees (collectively, the "Corporation
Indemnified Persons" and singly, a "Corporation Indemnified Person")
and shall defend, indemnify and hold harmless all of the Corporation
Indemnified Persons against any and all loss, liability, cost, fine or
expense of any kind (other than indirect, consequential or incidental
losses or damages such as losses of profits or of business
opportunities), including the reasonable cost of legal representation
in respect thereof and any interest or penalty in connection therewith
("Claims"), incurred or suffered by or imposed upon any of the
Corporation Indemnified Persons arising directly or indirectly out of:
7.4.1 the breach of any representation or warranty of SGF Sante or
Draxis Health, as the case may be, contained in Article 4 of
this Agreement; and
7.4.2 the breach or non-fulfilment of any agreement, covenant,
undertaking or obligation of SGF Sante or Draxis Health, as the
case may be, contained in this Agreement.
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7.5 INDEMNIFICATION AGAINST THIRD-PARTY CLAIMS
7.5.1 Promptly upon receipt by any of the SGF Sante Indemnified
Persons, the Draxis Health Indemnified Persons or the
Corporation Indemnified Persons (in this section referred to as
the "Indemnitee") of notice of any demand or statement:
(a) by or on behalf of any Person or entity other than SGF
Sante, Draxis Health or the Corporation; and
(b) which, if maintained or enforced, will or might result in
any Claim of the nature described in sections 7.2, 7.3 or
7.4,
("Third-Party Claim") in respect of which the Indemnitee
proposes to demand indemnification from SGF Sante, Draxis
Health or the Corporation and Draxis Health solidarily, as the
case may be, (in this section referred to as the "Indemnitor")
pursuant to the provisions hereof, the Indemnitee shall give
written notice to that effect to the Indemnitor with reasonable
promptness.
7.5.2 The Indemnitor shall have the right by written notice to the
Indemnitee within 30 days of the giving of the notice described
in subsection 7.5.1 to assume the control of the defence,
compromise or settlement of the Third-Party Claim, without cost
to the Indemnitee and without limiting in any way the
Indemnitee's right to indemnification pursuant to the
provisions hereof.
7.5.3 Upon the assumption of control by the Indemnitor as aforesaid,
the Indemnitor shall diligently proceed with the defence,
compromise or settlement of the Third-Party Claim at
Indemnitor's sole expense, including retention of counsel
reasonably satisfactory to the Indemnitee. The Indemnitee
shall cooperate fully, but at the sole expense of the
Indemnitor, in making available to the Indemnitor all pertinent
information and witnesses under the Indemnitee's control and in
taking such other steps as in the reasonable opinion of counsel
for the Indemnitor are necessary to enable the Indemnitor to
conduct such defence. The Indemnitee shall be entitled to
reasonable security from the Indemnitor for any expense, costs
or other liabilities to which it may be or may become exposed
by reason of such cooperation.
7.5.4 The final determination of any such Third-Party Claim,
including all related costs and expenses, shall be binding and
conclusive upon the parties hereto, as to the validity or
invalidity, as the case may be, of such Third-Party Claim
against the Indemnitor hereunder. Notwithstanding any
provision of this section 7.5, the Indemnitor may not consent
to any settlement of a Third-Party Claim if the terms of such
settlement require the Indemnitee to act or refrain from
acting, without the prior written consent of the Indemnitee.
7.5.5 Should the Indemnitor fail to give notice to the Indemnitee as
provided in subsection 7.5.2, the Indemnitee shall be entitled
to make such settlement of the Third-Party Claim as in its sole
discretion may appear advisable, and such
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settlement or any other final determination of the Third-Party
Claim shall be binding upon the Indemnitor.
7.6 INDEMNIFICATION TO BE AFTER INSURANCE, ETC. The amount of the
indemnification for any Claim shall be payable on demand and shall be
determined after giving effect to any insurance recoveries or
recoveries from third parties, other than the Corporation.
7.7 AMOUNT OF CLAIM. For purposes of determining the amount of any Claim
contemplated by section 7.2, SGF Sante shall be entitled, at its sole
option, to deem the amount of such Claim to be equal to 5.71% or, in
the event the Second Closing is cancelled as a result of the
application of section 2.3, 1.36% (the "SGF Share of the Underlying
Loss") of the actual loss or liability of the Corporation (the
"Underlying Loss") which gave rise to such Claim, calculated as if
section 7.6 applied, MUTATIS MUTANDIS, for the purposes of this Article
7; all other provisions of this Article 7 shall thereupon continue to
apply as if the SGF Share of the Underlying Loss were the Claim.
7.8 CURRENCY OF INDEMNIFICATION. If any Claim is based on an expense
incurred in, or a Third-Party Claim expressed in, currency other than
Canadian currency, it shall be converted into Canadian currency at the
rate of exchange prevailing as of the date of payment, or expenditure
or ascertainment of loss in the absence of direct payment, or at the
date of the Third-Party Claim, as the case may be, giving rise to the
Claim.
7.9 EXPIRY AND LIMIT OF LIABILITY.
7.9.1 The representations and warranties of the Corporation, Draxis
Health and SGF Sante herein (except in the event of fraud,
gross negligence or deliberate misrepresentation) shall
continue in full force and effect for a period of three years
after the Closing Date and no Claim shall be made after such
termination date by any party based on or arising out of the
breach or non-fulfilment of any such representations or
warranties.
7.9.2 In the event of fraud or deliberate misrepresentation by
commission or omission, the representations and warranties of
the Corporation, Draxis Health and SGF Sante herein shall
continue in full force and effect indefinitely after the
Closing Date.
7.9.3 Notwithstanding the provisions of this section 7.9, no Claims
with respect to breaches or failures of representations and
warranties contemplated by subsections 7.2.1, 7.3.1 and 7.4.1
which would, were it not for this subsection 7.9.3, have
occurred, may be made against any of the SGF Indemnified
Persons, the Draxis Health Indemnified Persons or the
Corporation Indemnified Persons hereunder, and no breach or
failure of representations and warranties contemplated by
subsections 7.2.1, 7.3.1 and 7.4.1 shall be considered to have
occurred, unless and until the individual Claim or aggregate of
individual Claims which would, were it not for this subsection
7.9.3 have arisen, exceeds $100,000, in which event all
breaches and failures of representations and warranties
contemplated in subsection 7.2.1, 7.3.1 and
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7.4.1 shall be considered to have occurred as if this
subsection 7.9.3 did not exist and the amounts claimable shall
be the aggregate of the Claims then being asserted and not be
limited to that amount only in excess of the above limit.
7.10 SGF SANTE'S RECOURSES. In the event of a Claim which, in accordance
with section 7.7, is deemed to be equal to the SGF Share of the
Underlying Loss, in settlement of the obligations of Draxis Health
under this Article 7, Draxis Health shall have the option of either:
7.10.1 paying SGF Sante the amount of the SGF Share of the Underlying
Loss; or
7.10.2 investing a sum of money in the Corporation, as a contribution
to capital and without any shares or debt issued to it in
consideration therefor, which is equal to the Underlying Loss
so as to put the Corporation in the same financial position it
would have been in, on a consolidated basis, if the event
giving rise to the Underlying Loss had not occurred.
7.11 DRAXIS HEALTH OBLIGATIONS. The obligations of Draxis Health hereunder
are as primary obligor and not as surety or guarantor and Draxis Health
agrees that it does not have any right of subrogation against the
Corporation with respect hereto.
7.12 OTHER RECOURSES. The provisions of this Article 7 constitute
additional remedies for SGF Sante Indemnified Persons and are in
addition to any other recourses they may have, including pursuant to
section 5.2 and the Initial Subscription Agreement or otherwise under
Applicable Laws and including the right of SGF Sante to demand
resolution of this Agreement.
ARTICLE 8
ARBITRATION
8.1 CHOICE OF ARBITRATION. Subject to section 8.11 below, any Claim
arising in respect of this Agreement which is challenged, any
controversy or dispute regarding the execution of this Agreement,
including its annulment, as well as any dispute with regard to the
interpretation or application of this Agreement must be submitted to
arbitration to the exclusion of the courts, the whole in accordance
with the procedure hereinafter established.
8.2 NOTICE TO ARBITRATE. Any party or parties to this Agreement wishing to
submit a Claim, conflict, dispute or disagreement (collectively a
"Dispute") to arbitration must forward to the other parties to the
Dispute a written notice (hereinafter referred to as "Notice to
Arbitrate"), containing a reasonably detailed description of the
Dispute and the nomination of an arbitrator.
8.3 CHOICE OF SECOND ARBITRATOR. Within 10 days of the receipt of Notice
to Arbitrate, the other party or parties involved in the Dispute shall
name a second arbitrator and send a notice to this effect to the party
or parties making the submission, the first-named
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arbitrator and to the second-named arbitrator; in the absence of such
a notice, the first-named arbitrator shall be the sole arbitrator and
sections 8.6 to 8.10 inclusively shall apply mutatis mutandis.
8.4 CHOICE OF THIRD ARBITRATOR. The two arbitrators appointed in
accordance with the above procedure shall, within 10 days following the
appointment of the second arbitrator, name a third arbitrator who shall
be a member in good standing of the
Quebec Bar and will act as
President of the Arbitration Committee; if the first two arbitrators
fail to agree on a third arbitrator, either one or both may apply to a
judge of the Superior Court of the Province of
Quebec, District of
Montreal, to appoint the third arbitrator.
8.5 CHOICE OF SINGLE ARBITRATOR. In order to minimize costs, the parties
involved in any dispute may agree, in writing, to appoint a single
arbitrator in which event a notice of such appointment shall be sent to
the arbitrator in question; sections 8.6 to 8.10 inclusively shall
apply mutatis mutandis to such sole arbitrator.
8.6 HEARING AND AWARD. The hearing shall be held in Montreal. The date of
hearing must be held within 30 days of the appointment of the third
arbitrator. The award of the board of arbitrators must be rendered in
writing and served to the parties within 90 days following the hearing.
Any such award (including with respect to the payment of fees and
disbursements related to the arbitration) which is rendered shall be
final, binding and without appeal, and shall become executory as a
judgement against the parties upon homologation.
8.7 PROCEDURE AND EVIDENCE. Notice shall be given by the arbitrators, in
writing, of the time and place of any hearings except where such
hearings are adjourned by the arbitrators in the presence of both of
the parties hereto. In the conduct of the hearing and particularly in
the taking of testimony or other evidence in the course thereof, the
arbitrators shall be bound by the rules of law applying to the
competence, relevance and materiality of witnesses and testimony in the
courts of the Province of Quebec and the rules of procedure set out in
the CODE OF CIVIL PROCEDURE (Quebec). The arbitrators shall have full
power and authority to permit, before or during any hearing, any
amendment to the arbitration submission requested by the parties so
submitting as well as any cross-demand by the other party or parties.
8.8 RESPECT OF DELAYS. In the event that the arbitration hearing is not
held, or the arbitration award is not rendered, within the respective
delays set out above, upon the receipt of a written notice to this
effect from any party to the arbitration, the arbitrators shall no
longer have jurisdiction to decide the matter submitted to them, and
any party may thereupon take all steps to submit the matter to
arbitration once again pursuant to these rules of procedure.
8.9 REPLACEMENT OF ARBITRATORS. In the event that one or more of such
arbitrators resigns, refuses to act, withdraws, dies or otherwise
becomes unable to fulfill the duties imposed upon him, then his place
shall be filled by the parties originally naming him or if named by the
other arbitrators, his place shall be filled by an appointment made by
them; if no replacement has been named within 15 days following the
date upon which the parties
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were advised of such failure to act, the vacancy may be filled by a
judge of the Superior Court of the Province of Quebec, District of
Montreal, upon motion by one of the parties.
8.10 SUPPLETIVE PROVISIONS. The parties to this Agreement agree that the
provisions presently in effect of the CODE OF CIVIL PROCEDURE (Quebec)
shall receive suppletive application to any arbitration proceeding
undertaken or held by virtue of the present Agreement. In the event of
a contradiction between the provisions of this Article 8 and the
provisions of the aforementioned sections of the CODE OF CIVIL
PROCEDURE (Quebec), the provisions of this Article 8 shall have
precedence.
8.11 EXCEPTIONS TO ARBITRATION. Notwithstanding the provisions of this
Article 8, any party shall be entitled to commence procedures in a
court of law in order to obtain injunctive relief or seizure against a
defaulting party.
8.12 LANGUAGE. Each party to the arbitration shall be entitled to use
English or French at its or his sole discretion. The arbitrator(s)
shall be bilingual and able to communicate in both English and French.
ARTICLE 9
GENERAL PROVISIONS
9.1 SUCCESSORS AND PERMITTED ASSIGNS. The provisions of this Agreement
shall, except as otherwise provided herein, enure to the benefit of and
be binding upon the parties hereto and their respective
representatives, administrators, successors and permitted assigns and
each and every Person so bound shall make, execute and deliver all
documents necessary to carry out this Agreement.
9.2 NO ASSIGNMENT. No party may assign its rights or obligations under
this Agreement without the express written consent of all other
parties, except that SGF Sante may do so in favour of any other entity
ultimately controlled by the government of the province of Quebec
provided the acquirer agrees and undertakes to respect and be bound by
the provisions of this Agreement.
9.3 NOTICES. All communications, notices and demands required or permitted
hereunder shall be in writing and shall be deemed to have been duly
given upon personal delivery, including delivery by courier or
facsimile (with proof of receipt) to the addresses as set forth below:
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IF TO SGF SANTE:
SGF SANTE INC.
X/X XXXXXXX XXXXXXXX XX XXXXXXXXXXX XX XXXXXX
000 de La Gauchetiere West, Suite 1700
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: The Secretary
Fax: (000) 000-0000
IF TO THE CORPORATION:
DRAXIS PHARMA INC.
00000 XxxxxXxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: President
Fax: (000) 000-0000
IF TO DRAXIS HEALTH:
DRAXIS HEALTH INC.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: The Secretary
Fax: (000) 000-0000
Each of the parties shall be entitled to specify different or
additional addresses by giving written notice to the other party in the
manner set forth herein.
9.4 BROKERAGE COMMISSIONS. None of the Corporation, Draxis Health nor SGF
Sante has paid or become obligated to pay any fee or commission to any
broker, investment banker, finder or the like in connection with the
transactions contemplated by this Agreement. Each party hereby agrees
to indemnify, defend and hold harmless the other against any and all
Claims of the above-mentioned brokers, investment bankers, finders or
the like, and against the Claims of all other parties claiming any
right to a commission or compensation by or through the acts of that
party or that party's partners, employees, agents or Affiliates in
connection with this Agreement. Each party's indemnification
obligations provided in Article 7 shall include all damages, losses,
liabilities, and expenses, including reasonable attorneys' fees,
incurred in connection with any such claim for a broker's or finder's
fee.
9.5 TIME OF THE ESSENCE. Time shall be of the essence of this Agreement.
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9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, and such counterparts shall together constitute but one and
the same Agreement.
9.7 SEPARABILITY. In the event that any provision of this Agreement is
held invalid or unenforceable, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of
this Agreement.
9.8 CONSENTS AND APPROVALS. Except as otherwise expressly set forth
herein, whenever any party's consent or approval must be obtained
hereunder, such consent or approval shall not be unreasonably withheld,
delayed or conditioned.
9.9 ANNOUNCEMENTS. SGF Sante reserves the right for itself or its
governmental representatives to publicly announce the following
information in connection with its investment: the name and address of
the Corporation, the nature of its business, the nature and amount of
the investment and the number of jobs to be created, the whole subject
to the prior approval by the Corporation of the content of such
announcement. Draxis Health shall also be entitled to publicly
announce the completion of the transaction contemplated herein, subject
to the prior approval by SGF Sante of the content of the announcement.
It is also recognized that Draxis Health is subject to certain
disclosure obligations under Applicable Laws as a result of the listing
of its shares on the Toronto Stock Exchange and NASDAQ, and it is
agreed that the prior approval by SGF Sante of the content of all such
disclosures with respect to the transaction contemplated herein and all
accessory matters shall be required which approval shall not be
unreasonably withheld or delayed, it being agreed that if such approval
is not obtained in the required delay imposed by Applicable Laws then
the Corporation may process with same disclosure. In the event that
the Corporation organizes an official ceremony or press conference to
publicize the investment by SGF Sante, it shall obtain its prior
written approval which shall not be unreasonably withheld and advise it
of such ceremony at least 15 days prior thereto in order to permit SGF
Sante or its representatives or invitees to attend thereat.
9.10 LANGUAGE. This Agreement is executed by all the parties hereto in
French and in English. The parties hereto expressly agree that in the
event of any misunderstanding, dispute or controversy amongst them with
respect to any of the provisions of this Agreement, the French version
and the English version shall have equal value and neither of them
shall prevail.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
SGF SANTE INC.
Per: /s/ Xxxxxx Xxxxx
-----------------------------
Xxxxxx Xxxxx
Per: /s/ Michel Sainte-Xxxxx
-----------------------------
Michel Sainte-Xxxxx
DRAXIS PHARMA INC.
Per: /s/ Xxxxxxx Xxxxxx
-----------------------------
Xxxxxxx Xxxxxx
DRAXIS HEALTH INC.
Per: /s/ Xxx Xxxxxx
-----------------------------
Xxx Xxxxxx
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