SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 29, 2000
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Date of Report
(Date of Earliest Event Reported)
BioSyntech Inc.
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(Exact Name of Registrant as Specified in its Charter)
Nevada 0-27179 88-0329399
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
475 Boulevard Armand-Frappier
Laval, Quebec, Canada
H7V 4B3
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(Address of Principal Executive Office)
(450) 686-2437
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(Registrant's telephone number,
including area code)
Dream Team International, Inc.
3675 Pecos-McLeod, Suite 112
Las Vegas, NV 89119
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(Former Name and Former Address)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Amalgamation Agreement and related agreements,
as amended (the "Exchange Agreements"), dated February 15, 2000 by and
among BioSyntech, Inc. (formerly Dream Team International Inc., the
"Registrant" or the "Company"), a Nevada corporation, its wholly-owned
subsidiary 9083-5661 Quebec Inc., a Quebec corporation (the
"Purchaser"), Bio Syntech Ltd., a Quebec corporation ("Bio Syntech"),
and the shareholders of Bio Syntech (the "Bio Syntech Shareholders"),
on February 29, 2000, the Purchaser and Bio Syntech were merged into
one company under the name of Bio Syntech Canada Inc. ("Bio Syntech
Canada"). As a result of the Exchange Agreements, the Registrant became
the record and beneficial owner of all of the issued and outstanding
shares of Bio Syntech Canada's Common Stock and the Bio Syntech
Shareholders were issued non-voting exchangeable shares of Bio Syntech
Canada's Preferred Stock (the "Class A Shares"). The Class A Shares are
exchangeable on a share-for-share basis, for an aggregate of 15,177,036
shares (the "Registrant Shares") of Common Stock, $.001 par value, of
the Registrant. The Registrant Shares issued under the Exchange
Agreements are held in trust under the terms of an Exchange and Voting
Agreement (the "Trust Agreement"), by and among the Registrant, Pierre
Barnard (the "Trustee"), Bio Syntech and the Purchaser. (The foregoing
transactions are referred to collectively hereinafter as the
"Transactions").
Prior to the Transactions, there were 11,625,000 shares of
Common Stock outstanding, taking into account a 3.75 for 1 split
effectuated on December 28, 1999 and the repurchase of 10,875,000
shares of Common Stock on February 2, 2000. As part of the
Transactions, the Registrant completed two private placements (the
"Private Placements") yielding gross proceeds of $2,350,000 in which it
issued an aggregate of 470,000 shares of Common Stock and warrants (the
"Warrants") to purchase an aggregate of 470,000 additional shares of
Common Stock at a price of $7.00 on or before September 30, 2001. After
giving effect of the Transactions, there are 27,272,036 shares of
Common Stock outstanding. In addition, 1,500,000 shares of Common Stock
are reserved for issuance upon exercise of options granted or to be
granted under the Bio Syntech Canada Employee Stock Option Plan and
470,000 shares of Common Stock are reserved for issuance upon exercise
of the Warrants.
Each beneficial holder of the Class A Shares has voting rights
in that number of Registrant Shares equal in number to the number of
the Class A Shares held by such holder. Consequently, the Bio Syntech
Shareholders hold securities with voting rights equal to approximately
55.7% of the total voting power of the outstanding Common Stock. At
such time as the holders of Class A Shares may exchange such shares for
the Registrant Shares, they will have the right to direct the
disposition of such Registrant Shares.
The sole source of consideration for issuance to the Bio
Syntech Shareholders of the Class A Shares was the exchange of the Bio
Syntech
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shares held by them. At such time as the Bio Syntech Shareholders may
exchange their Class A Shares for Registrant Shares, the sole source of
consideration for the transfer to them of the Registrant Shares will be
such Class A Shares.
Control of the Registrant was acquired by the Purchaser, by
virtue of the issuance of the 15,177,036 shares of Common Stock to the
Trustee as part of the Transactions. Prior to the Transaction, the
Registrant was controlled by Rebecca A. Berney and Caron A. Kelley, of
Las Vegas Nevada, by virtue of their holding respectively 5,062,500 and
4,875,000 shares of Common Stock, which shares were redeemed and
retired on February 2, 2000.
The Registrant was formed to provide a method for a foreign or
domestic private company to combine with a company whose securities are
registered under the Securities Exchange Act of 1934, as amended. Prior
to the Transactions, the Registrant had no operations, revenues,
material assets or liabilities. The Exchange Agreements were structured
to provide the Bio Syntech Shareholders with a capital gain deferral
under applicable Canadian tax laws, rules and regulations. In
anticipation of the Transactions, the Registrant changed its name to
"BioSyntech Inc."
On the effective date of the Transactions, the officers and
directors of the Registrant resigned and new officers and directors
were appointed. See "Management" below.
Copies of the Exchange Agreements and related transactions
documents are filed as exhibits to this Current Report on Form 8-K and
are incorporated in their entirety herein. The description of the
exhibits contained in this report is modified by such reference.
(b) The following table contains information at February 29, 2000
regarding the beneficial ownership of shares of Common Stock by the
Registrant's current directors and executive officers and those persons
or entities who, to the Registrant's knowledge, beneficially own more
than 5% of the Common Stock, after giving effect to the Transactions:
<TABLE>
<CAPTION>
Shares of Common
Name and Stock Percentage of Common
Address of Beneficially Stock Beneficially
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<S> <C> <C>
9083-1496 Quebec Inc. (4) 7,640,000(4) 28.0%
475 Boulevard Armand-Frappier
Laval, Quebec, Canada H7V 4B3
Amine Selmani (4) 7,952,500(5) 28.8%
Chairman of the Board and President
475 Boulevard Armand-Frappier
Laval, Quebec, Canada H7V 4B3
Denis N. Beaudry (6) 0(6) --
Director
3744 Jean-Brillant, Suite 6332
Montreal, Quebec, Canada H3B 1P1
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Pierre Alary 0 --
Director
1101 Parent Street
Saint-Bruno, Quebec,
Canada J3V 6E6
Jean-Yves Bourgeois 0 --
Director
119 du Bearn Avenue
Saint-Lambert, Quebec,
Canada J4S 1K6
Pierre Ranger (7) 100,000 0.4%
Director
1800, Boulevard Le Corbusier, bur.
113
Laval, Quebec, Canada H7S 2K1
All Officers and Directors as a 8,052,500 29.1%
group
(5 persons)
</TABLE>
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(1) Includes rights to acquire Registrant Shares through exchange of Class
A Shares.
(2) A person is deemed to be the beneficial owner of voting securities that
can be acquired by such person within 60 days after February 29, 2000
upon the exercise or conversion of options, warrants or convertible
securities. Each beneficial owner's percentage ownership is determined
by assuming that options, warrants and convertible securities that are
held by such person (but not those held by any other person) and that
are exercisable or convertible within 60 days after February 29, 2000
have been exercised or converted.
(3) Based upon 27,272,036 outstanding shares of Common Stock.
(4) Mr. Selmani does not own directly any Class A Shares or Common Stock.
However, by virtue of his ownership of 9083-1496 Quebec Inc., Mr.
Selmani has shared voting and dispositive power with respect to the
7,640,000 Class A Shares owned by 9083-1496 Quebec Inc. Mr. Selmani
also may be deemed the beneficial owner of 312,500 shares of Common
Stock that would be held by him upon exchange of 312,500 Class A Shares
issuable upon exercise of options.
(5) Does not include an aggregate of 1,085,000 shares of Common Stock
beneficially owned by Monique Jarry, the spouse of Mr. Selmani.
(6) Denis N. Beaudry is the representative of Polyvalor on the Company's
Board of Directors. Does not include 1,072,000 shares of Common Stock
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beneficially owned by Polyvalor. (See "Agreement with Polyvalor.") Mr.
Beaudry disclaims beneficial ownership of such shares.
(7) Represents 100,000 shares of Common Stock that would be beneficially
owned upon exercise of an option granted under the Bio Syntech Canada
Employee Stock Option Plan.
Class A Shares
Bio Syntech Canada has authorized an unlimited number of Class A
Shares, of which 15,177,036 have been issued to the Bio Syntech Shareholders. In
addition 1,500,000 Class A Shares are reserved for issuance upon exercise of
options granted or to be granted under the Bio Syntech Canada Employee Stock
Option Plan.
The Class A Shares may be exchanged for an equal number of shares of
Common Stock (which shares are held by the Trustee for such exchange) upon
proper notification to the Registrant. The Registrant has issued and placed with
the Trustee the Registrant Shares, consisting of 15,177,036 shares of Common
Stock, for use in exchange of the Class A Shares pursuant to the Exchange
Agreements. By virtue of the Transactions, the Bio Syntech Shareholders are able
to defer certain Canadian taxes otherwise payable upon the disposition of their
shares in Bio Syntech Canada, while maintaining voting rights in the Registrant.
The Exchange Agreements set forth the rights and restrictions
pertaining to the Class A Shares and the Registrant Shares. The Registrant
Shares will be held by the Trustee pending exchange of the Class A Shares. Upon
exchange by the holder of Class A Shares, the Registrant Shares will be released
to the exchanging Bio Syntech Shareholder and an equal number of Class A Shares
will be delivered to the Registrant. The Bio Syntech Shareholders have the right
to vote their interests in the Registrant directly or through the Trustee.
The Registrant Shares, while held by the Trustee, will not be entitled
to participate in dividends declared by the Registrant; provided, however, the
Registrant has agreed that should it declare a dividend on its Common Stock it
will ensure that Bio Syntech Canada has the means to pay a like dividend on the
Class A Shares.
The following summary of the provisions of the Class A Shares should be
read in conjunction with the descriptions provided in the Exchange Agreements,
which are attached hereto as exhibits.
(i) Exchange Rights on the Liquidation of Registrant. Holders of the
Class A Shares have the right, upon the occurrence and during the continuance of
any proceeding in bankruptcy, insolvency, liquidation, dissolution or winding up
commenced by Bio Syntech Canada or against Bio Syntech Canada, to require the
Registrant to purchase all or any part of the Class A Shares held by them at an
amount equal to (a) the current market price of the Common Stock on the last
business day prior to the day of purchase plus (b) an additional amount equal to
the full amount of all dividends declared and paid on such Class A Shares and on
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all dividends declared on the Registrant's common stock which have not been
declared on the Class A Shares.
(ii) Automatic Exchange on the Liquidation of the Registrant. In order
for holders of the Class A Shares to participate on a pro rata basis with the
holders of the Registrant's common stock in the event of a voluntary or
involuntary dissolution, liquidation or winding-up of the Registrant, all of the
then outstanding Class A Shares shall be automatically exchanged for shares of
Common Stock of the Registrant in the absence of an affirmative written election
from a holder of Class A Shares not to participate in the automatic exchange.
(iii) Retraction by Holder. A holder of Class A Shares is entitled at
any time to require Bio Syntech Canada, subject to the right to purchase the
Class A Shares of the Registrant (the "Call Right"), to redeem any or all of the
Class A Shares held by it in an amount equal to the current market price of the
Common Stock on the last business day prior to the retraction date (the
"Retraction Price"), which may be satisfied in full by Bio Syntech Canada
causing to be delivered to such holder one share of common stock of the
Registrant held by the Trustee for each Class A Share held by the retracting
holder. If the Registrant exercises its Call Right, the retraction will be
considered an offer to sell the Class A Shares to the Registrant at the price of
(a) the Retraction Price plus (b) an additional amount equal to the full amount
of all dividends declared and paid on such Class A Shares and on all dividends
declared on the shares of Common Stock which have not been declared on the Class
A Shares.
(iv) Purchase For Cancellation. Bio Syntech Canada may at any time and
from time to time offer to purchase for cancellation all or any of the
outstanding Class A Shares at any price by tender to all of the holders of the
Class A Shares then outstanding at any price per share determined by Bio Syntech
Canada plus an amount equal to all declared and unpaid dividends thereon. If in
response to such tender offer, more Class A Shares are tendered than Bio Syntech
Canada is willing to purchase, Bio Syntech Canada shall purchase as nearly as
possible pro rata according to the number of shares tendered by each holder.
(v) Reciprocal Changes. If the Registrant issues or distributes its
warrants, options or other rights to purchase its securities to the holders of
its outstanding common stock or issues shares or securities of any other class
of the Registrant than the common stock exchangeable by the Class A Shares, or
evidences of indebtedness of the Registrant or assets of the Registrant, then
the Purchaser shall issue to the holders of the Class A Shares the economic
equivalent on a per share basis of such rights, options, securities, shares,
evidences of indebtedness or other assets.
(vi) Reclassifications. If the Registrant subdivides, redivides or
changes the outstanding number of its common stock into a greater number or
reduces, combines or consolidates the outstanding number of its common stock
into a lesser number or reclassifies or otherwise changes its common stock or
effects an amalgamation, merger, reorganization or other transaction affecting
its common stock, then Bio Syntech Canada will make the same or an economically
equivalent change simultaneously to, or in the rights of the holders of, the
Class A Shares.
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(vii) Registration of Registrant Shares. The Registrant has agreed to
use its best efforts to register for sale in the United States secondary market
all of the Registrant Shares to be held by the Trustee on behalf of the Bio
Syntech Shareholders. The Registrant intends to register such shares by filing
with the United States Securities and Exchange Commission, as soon as possible,
a registration statement on Form SB-2 pursuant to the Securities Act of 1933.
The timing of the sales of the registered sales, and the prices at which such
shares are sold into the public market (if such market develops, of which there
can be no assurance), will be determined, respectively, by the holders of the
registered shares and by market conditions at the time of such sales. None of
the proceeds of such sales will belong to the Registrant or be applied for its
benefit.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The information set forth in Item 1. Changes in Control of Registrant
is incorporated by reference herein.
The Registrant intends to continue the business development undertaken
by Bio Syntech which, as result of the Transactions, has become a subsidiary of
the Registrant.
Business
References herein to the Company include the Company's subsidiary, Bio
Syntech Canada, unless the context otherwise requires.
The Company is a development stage company engaged in the development
of biotherapeutic delivery systems made of proprietary biomaterials. The
Company's systems are intended to enable or enhance the treatment of diseases or
injuries for which therapies exist or are under development, but must be
transported to the site of action. The Company has limited revenues to date. Its
future operations are dependent upon financing necessary to complete research
and development projects and market the Company's products. There can be no
assurance that the Company will be able to complete the development of its
products, or if completed, that they can be successfully marketed. Furthermore,
there is no assurance that even if the products are completed and marketed, the
revenues therefrom will be sufficient to fund the Company's future operations or
to fund additional research, development and marketing.
Company Background
The Company was founded in 1995 by a research group in advanced
biomaterials at the Ecole Polytechnique de Montreal (the University of
Montreal's engineering faculty, "Ecole Polytechnique"). The founders included
Amine Selmani, Ph.D., other researchers, and Polyvalor Inc., the business
venture arm of the Ecole Polytechnique. Polyvalor is an entity created by Ecole
Polytechnique for the purpose of commercializing the technology in which Ecole
Polytechnique has an interest. The Company has its administrative and commercial
offices, as
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well as its research and development facilities, at 475 Armand-Frappier
Boulevard, in Laval (Quebec), in the Greater Montreal Area (see "Property").
Agreement with Polyvalor
In October 1997, the Company entered into a technology assignment
agreement (the "Assignment Agreement"), as amended in September 1999 and as
amended and restated in March 2000, with Polyvalor Limited Partnership, a
Canadian limited partnership, as represented by its General Partner, Polyvalor
Inc. ("Polyvalor"). Through the Assignment Agreement, the Company acquired from
Polyvalor all rights related to certain patents and know-how (the
"Technologies"). The Technologies were based upon the work of Dr. Selmani and
his team of collaborators at Ecole Polytechnique. In consideration of said
assignment, the Company agreed to pay to Polyvalor a royalty of 5% on all gross
sales of all products and services sold by the Company, up to a maximum
cumulative amount of CDN $3,000,000 (US$2,069,679 based on a foreign exchange
rate on March 1, 2000 of CDN$1.4495 to UD$1.0).
In connection with the Assignment Agreement, Bio Syntech Canada issued
to Polyvalor 1,072,000 Class A Shares and granted Polyvalor the right to
nominate one director to the Company's Board of Directors.
Technology Background
The Company focuses on the creation and development of advanced
injectable vehicles for biotherapeutics, cells and genetic material, and intends
to commercialize these products for the biomedical and pharmaceutical markets.
Current development targets include all therapeutics that cannot be administered
orally, either because they are inactivated in the digestive tract, or because
their therapeutic activity is needed only at a specific site in the body. The
Company's main efforts are focused on researching and developing, either
internally or in collaboration with corporate partners, several programs
exploiting the multiple benefits of its delivery systems, which include the
delivery of, among others, therapeutic proteins, genetic material for
site-specific gene therapy, and living cells or bioartificial organs for
tissue-engineering applications.
Technology and Product
The Company has developed three platform technologies all aimed at the
generation of solutions to efficiently deliver biologically active therapeutics.
(1) BST-Gel(TM): An injectable thermosensitive self-forming
solvent and detergent-free hydrogel for biotherapeutic
delivery;
(2) BST-Spheres: Microspheres for biotherapeutic delivery; and
(3) BST-Cargel(TM): Chondrocytes in an adhesive exogenous matrix
delivered arthroscopically for the treatment of cartilage
defects.
BST-Gel(TM)
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BST-Gel(TM) is a family of polymeric gels that are liquid at low
temperatures and solid at the temperature. This injectable delivery system is
derived from natural sources and contains no toxic chemicals such as chemical
cross-linkers, organic solvents, or detergents. One of its key properties is its
in situ gelling after its injection in liquid form, thus forming a reservoir for
the sustained release of its therapeutic payload that requires no surgery for
its implantation. BST-Gel(TM) is biodegradable, and has an adjustable
composition. The amounts injected vary for different requirements, which result
in controllable residence times ranging from a few days to several weeks. The
Company has developed specialized matrices and an encapsulation technology that
can be used in conjunction with BST-Gel(TM) to provide a proprietary form of
delivery of therapeutic agents and can have the following applications:
o delivery of small molecules, peptides and recombinant
proteins;
o bioengineering of tissues with cells or growth-factor
therapeutics;
o delivery of bone-repair therapeutics;
o delivery of genetic material (DNA vaccines and gene
therapy); and
o development of vaccines based on the sustained
release of antigens.
BST-Spheres
The Company has developed and patented BST-Spheres, a proprietary
process to generate polymer based microspheres used in the delivery of
biotherapeutics, which is free of organic solvents. This proprietary process
offers several advantages over the current approach of making microspheres:
o It does not require the use of toxic chemicals such
as organic solvents or detergents;
o It can be adapted to a wide range of biomaterials,
whether or not biodegradable;
o It is injectable for the sustained release of
biotherapeutics;
o It can be used with a broad range of biotherapeutic
types, from small to large compounds; and
o It may enhance the biotherapeutic-loading capacity of
the vehicle.
BST-Cargel(TM)
BST-Cargel(TM) is a proprietary generation of bioengineered living
articular cartilage-tissue implants developed from cells encapsulated and grown
within a BST-Gel(TM) -based matrix for arthroscopic delivery. A particular
formulation of the gel maintains the cell viability during the delivery period
while assuring the adhesion of BST-Gel(TM) to the underlying bone and
surrounding cartilage. Preclinical studies have shown that chondrocytes embedded
in BST-Gel (TM) produce a matrix having the characteristics of normal cartilage
tissue.
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<PAGE>
Future Products and Research and Development
The Company intends to continue to develop new technologies based on
advanced biomaterials to address unfulfilled medical needs. The Company is
focusing its effort on the development of biomaterials with superior
compatibility with biotherapeutics such as large macromolecules, genetic
material and living cells. With its understanding of the challenges raised for
biotherapeutics delivery, combined with its expertise in the field of
biomaterials and formulation, the Company positioned to participate in an
expanding market of new biologics-derived therapeutics.
Competition
The biotechnology and pharmaceutical industries are subject to rapid
and substantial technological change. There is intense competition in the
development, manufacturing, marketing and commercialization of products from
academic institutions, government agencies, research institutions, biotechnology
and pharmaceutical companies, and other drug delivery companies. There can be no
assurance that developments by others will not render our product candidates or
technologies obsolete or noncompetitive. Many actual and potential competitors
have substantially greater capital resources, manufacturing and marketing
experience, research and development resources and production facilities than
the Company. Many of these competitors also have significantly greater
experience than does the Company in undertaking preclinical testing and clinical
trials of new pharmaceutical products and obtaining required regulatory
approvals.
Trademarks
The Company vigorously pursues a policy of seeking patent protection to
preserve its proprietary technology and its right to capitalize on the results
of its research and development activities. The Company also relies upon trade
secrets, know-how, continuing technological innovations and licensing
opportunities to develop and maintain its competitive position. The Company
regularly searches for third-party patents in its fields of endeavor, both to
shape its own patent strategy as effectively as possible and to identify
licensing opportunities. The Company also relies upon trademarks and tradenames
to protect its technology. The Company has filed an application for the
registration of trademarks for its names BST-GEL(TM), BST-CARGEL(TM) and
ARTHRO-BST(TM) in the United States and Canada and in various other countries.
Revenues and Other Financing
Since inception, the Company has operated using funds received from
equity investment to develop its products and to pay administrative expenses.
The Company projects that additional funds may be received from sales of its
products and its securities. There is no assurance that the Company will be
successful in any sales of its products or that it will be able to raise any
funds through the sales of its securities. In such event the Company may be
required to seek financing for its operations from other sources, including debt
financing or borrowing from financial institutions or other sources. There can
be no assurance that any such funding will be available, or available on terms
acceptable to the Company, if and when needed by the Company.
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Property
The Company has its administrative and commercial offices as well as
Research and development facilities at 475 Armand-Frappier Boulevard, in Laval
(Quebec), in the Greater Montreal Area. A 90,000-square-foot area of land has
been acquired by Bio Syntech Canada on which 20,000-square-foot building was
built to specifications to house the administrative, commercial, scientific, and
technical personnel. This state-of-the-art complex is equipped to conduct
high-level research and development and preliminary production of biomaterials.
In addition, as part of the Company's research and development infrastructure,
research laboratories at the Ecole Polytechnique have been renovated and
equipped for the development of technologies related to articular-cartilage
engineering and biomaterial-testing devices. The Company's laboratories in Laval
are designed to be upgradable to comply with Good Laboratory Practices (GLPs),
while additional space will be devoted in the future to sites for operations
compliant with Good Manufacturing Practices (GMPs).
Management
Name Age Title
Amine Selmani 43 Chairman of the Board, President
Denis N. Beaudry 56 Director
Pierre Alary 41 Director
Jean-Yves Bourgeois 36 Director
Pierre Ranger 45 Director
Amine Selmani, 43, President and Chief Executive Officer. Mr. Selmani
has served as President and Chief Executive Officer of the Company since
February 2000 and President and Chief Executive Officer of Bio Syntech since its
inception in November 1997. Prior to founding Bio Syntech, Mr. Selmani had eight
years of teaching experience at the Chemical Engineering Department and
Biomedical Institute of the Polythechnic School of Montreal as an Associate
Professor from 1992 to 1997 and as an Assistant Professor from 1989 to 1992. Mr.
Selmani received his Bachelor of Science and Master of Science Degrees in
Physical Chemistry in 1979 and 1981, respectively, from the University of
Bordeaux. He also obtained his Doctoral and Post Doctoral Degrees in Materials
Science from the University of Montreal in 1985 and Dalhousy University in 1988,
respectively.
Denis N. Beaudry, 56, Director. Mr. Beaudry has been a Director of the
Company since February 2000. Mr. Beaudry is President of Polyvalor, Montreal,
Quebec, Canada, a limited partnership formed by the Ecole Polytechnique for the
purpose of commercializing the intellectual property of the Ecole Polytechnique.
Since 1984, he has occupied the position of Director of the Centre de
Developpement Technologique of the Ecole Polytechnique whose sphere of
activities includes technology transfer, licensing of technology and software,
joint
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creation with private industry of laboratories and research centers, strategic
alliances, research partnerships, industrial chairs and the emergence of high
technology enterprises. In 1998, he joined Polyvalor as President and General
Manager. His role consisted of enhancing the value of research results for
commercial use by means of start-up of high-tech companies in which Polyvalor
holds a participation or interest. Mr. Beaudry was President of the Quebec
Association of University Research Directors in 1992, and is at present a member
of the Board of Directors of the Centre des Technologies Textiles, the College
Rosemont, the Corporation de Financement de l'Institut de Cardiologie de
Montreal, the Centre de Technologies du Gaz Naturel, the Corporation Commerciale
de Materiaux Composites, the Centre de Developpement Rapide de Produits et de
Procedes, and the firms Sinlab Inc., Phytobiotech Inc., Polyplan Inc., Odotech
Inc. and COESI Inc.
Pierre Alary, CA, 41, Director. Mr. Alary has been a Director of the
Company since February 2000. Mr. Alary has been a Vice President for finance and
information technologies at Bombardier Transport, a designer, manufacturer and
distributor of rail cars. Prior to joining Bombardier Transport, Mr. Alary has
held various positions, including as Senior Partner, at Ernst & Young LLP,
specializing in the biotechnology industry.
Jean-Yves Bourgeois, 36, Director. Mr. Bourgeois has been a Director of
the Company since February 2000. Since 1999, Mr. Bourgeois has been a Director
and Senior Vice President in charge of corporate finance for eastern Canada of
Canaccord, a securities broker/dealer. Prior to joining Canaccord, Mr. Bourgeois
served as a Chief Financial Officer for Aeterna Laboratories. Mr. Bourgeois had
also been in charge of small capital market development, specializing in high
technology and biotechnology industries, for TD Securities, a securities
broker/dealer. From 1992 to 1997, Mr. Bourgeois held various positions,
including the head of corporate finance for eastern Canada, at Gordon Capital,
where he specialized in high technology and biotechnology industries.
Pierre Ranger, 45, Director. Mr. Ranger has been a Director of the
Company since February 2000. Since 1991, Mr. Ranger has been a teaching
professor in the orthopedic residents program at the CMDP Sacred Heart Hospital
of Montreal. Mr. Ranger received his Doctoral of Medicine Degree from the
University of Montreal in 1979 and Diploma of Sports Medicine in 1996.
Remuneration
No fees or other remuneration were paid to directors of the Company
during the year ended December 31, 1999, with the exception of reimbursement of
expenses. The Board of Directors will determine the remuneration of the
directors and officers of the Company during the current and subsequent fiscal
years.
The following table sets forth, for the periods indicated, all
compensation awarded to, earned by or paid to the chief executive officer of
Biosyntech (the "CEO") and the other executive officers of Biosyntech
(collectively, the "Named Executive Officers").
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Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Name and Principal
Position Year(1) Salary Bonus(2) # of Options
- -------- ------- ------ -------- ------------
<S> <C> <C> <C> <C>
Amine Selmani 1999 $120,000 - 312,500
Chief Executive Officer 1998 $120,000 - -
and President
</TABLE>
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(1) The Company commenced operations in November 1997.
(2) Certain of the executive officers of the Company routinely receive
other benefits from the Company, the amounts of which are customary in
the Company's industry. The Company has concluded, after reasonable
inquiry, that the aggregate amounts of such benefits during each of the
periods reflected in the table above did not exceed the lesser of
US$50,000 (CDN$73,600) or 10% of the compensation set forth above for
any named individual in respect of any such period.
Risk Factors
Going Concern Question; Uncertainty of Future Profitability
The Company has suffered losses from its start-up activities and has no
operations or revenues, which raises doubt about its ability to continue as a
going concern. The ability of the Company to continue as a going concern is
dependent upon obtaining the necessary financing to complete its research and
development projects, to market those products once available and upon future
profitable operations. There can be no assurance that the Company will be able
to complete the development of its products, or if completed, that it will be
able to market them successfully. There is no assurance that even if completed
and marketed that revenues from the products will be sufficient to fund the
Company's operations or fund any additional research, development or marketing.
The Company may be required to raise additional capital through debt or equity
financing. There are no assurances that the Company will receive any revenues
from operations or other proceeds nor that it will be able to raise such capital
through debt or equity financing. If the Company is not able to raise such
financing or to obtain alternative sources of funding, management will be
required to curtail development. There is no assurance that the Company will be
able to continue to operate.
Limited Operating History
The Company's operations will be subject to all the risks inherent in
the establishment of a relatively new business enterprise, including the lack of
a
-12-
<PAGE>
significant operating history. There can be no assurance that future operations
will be profitable. Revenues and profits of the Company, if any, will depend
upon various factors, including market acceptance of the Company's concepts,
market awareness, reliability of the biotherapeutic products, and general
economic conditions. There is no assurance that the Company will achieve its
goals and the failure to achieve such goals.
Uncertainty of Product Development
The Company is pursuing, and intends to continue, an aggressive product
development program. Successful product development in the bio-therapeutic
industry is highly uncertain, and only a small minority of research and
development programs ultimately result in the commercialization of a product. Of
the products candidates that are commercialized, all may not be commercially
successful. Product candidates that appear promising in the early phases of
development may fail to reach the market for numerous reasons, including,
without limitation, results indicating lack of effectiveness or harmful side
effects in clinical or preclinical testing, failure to receive necessary
regulatory approvals, uneconomical manufacturing costs, the existence of third
party proprietary rights, failure to be cost effective in light of existing
therapeutics or other factors. There can be no assurance that the Company will
be able to produce future products that have commercial potential.
Additionally, success in preclinical and early clinical trials does not
ensure that large scale clinical trials will be successful. Clinical results are
frequently susceptible to varying interpretations that may delay, limit or
prevent further clinical development or regulatory approvals. The length of time
necessary to complete clinical trials and receive approval for product marketing
by regulatory authorities varies significantly by product and indication and is
often difficult to predict.
Uncertainty of Regulatory Approvals
The Company's research and development, preclinical testing, clinical
trials, facilities, manufacturing and marketing of its products are subject to
extensive regulation by numerous governmental authorities in Canada, the U.S.
and other countries. The success of the Company's product candidates will depend
in part upon obtaining and maintaining regulatory approval to market products in
approved indications. Even if regulatory approval is obtained, a marketed
product and its manufacturer are subject to continued review. Later discovery of
previously unknown problems with a product or manufacturer may result in
restrictions on such product or manufacturer, including withdrawal of the
product from the market. Failure to obtain necessary approvals, or the
restriction, suspension or revocation of any approvals or the failure to comply
with regulatory requirements could have a material adverse effect on the
Company.
Trademark, Patent and License Uncertainties
The patent positions of biotechnology companies can be highly uncertain
and involve complex legal, scientific and factual questions. To date there has
emerged no consistent policy regarding breadth of claims allowed in such
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<PAGE>
companies' patents. Accordingly, there can be no assurance that patents and
patent applications relating to the Company's products and technologies will not
be challenged, invalidated or circumvented or will afford protection against
competitors with similar products or technology. Patent disputes are frequent
and can preclude commercialization of products. The Company may in the future be
involved in patent litigation. Such litigation, if decided adversely, could
subject the Company to significant liabilities, cause the Company to obtain
third party licenses or cease using the technology or product in dispute.
However, there can be no assurance that such licenses will be available on terms
acceptable to the Company, or at all.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired: It is impracticable
to provide the required financial statements at the time this
Report is filed. The required financial statements will be
filed as soon as practicable, but no later than 60 days after
this Report must be filed.
(b) Pro Forma Financial Information: It is impracticable to
provide the required pro form financial information at the
time this Report is filed. The required pro forma financial
information will be filed as soon as practicable, but no later
than 60 days after this Report must be filed.
(c) Exhibits:
2.1 Amalgamation Agreement made December 2, 1999, as amended and
restated on February 15, 2000, among BioSyntech Inc., Bio
Syntech Ltd. and 9083-5661 Quebec Inc.
4.1 Exchange and Voting Agreement made February 16, 2000 Agreement
among BioSyntech Inc., 9083-5661 Quebec Inc., Pierre Barnard
and Bio Syntech Ltd.
4.2 Support Agreement made February 15, 2000 among BioSyntech
Inc., 9083-5661 Quebec Inc. and Bio Syntech Ltd.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BIOSYNTECH INC.
March 15, 2000 By: /s/ Amine Selmani
-----------------------------
Amine Selmani, President
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THIS AMALGAMATION AGREEMENT made as of December 2, 1999, as amended and
restated on February 15 2000.
AMONG:
BIOSYNTECH, INC (formerly Dream Team International Inc) a body
corporate incorporated under the laws of the State of Nevada
("Dream Team")
- and -
BIO SYNTECH LTD., a body corporate incorporated under the laws
of the Province of Quebec with an office in the City of Laval,
in the Province of Quebec ("Bio Syntech")
- and -
9083-5661 QUEBEC INC, a body corporate incorporated under the
laws of the Province of Quebec with an office in the City of
Montreal, in the Province of Quebec ("Newco")
RECITALS:
1. Newco and Bio Syntech wish to merge their businesses so as to continue
as one corporation in accordance with the terms and subject to the conditions
herein set forth;
2. Newco is a wholly-owned subsidiary of Dream Team; and
3. The Parties wish to effect the foregoing merger through the
amalgamation of Newco with Bio Syntech, in accordance with the terms and
conditions herein set forth;
NOW THEREFORE IN CONSIDERATION of the covenants and agreements herein
contained and other good and valuable consideration (the receipt and sufficiency
of which is hereby acknowledged), the parties hereto covenant and agree as
follows:
ARTICLE 2
DEFINITIONS
2.1 In this Agreement, unless the context otherwise requires:
"Agreement" means this agreement, including the recitals and all
Schedules to this agreement as amended or supplemented from time to
time, and "hereby", "hereof", "herein", "hereunder", "herewith" and
similar terms refer to this Agreement and not to any particular
provision of this Agreement;
<PAGE>
2
"Amalgamated Corporation" means the continuing corporation constituted
upon the Amalgamation under the name of Bio Syntech Canada inc.;
"Amalgamation" means the amalgamation of Bio Syntech and Newco to form
Bio Syntech Canada Inc., as provided for herein;
"Articles of Amalgamation" means the articles of amalgamation in
respect of the Amalgamation in the form set forth in Schedule "A";
"Bio Syntech Assets" means all of the assets and properties of Bio
Syntech;
"Bio Syntech Counsel" means De Grandpre Chaurette Levesque , or such
other legal counsel as may be designated by Bio Syntech;
"Bio Syntech Financial Statements" means the audited financial
statements of Bio Syntech for the year ended March 31, 1999 and the
unaudited financial statements of Bio Syntech for the six month period
ended September 30, 1999;
"Bio Syntech Material Adverse Effect" means any action, occurrence or
omission which has or will have a material adverse effect on the
business, assets, properties, condition (financial or otherwise),
results of operations or prospects of Bio Syntech;
"Bio Syntech Meeting" means the special meeting of the holders of Bio
Syntech Shares called for the Meeting Date to consider and, if thought
fit, approve and adopt the Amalgamation, and any adjournments thereof;
"Bio Syntech Options" means options to acquire Bio Syntech Shares
granted to employees or officers of Bio Syntech under its stock option
plan.
"Bio Syntech Warrants" means the outstanding warrants entitling the
holder to acquire common shares of Bio Syntech;
"Bio Syntech Shares" means the common shares without nominal or par
value in the capital of Bio Syntech as constituted on the date hereof;
"Bio Syntech Shareholders" means the holders of Bio Syntech Shares;
"Business day" means a day, other than a Saturday, Sunday or statutory
holiday, when banks in the City of Montreal are generally open for the
transaction of banking business;
"Closing" means the delivery of the documents contemplated by this
Agreement to be delivered by or on behalf of one party hereunder to
another party hereunder in order to effect the completion of the
Amalgamation and the other transactions contemplated herein, which
delivery of documents shall take place at the Closing Time at the
offices of De Grandpre Chaurette Levesque Counsel in Montreal, Quebec,
unless otherwise agreed by Dream Team and Bio Syntech;
<PAGE>
3
"Closing Time" shall be the time on the Effective Date at which the
Closing shall occur, which time shall be 2:00 p.m. (Montreal time)
unless otherwise agreed by Dream Team and Bio Syntech;
"Control" means, with respect to control of a body corporate by a
person, the holding (other than by way of security) by or for the
benefit of that person of securities of that body corporate to which
are attached more than 50% of the votes that may be cast to elect
directors of the body corporate (whether or not securities of any other
class or classes shall or might be entitled to vote upon the happening
of any event or contingency) provided that such votes, if exercised,
are sufficient to elect a majority of the board of directors of the
body corporate;
"Effective Date" means the date the Amalgamation becomes effective
under the Quebec Companies Act;
"Effective Time" means 12:01 a.m. (Montreal time) on the Effective
Date;
"Governmental Authority" includes any federal, provincial, municipal or
other political subdivision, government, department, commission, board,
bureau, agency or instrumentality, domestic or foreign;
"Dream Team Assets" means all of the assets and properties of Dream
Team;
"Dream Team Common Shares" means common shares in the capital of Dream
Team as constituted on the date hereof;
"Dream Team Counsel" means Randall J. Lanham, Esq. or such other legal
counsel as may be designated by Dream Team;
"Dream Team Financial Statements" means the audited financial
statements of Dream Team for the 12 months ended December 31, 1998 and
the unaudited consolidated financial statements of Dream Team for the
nine month period ended September 30, 1999;
"Dream Team Material Adverse Effect" means any action, occurrence or
omission which has or will have a material adverse effect on the
business, assets, properties, condition (financial or otherwise),
results of operations or prospects of Dream Team;
"Dream Team Shares" means the common shares without nominal or par
value in the capital of Dream Team as constituted on the date hereof;
"Dream Team Shareholders" means the holders of Dream Team Shares;
"Information Circular" means the information circular to be used in
connection with the holding of the Bio Syntech Meeting;
"Misrepresentation" includes any untrue statement of a material fact,
any omission to state a material fact that is required to be stated and
any omission to state a material fact that is necessary to be stated in
order for a statement not to be misleading;
<PAGE>
4
"Non-Voting Exchangeable Share" means the non-voting exchangeable
shares of Bio Syntech Canada Inc;
"Person" includes any individual, partnership, firm, trust, body
corporate, government, governmental body, agency or instrumentality,
unincorporated body of persons or association;
ARTICLE 2
INTERPRETATION
2.1 The division of this Agreement into articles, sections, subsections and
paragraphs and the insertion of headings are for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
2.2 Unless the contrary intention appears, references in this Agreement to
an article, section, subsection, paragraph, clause, subclause or
schedule by number or letter or both refer to the article, section,
subsection, paragraph, clause, subclause or schedule, respectively,
bearing that designation in this Agreement.
2.3 In this Agreement, unless the contrary intention appears, words
importing the singular include the plural and vice versa and words
importing gender shall include all genders.
2.4 In the event that the date on which any action is required to be taken
hereunder by any of the parties is not a business day in the place
where the action is required to be taken, such action shall be required
to be taken on the next succeeding day which is a business day in such
place.
2.5 References in this Agreement to any statute or sections thereof shall
include such statute as amended or substituted and any regulations
promulgated thereunder from time to time in effect.
2.6 Unless otherwise stated, all references in this Agreement to sums of
money are expressed in lawful money of Canada.
2.7 All representations, warranties, covenants and opinions in or
contemplated by this Agreement as to the enforceability of any
covenant, agreement or document are subject to enforceability being
limited by applicable bankruptcy, insolvency, reorganization and other
laws affecting creditors' rights generally and by the discretionary
nature of certain remedies (including specific performance and
injunctive relief).
ARTICLE 3
AMALGAMATION
3.1 Amalgamation. Bio Syntech and Newco agree to amalgamate pursuant to the
provisions of the Quebec Companies Act and to continue as one
corporation effective on the Effective Date, on the terms and subject
to the conditions set out herein.
3.2 Name. The name of the Amalgamated Corporation shall be Bio Syntech
Canada Inc.
<PAGE>
5
3.3 Registered Office. The registered office of the Amalgamated Corporation
shall be situate at the registered office of BioSyntech.
3.4 Authorized Capital and Restrictions on Share Transfers. The Amalgamated
Corporation shall be authorized to issue an unlimited number of common
shares and an unlimited number of NonVoting Exchangeable Shares, which
shall have the rights, privileges, restrictions and conditions set
forth in the Articles of Amalgamation and the Quebec Companies Act.
3.5 Number of Directors. The minimum number of directors of the Amalgamated
Corporation shall be one (1) and the maximum number of directors of the
Amalgamated Corporation shall be nine (9).
3.6 First Directors. The number of first directors of the Amalgamated
Corporation shall be five. The first directors of the Amalgamated
Corporation shall be the persons who are directors of BioSyntech
immediately before the effective date of the Amalgamation
The first directors shall hold office until the first annual or general
meeting of the shareholders of the Amalgamated Corporation or until
their successors are duly appointed or elected. The subsequent
directors shall be elected each year thereafter as provided for in the
Quebec Companies Act and the by-laws of the Amalgamated Corporation.
The management and operation of the business and affairs of the
Amalgamated Corporation shall be under the control of the Board of
Directors thereof as it is constituted from time to time.
3.7 Effect of Certificate of Amalgamation. On the Effective Date, the
Amalgamation of Bio Syntech and Newco and their continuance as one
corporation shall become effective; the property of each of Bio Syntech
and Newco shall continue to be the property of the Amalgamated
Corporation; the Amalgamated Corporation shall continue to be liable
for the obligations of each of Bio Syntech and Newco; any existing
cause of action, claim or liability to prosecution of either of Bio
Syntech or Newco shall be unaffected; any civil, criminal or
administrative action or proceeding pending by or against either Bio
Syntech or Newco may be continued to be prosecuted by or against the
Amalgamated Corporation; any conviction against, or ruling, order or
judgment in favour of or against, either Bio Syntech or Newco may be
enforced by or against the Amalgamated Corporation; and the Articles of
Amalgamation shall be deemed to be the Articles of Incorporation for
the Amalgamated Corporation and the certificate of amalgamation to be
issued evidencing the Amalgamation shall be deemed to be in the
certificate of incorporation of the Amalgamated Corporation.
3.8 First Auditors. The first auditors of the Amalgamated Corporation shall
be Ernst & Young Chartered Accountants, of Montreal, Quebec. The first
auditors of the Amalgamated Corporation shall hold office until the
first annual meeting of the Amalgamated Corporation following the
Amalgamation or until their successors are duly elected or appointed.
3.9 Restrictions on Business. There shall be no restrictions on the
business that the Amalgamated Corporation may carry on.
<PAGE>
6
3.10 Articles of Amalgamation and By-laws. The Articles of Amalgamation of
the Amalgamated Corporation shall be in the form set forth in Schedule
"A". The by-laws of the Amalgamated Corporation shall be the existing
by-laws of Newco.
3.11 Effect of the Amalgamation on Shares. On the Effective Date:
(a) subject to paragraph 3.11(c) below, each holder of Bio Syntech
Shares shall receive, for each Bio Syntech Share held, one
Non-Voting Exchangeable Share following which all Bio Syntech
Shares shall be canceled;
(b) Dream Team shall receive one fully-paid and non-assessable
common share of the Amalgamated Corporation for each one Newco
common share held by Dream Team, following which all Newco
common shares shall be canceled;
(c) if a holder of Bio Syntech Shares is entitled to receive a
fraction of a Non-Voting Exchangeable Share, then in respect
of such fraction the holder shall be entitled to receive one
whole Non-Voting Exchangeable Share, as the case may be,
rounded up. In calculating such fraction, all Bio Syntech
Shares held by a beneficial holder shall in each case be
aggregated;
(d) each holder of a Bio Syntech Option shall receive for each Bio
Syntech Option held, an equivalent option to acquire one
Non-Voting Exchangeable Share for each Bio Syntech Share which
he is entitled to acquire under his option, on the same terms
and conditions;
.
(e) the stated capital account of the common share shall
correspond to the stated capital for the Newco common shares
and the stated capital for the on Voting Exchangeable Shares
shall correspond to the stated capital of the Bio Syntech
Shares.
3.12 Share Certificates, etc. On the Effective Date:
(a) the registers and transfers of Bio Syntech Shares shall be
closed;
(b) Dream Team, as the registered holder of Newco common shares,
shall cease to be the holder of Newco common shares and shall
be deemed to be the registered holder of common shares of the
Amalgamated Corporation to which it is entitled calculated in
accordance with the provisions hereof;
(c) the holders of Bio Syntech Shares shall cease to be the
holders of Bio Syntech Shares and shall be deemed to be
registered holders of the number of Non-Voting Exchangeable
Shares to which they are entitled calculated in accordance
with the provisions hereof; and
(d) certificates representing the number of Non-Voting
Exchangeable Shares issuable to holders of Bio Syntech Shares
shall be made available at the Depositary for pick-up by or
delivery to the holder upon deposit with the Depositary of
certificates formerly representing Bio Syntech Shares.
<PAGE>
7
ARTICLE 4
BIO SYNTECH'S CLOSING CONDITIONS
4.1 The obligation of Bio Syntech to complete the transactions contemplated
herein is subject to the fulfilment of the following conditions
precedent on or before the Closing Time or such other time as is
specified below:
(a) the representations and warranties made by Dream Team in this
Agreement shall be true as of the Effective Date as if made on
and as of such date and Dream Team shall have provided to Bio
Syntech at the Closing Time a certificate of the Chief
Executive Officer of Dream Team to that effect dated the
Effective Date and Bio Syntech shall have no knowledge to the
contrary;
(b) Dream Team shall have provided Bio Syntech with an opinion of
Dream Team Counsel satisfactory in form and substance in all
material respects to Bio Syntech dated the Effective Date (or
such other date as Dream Team and Bio Syntech may agree) and
addressed to Bio Syntech and Bio Syntech Counsel;
(c) at the Effective Date there shall not be more than 12,000,000
Dream Team Shares outstanding, without taking into account
shares to be issued under the private placement contemplated
under paragraph (g) below, which shall not exceed 500,000
shares and 500,000 warrants to acquire additional shares;
(d) Dream Team shall have no employees, and all Dream Team
consultants shall have been terminated by Dream Team and the
aggregate amount of termination fees, bonuses or other similar
amounts paid to such persons shall not exceed $1,000
collectively;
(e) there shall not have occurred any Dream Team Material Adverse
Effect or any material adverse effect on the value of the
Non-Voting Exchangeable Shares to be received by the holders
of Bio Syntech Shares;
(f) all directors and officers of Dream Team shall have resigned
and Bio Syntech shall be satisfied that Dream Team has no
further obligations or liabilities to such persons other than
typical directors' indemnities; and
(g) Dream Team shall have completed a private placement of
US$2,000,000.
The foregoing conditions precedent are for the benefit of Bio Syntech
and may be waived, in whole or in part, by Bio Syntech in writing at
any time. If any of the said conditions precedent shall not be complied
with or waived by Bio Syntech on or before the date required for the
performance thereof, Bio Syntech may, in addition to the other remedies
it may have at law or equity, rescind and terminate this Agreement by
written notice to Dream Team.
ARTICLE 5
DREAM TEAM'S CLOSING CONDITIONS
<PAGE>
8
5.1 The obligation of Dream Team to complete the transactions contemplated
herein are subject to fulfilment of the following conditions precedent
on or before the Effective Date or such other time as is specified
below:
(a) the representations and warranties made by Bio Syntech in this
Agreement shall be true as of the Effective Date as if made on
and as of such date and Bio Syntech shall have provided to
Dream Team at the Closing Time a certificate of the Chief
Executive Officer of Bio Syntech, dated the Effective Date, to
that effect and Dream Team shall have no knowledge to the
contrary;
(b) Bio Syntech shall have provided Dream Team with an opinion of
Bio Syntech Counsel satisfactory in form and substance in all
material respects to Dream Team dated the Effective Date (or
such other date as Dream Team and Bio Syntech may agree) and
addressed to Dream Team and Dream Team Counsel;
(c) Bio Syntech shall have complied with its covenants herein and
shall have provided to Dream Team at the Closing Time a
certificate of the Chief Executive Officer of Bio Syntech
dated the Effective Date certifying that Bio Syntech has
complied with its covenants herein and Dream Team shall have
no knowledge to the contrary;
(d) prior to the Closing Time all of the outstanding Bio Syntech
Warrants shall have been exercised or canceled;
(e) Dream Team being satisfied that, at the Effective Time, no
person, firm or corporation has any agreement, option, right
or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement, option or privilege to
acquire any unissued securities of Bio Syntech or any interest
therein, with the exception of a maximum of 2,000,000 shares
issuable under the Bio Syntech Options;
(f) no act, action, suit or proceeding shall have been threatened,
taken or be outstanding before or by any domestic or foreign
court or tribunal or governmental agency or other regulatory
authority or administrative agency or commission by any
elected or appointed public official or private person
(including, without limitation, any individual, corporation,
firm, group or other entity) in Canada or elsewhere, whether
or not having the force of law; and no law, regulation or
policy shall have been proposed, enacted, promulgated or
applied:
(i) which has the effect or may have effect, to cease
trade, enjoin, prohibit or impose material
limitations or conditions on the amalgamation of Bio
Syntech and Newco, or the right of Dream Team to own
or exercise full rights of ownership of the
Amalgamated Corporation; or
(ii) which, if the proposed transaction were consummated
would, in the judgement of Dream Team, acting
reasonably, materially and adversely affect Dream
Team and Bio Syntech considered on a consolidated
basis;
<PAGE>
9
(g) at the Effective Time there shall not be more than 15,196,440
Bio Syntech Shares outstanding, together with any Bio Syntech
Shares which may be issued prior to the Closing Time upon the
due exercise of outstanding Bio Syntech Options and Warrants;
(h) there shall not have occurred any Bio Syntech Material Adverse
Effect or any material adverse effect on the value of the Bio
Syntech Shares to Dream Team; and
The foregoing conditions precedent are for the benefit of Dream Team
and may be waived, in whole or in part, by Dream Team in writing at any
time. If any of the said conditions precedent shall not be complied
with or waived by Dream Team on or before the date required for the
performance thereof, Dream Team may, in addition to the other remedies
it may have at law or equity, rescind and terminate this Agreement by
written notice to Bio Syntech.
ARTICLE 6
MUTUAL CLOSING CONDITIONS
6.1 The obligations of Dream Team and Bio Syntech to complete the
transactions contemplated herein are subject to fulfilment of the
following conditions precedent on or before the Effective Date or such
other time as is specified below:
(a) special resolutions shall have been passed at the Bio Syntech
Meeting by the holders of Bio Syntech Shares duly approving
the Amalgamation in accordance with the applicable corporate
legislation; and the Bio Syntech Meeting shall have been held
in accordance with the applicable corporate legislation;
(b) all requisite regulatory approvals (including, without
limitation, of any stock exchanges or other regulatory
authorities) shall have been obtained on terms satisfactory to
Bio Syntech and Dream Team, acting reasonably;
(c) there shall not exist any prohibition at law against Dream
Team or Bio Syntech consummating the proposed transaction;
(d) the Articles of Amalgamation shall have been executed, as
required, by Newco and Bio Syntech and filed with the
Registrar under the Quebec Companies Act in a diligent manner
as soon as possible following the Meeting Date; and
(e) other than as a result of the actions of a party to this
Agreement, the Effective Date shall be no later than February
28, 2000.
The foregoing conditions are for the mutual benefit of Dream Team and
Bio Syntech and may be waived, in whole or in part, by Dream Team and
Bio Syntech at any time. If any of the said conditions precedent shall
not be complied with or waived as aforesaid on or before the date
required for the performance thereof, Dream Team or Bio Syntech may, in
addition to the other remedies it may have at law or in equity, rescind
and terminate this Agreement by written notice to the other party.
<PAGE>
10
ARTICLE 7
BIO SYNTECH'S REPRESENTATIONS AND WARRANTIES
7.1 Bio Syntech represents and warrants to and in favour of Dream Team the
following, and acknowledges that Dream Team is relying upon such
representations and warranties:
(a) as of the date hereof there are not more than 13,283,579 Bio
Syntech Shares and no other shares issued and outstanding and
other than pursuant to this Agreement or as has been disclosed
by Bio Syntech to Dream Team, no person, firm or corporation
has any agreement, option, right or privilege (whether by law,
pre-emptive or contractual) capable of becoming an agreement,
option or privilege to acquire any unissued securities of Bio
Syntech or any interest therein;
(b) Bio Syntech has been duly incorporated and organized, and is
validly existing as a corporation, under the Quebec Companies
Act and has full corporate power and authority to own its
assets and conduct its businesses as now owned and conducted.
Bio Syntech is duly qualified to carry on business, and is in
good standing, in each jurisdiction in which the character of
its properties, owned or leased, or the nature of its
activities makes such qualification necessary, except where
the failure to be so qualified will not have an Bio Syntech
Material Adverse Effect;
(c) Bio Syntech has complied with and is in compliance with all
laws and regulations applicable to the operation of its
business except where failure to so comply will not have an
Bio Syntech Material Adverse Effect and has all licences,
permits, orders or approvals of, and has made all required
registrations with, any governmental or regulatory body that
is material to the conduct of its business;
(d) Bio Syntech has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Bio
Syntech and the consummation by Bio Syntech of the
transactions contemplated by this Agreement have been duly
authorized by the board of directors of Bio Syntech and,
except as contemplated hereby, no other corporate proceedings
on the part of Bio Syntech are necessary to authorize this
Agreement and the completion of the Amalgamation. This
Agreement has been duly executed and delivered by Bio Syntech
and constitutes a valid and binding obligation of Bio Syntech,
enforceable by Dream Team against Bio Syntech in accordance
with its terms, subject to bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other laws
relating to or affecting creditors' rights generally and to
general principles of equity. The execution and delivery by
Bio Syntech of this Agreement and performance by it of its
obligations hereunder will not;
(i) result in a violation or breach of any term or
provision of:
(1) its articles or by-laws; or
(2) any law, regulation, order, judgement or decree;
(ii) give rise to any right of termination, or
acceleration of indebtedness, or cause any
indebtedness to come due before its stated maturity,
in any case, or give rise to any rights of first
refusal or any restriction or limitation under any
agreement,
<PAGE>
11
contract, licence, franchise or permit of Bio Syntech
which in any case would have an Bio Syntech Material
Adverse Effect and Bio Syntech is not currently in
breach of any such contract where such breach would
have an Bio Syntech Material Adverse Effect; or
(iii) result in the imposition of any encumbrance, charge
or lien upon any of its assets;
(e) except as disclosed to Dream Team:
(i) Bio Syntech has conducted its business only in the
usual, ordinary and regular course and consistent
with past practice;
(ii) no liability or obligation of any nature (whether
absolute, accrued, contingent or otherwise) that has
had or is reasonably likely to have an Bio Syntech
Material Adverse Effect has been incurred;
(iii) there is no claim, action, proceeding or
investigation pending or, to the knowledge of Bio
Syntech, threatened against or relating to Bio
Syntech or any of its properties or assets before any
court or governmental or regulatory authority or body
that, if adversely determined, is likely to have an
Bio Syntech Material Adverse Effect or prevent or
materially delay consummation of the proposed
transaction, nor is Bio Syntech aware of any basis
for any such claim, action, proceeding or
investigation. Bio Syntech is not subject to any
outstanding order, writ, injunction or decree that
has had or is reasonably likely to have an Bio
Syntech Material Adverse Effect or prevent or
materially delay consummation of the proposed
transaction; and
(iv) there has not been any event prior to the date hereof
that has had or is reasonably likely to have an Bio
Syntech Material Adverse Effect;
(f) the Bio Syntech Financial Statements were prepared in
accordance with generally accepted accounting principles in
Canada consistently applied and fairly represent the financial
condition of Bio Syntech for the period indicated and the
results of operations of Bio Syntech for such applicable
period;
(g) Bio Syntech has not incurred any obligation or liability,
contingent or otherwise, for brokerage fees, finder's fees,
agent's commission or other similar forms of compensation with
respect to the transactions contemplated herein;
(h) Bio Syntech has no Subsidiaries or securities investments in
any other persons and has no obligations of any nature to
acquire any Subsidiary or securities investments in any other
person or to acquire or lease any other business operations
out of the ordinary course;
(i) the minute books of Bio Syntech are complete and correct in
all material respects and contain the minutes of all meetings
and all resolutions of the directors and shareholders thereof;
(j) Bio Syntech:
<PAGE>
12
(i) has duly and in a timely manner filed all returns,
elections, filings and reports required pursuant to
the Income Tax Act, the Quebec Tax Act, the income
tax legislation of any other province of Canada or
any foreign jurisdictions having jurisdiction over
the affairs of Bio Syntech, the Excise Tax Act
(Canada) as it relates to the goods and services tax
("GST"), the Mines and Minerals Act (Quebec), the
Freehold Mineral Rights Tax Act (Quebec), and any
similar legislation of provinces or foreign
jurisdictions having jurisdiction over the affairs of
Bio Syntech for all prior periods in respect of which
such filings have heretofore been required, and such
filings are substantially true, complete and correct;
the tax liability of Bio Syntech is as indicated by
the above returns and filings, and Bio Syntech has
made timely payment of, or has duly and properly
accrued on the books thereof, the taxes (including
interest and penalties thereon) shown in these
returns and filings, with respect to periods ending
on or prior to the date hereof, and any subsequent
assessments, reassessments or determinations thereof;
(ii) has made adequate provision for taxes or other
amounts payable pursuant to any legislation referred
to in (i) above for the current period for which
returns, reports, elections or other filings are not
yet required to be filed, and Bio Syntech has paid
all required instalments of income, capital, property
and business taxes payable on account of the current
period;
(iii) is not aware, without having made special
investigation, of any contingent tax liabilities or
any grounds that could prompt an assessment or
reassessment and has not received any indication from
any taxation authorities that an assessment or
reassessment, regardless of its merits, is proposed
or is under consideration;
(iv) is not a party to any agreements or waivers extending
the statutory period of limitations applicable to any
federal, provincial or other tax return for any
period;
(v) has withheld, and will continue to withhold until the
Effective Date, from each payment made to any of its
officers, directors, former directors and employees
and to all non-residents of Canada and other persons
with respect to whom it is required by law to
withhold any amounts, the amount of all taxes
(including, without limitation, income tax) and other
deductions required to be withheld therefrom and has
paid the same to the proper tax or other authority
within the time required under any applicable
legislation; and
(vi) has not to the best of its knowledge, without having
made a special investigation, undergone an
acquisition of control, for the purposes of the
Income Tax Act or any relevant provincial statute,
that would affect any taxation years of Bio Syntech
ending before the Effective Date;
(k) all filings made by Bio Syntech under which Bio Syntech has
received or is entitled to government incentives, have been
made in accordance, in all material respects, with all
applicable legislation and contain no misrepresentations of
material fact or omit to state
<PAGE>
13
any material fact which could cause any amount previously paid
to Bio Syntech or previously accrued on the accounts thereof
to be recovered or disallowed;
(l) Bio Syntech has performed, observed and satisfied all of its
material duties, liabilities, obligations and covenants
required to be satisfied, performed and observed by it under,
and is not in material default under or in material breach of,
the terms of any material leases or agreements pertaining to
Bio Syntech or the Bio Syntech Assets;
(m) there is no material circumstance, matter or thing known to
Bio Syntech which would cause it to believe that it may not
hold good and marketable title to any material portion of the
Bio Syntech Assets;
(n) all material documents and agreements of whatsoever nature and
kind affecting the title to the Bio Syntech Assets which are
in the possession of Bio Syntech or of which Bio Syntech is
otherwise aware have been made available for review by Dream
Team;
(o) Bio Syntech has done no act or thing, nor has Bio Syntech
suffered or permitted any act or omission, whereby its title
to any of the Bio Syntech Assets may be canceled or
terminated;
(p) there are reasonable grounds for believing that Bio Syntech
is, and immediately prior to the Effective Date will be, able
to pay its liabilities as they become due; and
(q) there are reasonable grounds for believing that no creditor of
Bio Syntech will be prejudiced by the Amalgamation.
ARTICLE 8
DREAM TEAM'S REPRESENTATIONS AND WARRANTIES
8.1 Dream Team represents and warrants to and in favour of Bio Syntech the
following, and acknowledges that Bio Syntech is relying upon such
representations and warranties:
(a) As of the date hereof there are not more than (i) 12,000,000
Dream Team Common Shares and no other shares issued and
outstanding, and (ii) other than pursuant to this Agreement or
as has been disclosed by Dream Team to Bio Syntech, no person,
firm or corporation has any agreement, option, right or
privilege (whether by law, pre-emptive or contractual) capable
of becoming an agreement, option or privilege to acquire any
unissued securities of Dream Team or any interest therein;
(b) Dream Team has been duly incorporated and organized, and is
validly existing as a corporation, and has full corporate
power and authority to own its assets and conduct its business
as now owned and conducted. Dream Team has no Subsidiaries
other than Newco. Dream Team is duly qualified to carry on
business, and is in good standing, in each jurisdiction in
which the character of its properties, owned or leased, or the
nature
<PAGE>
14
of its activities makes such qualification necessary, except
where the failure to be so qualified will not have a Dream
Team Material Adverse Effect;
(c) Dream Team has complied with and is in compliance with all
laws and regulations applicable to the operation of its
business except where failure to so comply will not have a
Dream Team Material Adverse Effect and each of them has all
licences, permits, orders or approvals of, and has made all
required registrations with, any governmental or regulatory
body that is material to the conduct of its business;
(d) Dream Team has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by
Dream Team and the consummation by Dream Team of the
transactions contemplated by this Agreement have been duly
authorized by the board of directors of Dream Team and, except
as contemplated hereby, no other corporate proceedings on the
part of Dream Team are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Dream Team and constitutes
a valid and binding obligation of Dream Team, enforceable by
Bio Syntech against Dream Team in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other laws relating to or affecting
creditors' rights generally and to general principles of
equity. The execution and delivery by Dream Team of this
Agreement and performance by it of its obligations hereunder
will not;
(i) result in a violation or breach of any term or
provision of:
(1) its articles or by-laws or those of Newco; or
(2) any law, regulation, order, judgement or decree;
(ii) give rise to any right of termination, or
acceleration of indebtedness, or cause any
indebtedness to come due before its stated maturity,
in any case, or give rise to any rights of first
refusal or any restriction or limitation under any
agreement, contract, licence, franchise or permit of
Dream Team which in any case would have a Dream Team
Material Adverse Effect and Dream Team is not
currently in breach of any such contract where such
breach would have a Dream Team Material Adverse
Effect; or
(iii) result in the imposition of any encumbrance, charge
or lien upon any of its assets or the assets of
Newco;
(e) Dream Team:
(i) has made adequate provision for taxes or other
amounts payable pursuant to any legislation referred
to in (i) above for the current period for which
returns, reports, elections or other filings are not
yet required to be filed, and Dream Team has paid all
required instalments of income, capital, property and
business taxes payable on account of the current
period;
(ii) is not aware, without having made special
investigation, of any contingent tax liabilities or
any grounds that could prompt an assessment or
reassessment and has not received any indication from
any taxation authorities that an assessment or
reassessment, regardless of its merits, is proposed
or is under consideration;
<PAGE>
15
(iii) is not a party to any agreements or waivers extending
the statutory period of limitations applicable to any
federal, provincial or other tax return for any
period;
(f) except as disclosed to Bio Syntech;
(i) Dream Team has conducted its business only in the
usual, ordinary and regular course and consistent
with past practice;
(ii) no liability or obligation of any nature (whether
absolute, accrued, contingent or otherwise) that has
had or is reasonably likely to have a Dream Team
Material Adverse Effect has been incurred; and
(iii) there has not been any event prior to the date hereof
that has had or is reasonably likely to have a Dream
Team Material Adverse Effect;
(g) the Dream Team Financial Statements were prepared in
accordance with generally accepted accounting principles
consistently applied and fairly present the financial
condition of Dream Team for the period indicated and the
results of operations of Dream Team for such applicable
period;
(h) there is no claim, action, proceeding or investigation pending
or, to the knowledge of Dream Team, threatened against or
relating to Dream Team or any of its properties or assets
before any court or governmental or regulatory authority or
body that, if adversely determined, is likely to have a Dream
Team Material Adverse Effect or prevent or materially delay
consummation of the proposed transaction, nor is Dream Team
aware of any basis for any such claim, action, proceeding or
investigation. Dream Team is not subject to any outstanding
order, writ, injunction or decree that has had or is
reasonably likely to have a Dream Team Material Adverse Effect
or prevent or materially delay consummation of the proposed
transaction;
(i) except for Newco, Dream Team has no Subsidiaries or securities
investments in any other persons and has no obligations of any
nature to acquire any Subsidiary or securities investments in
any other person or to acquire or lease any other business
operations out of the ordinary course;
(j) the minute books of Dream Team are complete and correct in all
material respects and contain the minutes of all meetings and
all resolutions of the directors and shareholders thereof;
(k) there has not been any material adverse change in the assets,
liabilities or obligations (absolute, accrued, contingent or
otherwise) of Dream Team from the position set forth in the
Dream Team Financial Statements and there has not been any
material adverse change in the business, operations or
condition (financial or otherwise) or results of operations of
Dream Team since September 30, 1999 and since that date there
have been
<PAGE>
16
no material facts, transactions, events or occurrences which
could have a Dream Team Material Adverse Effect which have not
been disclosed in writing to Bio Syntech;
(l) no securities commission or similar regulatory authority has
issued any order preventing or suspending trading in any
securities of Dream Team;
(m) Dream Team has not incurred any obligation or liability,
contingent or otherwise, for brokerage fees, finder's fees,
agent's commission or other similar forms of compensation with
respect to the transactions contemplated herein;
(n) Dream Team has performed, observed and satisfied all of its
material duties, liabilities, obligations and covenants
required to be satisfied, performed and observed by it under,
and is not in material default under or in material breach of,
the terms of any material leases or agreements pertaining to
Dream Team or the Dream Team Assets;
(o) Dream Team has not carried on any business to the date hereof
and has no assets or liabilities other than pursuant to this
Agreement;
ARTICLE 9
BIO SYNTECH'S COVENANTS
9.1 Until the earlier of: (i) the Effective Date and (ii) termination of
this Agreement in accordance with its terms, except with the prior
written consent of Dream Team, which shall not be unreasonably
withheld, and except for the Permitted Transactions:
(a) Bio Syntech will use all reasonable efforts to fulfil the
conditions set forth in Sections 5.1 and 6.1 to the extent the
fulfilment of the same is within the control of Bio Syntech:
(b) Bio Syntech shall not take any action except in, and maintain
its properties and facilities in, the usual, ordinary and
regular course of business and consistent with past practice;
(c) Bio Syntech shall not directly or indirectly do or permit to
occur any of the following:
(i) issue, sell, pledge, lease, dispose of, encumber or
agree to issue, sell, pledge, lease, dispose of or
encumber:
(1) any additional shares of, or any options,
warrants, calls, conversion privileges or
rights of any kind to acquire any Bio
Syntech Shares except pursuant to
outstanding Bio Syntech Options and
Warrants; or
(2) except in the ordinary course of business
for a consideration not in excess of
$100,000, any assets of Bio Syntech;
(ii) amend or propose to amend its articles or by-laws;
<PAGE>
17
(iii) split, combine or reclassify any outstanding shares,
or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or
otherwise with respect to any outstanding shares;
(iv) redeem, purchase or offer to purchase (or permit any
of its subsidiaries to redeem, purchase or offer to
purchase) any shares or other securities of Bio
Syntech except as contemplated in this Agreement;
(v) reorganize, amalgamate or merge Bio Syntech with any
other person, corporation, partnership or other
business organization whatsoever;
(vi) acquire or agree to acquire (by merger, amalgamation,
acquisition of securities or assets or otherwise) any
person, corporation, partnership or other business
organization or division or, except in the ordinary
course of business, any assets or properties;
(vii) incur or commit to incur any indebtedness for
borrowed money or issue any debt securities except
for borrowing in the ordinary course of business and
consistent with past practice;
(viii) expend any amounts, incur any liabilities, enter into
any agreements, arrangements or make any commitments
(whether absolute, contingent or otherwise), or make
any offers that could result in any agreements or
commitments, whether or not in the ordinary course of
business, in an amount in excess of $100,000 (without
prior written consent of Dream Team, which consent
shall not be unreasonably withheld) in respect of
each such event; or
(ix) declare or pay any dividends or make any other
distribution to its shareholders or repay, other than
in the ordinary course of business, any outstanding
indebtedness;
(d) Bio Syntech shall not adopt or amend any bonus, profit
sharing, incentive, compensation, stock option, pension,
retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee;
(e) Bio Syntech shall:
(i) use its best efforts to preserve intact its business
organization and goodwill, and to maintain
satisfactory relationships with suppliers,
distributors, customers and others having business
relationships with it or its subsidiaries;
(ii) not take any action that would render, any
representation or warranty made by it in this
agreement untrue at any time prior to the proposed
transaction being consummated if then made; and
<PAGE>
18
(iii) promptly notify Dream Team orally and in writing of
any governmental or third party complaints,
investigations or hearings (or communications
indicating that the same may be contemplated);
(f) Bio Syntech shall not enter into or modify any contract,
agreement, commitment or arrangement with respect to any of
the matters set forth in this Section 9.1;
(g) Bio Syntech will:
(i) convene the Bio Syntech Meeting and distribute copies
of the Information Circular in accordance with
applicable law;
(ii) solicit proxies to be voted in favour of the
Amalgamation at the Bio Syntech Meeting;
(iii) provide notice to Dream Team of the Bio Syntech
Meeting and allow Dream Team's representatives to
attend the Bio Syntech Meetings; and
(iv) conduct the Bio Syntech Meeting in accordance with
the by-laws of Bio Syntech and as otherwise required
by law;
(h) Bio Syntech will immediately advise Dream Team of the
occurrence of any material fact or material change with
respect to Bio Syntech which does or may effect the disclosure
with respect to Bio Syntech in the Information Circular;
(i) Bio Syntech will prepare (in consultation with Dream Team),
provided that Dream Team supplies all information as
reasonably requested, file and distribute to the holders of
Bio Syntech Shares in a timely and expeditious manner, any
amendments or supplements to the Information Circular as
required by applicable law, in all jurisdictions where the
same is required;
(j) Bio Syntech will subject to the approval of the Bio Syntech
Shareholders being obtained and subject to the satisfaction or
waiver of the conditions set forth for the benefit of Bio
Syntech, jointly with Newco file Articles of Amalgamation and
any other required documents with the Registrar under the
Quebec Companies Act, in order for the Amalgamation to become
effective;
(k) except for proxies and other non-substantive communications
with security holders, Bio Syntech will furnish promptly to
Dream Team a copy of each notice, report, schedule or other
document delivered, filed or received by Bio Syntech in
connection with (i) the Amalgamation, (ii) the Bio Syntech
Meeting, (iii) any filings under applicable laws and (iv) any
dealings with regulatory agencies in connection with the
transactions contemplated herein;
(l) Bio Syntech will make other necessary filings and applications
under applicable federal and provincial laws and regulations
required on the part of Bio Syntech in connection with the
transactions contemplated herein and take all reasonable
action necessary to be in compliance with such laws and
regulations;
<PAGE>
19
(m) Bio Syntech will use all reasonable efforts to conduct its
affairs so that all of Bio Syntech's representations and
warranties contained herein shall be true and correct on and
as of the Effective Date as if made thereon;
(n) Bio Syntech will terminate its stock option plan and negotiate
and effect either the cancellation and termination or the
exercise of all Bio Syntech Warrants by the Effective Date as
contemplated by paragraph 5.1(d);
(o) Bio Syntech shall not, directly or indirectly, solicit or
cause or facilitate anyone else to solicit any offer
(confidential or otherwise) or expression of interest to
acquire any of its assets outside the ordinary course of
business or any of its securities, whether directly or
indirectly, provide information (except for Bio Syntech Public
Documents) concerning its securities, assets or business to
anyone for or in furtherance of anything mentioned in this
subsection, pursue any other material corporate acquisition or
disposition, amalgamation, merger, arrangement or purchase or
sale of assets; provided that the foregoing shall not prevent
the board of directors of Bio Syntech from responding to any
unsolicited bona fide submission or proposal regarding any
acquisition or disposition of assets or any unsolicited bona
fide proposal to amalgamate, merge or effect an arrangement or
any unsolicited bona fide acquisition proposal generally or to
a bona fide offer to acquire Bio Syntech Shares (a "Competing
Offer") or make any disclosure to its shareholders with
respect thereto which in the opinion of counsel is required
for the directors of Bio Syntech to discharge their respective
fiduciary duties to Bio Syntech and its shareholders. If Bio
Syntech receives or becomes aware of an unsolicited offer, or
that an unsolicited offer is pending, it will promptly provide
all particulars known to Bio Syntech to Dream Team; and
(p) notwithstanding the foregoing, in the event that, prior to the
proposed transaction becoming effective, a bona fide Competing
Offer is made which, in the opinion of the board of directors
of Bio Syntech, acting in good faith, would result, directly
or indirectly, in such holders receiving consideration in
excess of the consideration to be received under the proposed
transaction (a "Superior Competing Offer"), then prior to Bio
Syntech recommending to holders of Bio Syntech Shares that
they accept or vote in favour of or otherwise support the
Superior Competing Offer, Bio Syntech shall give Dream Team
three (3) business days to elect to match or better such
Superior Competing Offer. If Dream Team elects not to match or
better the Superior Competing Offer, then the board of
directors of Bio Syntech may withdraw, modify or change any
recommendation regarding the Offer if in the opinion of the
board of directors of Bio Syntech, acting reasonably and upon
advice of counsel, failure to do so would be inconsistent with
applicable laws, including directors' fiduciary duties
thereunder.
<PAGE>
20
ARTICLE 10
DREAM TEAM'S COVENANTS
10.1 Until the earlier of: (i) the Effective Date; and (ii) termination of this
Agreement in accordance with its terms, except with the prior written consent of
Bio Syntech, which shall not be unreasonably withheld:
(a) Dream Team shall conduct its business in the ordinary course,
and shall not directly or indirectly do or permit to occur any
of the following:
(i) amend or propose to amend its articles or by-laws;
(ii) split, combine or reclassify any outstanding shares,
or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or
otherwise with respect to any outstanding shares;
(iii) reorganize, amalgamate or merge Dream Team with any
other person, corporation, partnership or other
business organization whatsoever;
(iv) acquire or agree to acquire (by merger, amalgamation,
acquisition of securities or assets or otherwise) any
person, corporation, partnership or other business
organization or division or, except in the ordinary
course of business, any assets or properties; or
(v) declare or pay any dividends or make any other
distribution to its shareholders or repay, other than
in the ordinary course of business, any outstanding
indebtedness;
(b) Dream Team shall not take any action except in, and maintain
its properties and facilities in, the usual, ordinary and
regular course of business and consistent with past practice;
(c) Newco will not, and Dream Team will not permit Newco to, carry
on any business or take any actions except as is necessary to
give effect to the Amalgamation and all other transactions
contemplated by this Agreement;
(d) Dream Team will use all reasonable efforts to fulfil the
conditions set forth in Sections 4.1 and 6.1 to the extent the
fulfilment of the same is within the control of Dream Team;
(e) Dream Team will make all other necessary filings and
applications under applicable laws and regulations required in
connection with the transactions contemplated herein and will
take all reasonable action necessary to be in compliance with
such laws and regulations;
(f) except for non-substantive communications with security
holders, Dream Team will furnish promptly to Bio Syntech a
copy of each notice, report, schedule or other document
delivered, filed or received by Dream Team in connection with
(i) the Amalgamation, (ii)
<PAGE>
21
any filings under applicable laws and (iii) any dealings with
regulatory agencies in connection with the transactions
contemplated herein;
(g) Dream Team will take appropriate steps to appoint the
directors of Bio Syntech to its Board of Directors effective
at the Effective Date and to obtain the resignation of and
full and complete releases from its current directors and
officers;
(h) Dream Team will use all reasonable efforts to conduct its
affairs so that all of Dream Team's representations and
warranties contained herein shall be true and correct on and
as of the Effective Date as if made thereon.
ARTICLE 11
TERMINATION
11.1 This Agreement may, prior to the issuance of a Certificate of
Amalgamation, be terminated by the mutual agreement of the respective
boards of directors of the parties hereto, without further action on
the part of the shareholders of Bio Syntech or Newco.
11.2 Notwithstanding any other rights contained herein, Dream Team may
terminate this Agreement upon notice to Bio Syntech in the event the
Amalgamation has not become effective on or before February 28, 2000.
11.3 Notwithstanding any other rights contained herein, Bio Syntech may
terminate this Agreement upon notice to Dream Team in the event the
Amalgamation has not become effective on or before February 28, 2000.
ARTICLE 12
AMENDMENT
12.1 This Agreement may, at any time and from time to time before or after
the holding of the Bio Syntech Meeting be amended by written agreement
of the parties hereto without further notice to or authorization on the
part of their respective shareholders, and any such amendment may,
without limitation:
(a) change the time for performance of any of the obligations or
acts of the parties hereto;
(b) waive any inaccuracies or modify any representation contained
herein or in any document delivered pursuant hereto; and
(c) waive compliance with or modify any of the covenants herein
contained and waive or modify performance of any of the
obligations of the parties hereto;
provided that, notwithstanding the foregoing, the number of Dream Team
Common Shares which the holders of Bio Syntech Shares shall have the
right to receive on the Amalgamation may not be
<PAGE>
22
reduced without the approval of the shareholders of Bio Syntech given
in the same manner as required for the approval of the Amalgamation.
12.2 This Agreement may only be amended by a written instruction signed by
the parties hereto.
ARTICLE 13
FEES AND EXPENSES
13.1 Each party hereto covenants and agrees to bear its own costs and
expenses in connection with the transactions contemplated hereby.
ARTICLE 14
DISCLOSURE
14.1 Without the prior written consent of the other party hereto, no party
hereto may disclose to any person either the fact that discussions or
negotiations are taking place concerning the proposed transaction or
any of the terms, conditions or other facts with respect to the
proposed transaction, including the status thereof, except where the
receiving party or its affiliates are required to do so by law,
including but not limited to the requirements of securities and other
regulatory agencies.
14.2 Except as otherwise provided in this Agreement, unless required by law
(including, without limitation, securities regulation), no party to
this Agreement shall make any public or private announcement or
communications in respect of the proposed transaction (including,
without limitation, the existence of this Agreement or that any
investigation, discussions or negotiations are taking place concerning
the evaluation of either of the parties hereto or the Amalgamation)
unless the prior approval of the announcement is obtained from the
other party.
ARTICLE 15
NOTICES
15.1 All notices, requests, demands and other communications hereunder shall
be deemed to have been duly given and made, if in writing and if served
by personal delivery upon the party for whom it is intended or
delivered, or if sent by telecopier, upon receipt of confirmation that
such transmission has been received, to the person at the address set
forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
if to Dream Team:
(a) Lanham & Associates
45 Glen Echo, Unit A
Dove Canyon, California 92679
Attention: Mr. Randall J. Lanham
Telecopier: 949-858-6774
<PAGE>
23
if to Bio Syntech
(b) 475, Armand Frappier
Laval, Quebec
Telecopier: 450-686-8952
Attention: Amine Selmani, President
ARTICLE 16
TIME
16.1 Time shall be of the essence in this Agreement.
ARTICLE 17
ENTIRE AGREEMENT
17.1 This Agreement constitutes the entire agreement between the parties
hereto and cancels and supersedes all prior agreements and
understandings between the parties with respect to the subject matter
hereof.
ARTICLE 18
FURTHER ASSURANCES
18.1 Each party hereto shall, from time to time, and at all times hereafter,
at the request of the other party hereto, but without further
consideration, take all such further acts and execute and deliver all
such further documents and instruments as shall be reasonably required
in order to fully perform and carry out the terms and intent hereof.
ARTICLE 19
GOVERNING LAW
19.1 This Agreement shall be governed by, and be construed in accordance
with, the laws of the Province of Quebec and applicable laws of Canada
but the reference to such laws shall not, by conflict of laws rules or
otherwise, require the application of the law of any jurisdiction other
than the Province of Quebec.
19.2 Each party hereto irrevocably attorns to the exclusive jurisdiction of
the Courts of the Province of Quebec in respect of all matters arising
under or in relation to this Agreement.
<PAGE>
24
ARTICLE 20
EXECUTION IN COUNTERPARTS AND BY FACSIMILE
20.1 This Agreement may be executed in identical counterparts and by
facsimile, and each such counterpart be and is hereby conclusively
deemed to be an original and counterparts collectively are to be
conclusively deemed one instrument.
ARTICLE 21
WAIVER
21.1 No waiver by any party hereto shall be effective unless in writing and
any waiver shall affect only the matter, and the occurrence thereof,
specifically identified and shall not extend to any other matter or
occurrence.
ARTICLE 22
ENUREMENT AND ASSIGNMENT
22.1 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This
Agreement may not be assigned by any party hereto without the prior
consent of the other parties hereto.
ARTICLE 23
NEWCO COVENANTS
23.1 Newco agrees to take all steps necessary on its behalf to implement the
terms hereof and the transactions contemplated hereby.
IN WITNESS WHEREOF the parties hereto have executed this Agreement.
Biosyntech , Inc
Per: /s/
--------------------------------
Bio Syntech Ltee.
Per: /s/
--------------------------------
9083-5661 QUEBEC INC
Per: /s/
--------------------------------
<PAGE>
SCHEDULE A
The Company shall be authorized to issue an unlimited number of Common
and Exchangeable shares, without par value, having the following rights,
privileges, restrictions and conditions:
3.1 COMMON SHARES
3.1.1 The Common shares shall confer the following rights upon holders
thereof, namely:
a) the right to vote at all meetings of shareholders, each
shareholder being entitled to one vote for each Common share
held by him;
b) the right to receive all dividends declared by the board of
directors on the Common shares;
c) the right to share in the remaining assets of the Company upon
its voluntary or forced winding-up or liquidation.
3.1.2 The board of directors shall be entitled to declare a dividend in
respect of the Common shares, without in any manner whatsoever being
required to declare or pay a dividend to holders of other classes of
shares.
3.2 EXCHANGEABLE SHARES
3.2.1 The Exchangeable shares shall have the following rights, privileges,
restrictions and conditions:
ARTICLE 1
INTERPRETATION
For the purposes of these share provisions:
"Act" means the Quebec Companies Act, as amended;
"Affiliate" has the meaning ascribed thereto in the Securities Act;
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"Bio Syntech" means Bio Syntech Ltd., a company incorporated under the laws of
the Province of Quebec, which was a predecessor to the Company;
"Bio Syntech Common Shares" means the common shares of Bio Syntech as
constituted immediately prior to the Effective Date;
"Bio Syntech Options" means the options to purchase Bio Syntech Common Shares
issued from time to time prior to the date hereof pursuant to the Bio Syntech
Stock Option Plan;
"Board of Directors" means the Board of Directors of the Company;
"Business Day" means any day on which commercial banks are generally open for
business in Montreal, Quebec, other than a Saturday, a Sunday or a day observed
as a holiday in Montreal, Quebec under the laws of the Province of Quebec or the
federal laws of Canada;
"Call Right" has the meaning ascribed thereto in the Exchange and Voting
Agreement;
"Canadian Dollar Equivalent" means in respect of an amount expressed in a
currency other than Canadian dollars (the "Foreign Currency Amount") at any date
the product obtained by multiplying:
(a) the Foreign Currency Amount by,
(b) the noon spot exchange rate on such date for such foreign
currency expressed in Canadian dollars as reported by the Bank
of Canada or, in the event such spot exchange rate is not
available, such spot exchange rate on such date for such
foreign currency expressed in Canadian dollars as may be
deemed by the Board of Directors to be appropriate for such
purpose;
"Common Shares" means the common shares in the capital of the Company;
"Company" means Bio Syntech Canada Inc., the company resulting from the
amalgamation of Bio Syntech and 9083-5661 Quebec Inc;
"Current Market Price" means, in respect of a Parent Common Share on any date,
the Canadian Dollar Equivalent of the average of the closing bid and asked
prices of Parent Common Shares during a period of 10 consecutive trading days
ending not more than
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three trading days before such date on Nasdaq, or, if the Parent Common Shares
are not then quoted on Nasdaq, on such other stock exchange or automated
quotation system on which the Parent Common Shares are listed or quoted, as the
case may be, as may be selected by the Board of Directors for such purpose;
provided, however, that if in the opinion of the Board of Directors the public
distribution or trading activity of Parent Common Shares during such period does
not create a market which reflects the fair market value of a Parent Common
Share, then the Current Market Price of a Parent Common Share shall be
determined by the Board of Directors, in good faith and in its sole discretion,
and provided further that any such selection, opinion or determination by the
Board of Directors shall be conclusive and binding;
"Dividend Amount" means the amount of all declared and unpaid dividends on an
Exchangeable Share held by a holder on any dividend record date which occurred
prior to the date of purchase or redemption of such shares by the Company or
Parent from such holder;
"Effective Date" means the date shown on the certificate of amalgamation to be
issued under the Act giving effect to the Amalgamation;
"Exchange and Voting Agreement" means the agreement between Parent, the Holders
of Exchangeable Shares and the Trustee in connection with the Amalgamation.
"Exchangeable Shares" means the non-voting exchangeable shares in the capital of
the Company, having the rights, privileges, restrictions and conditions set
forth herein;
"Governmental Entity" means any (a) multinational, federal, provincial, state,
regional, municipal, local or other government, governmental or public
department, central bank, court, tribunal, arbitral body, commission, board,
bureau or agency, domestic or foreign, (b) any subdivision, agent, commission,
board, or authority of any of the foregoing, or (c) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the foregoing;
"Holder" means, when used with reference to the Exchangeable Shares, the holders
of Exchangeable Shares shown from time to time in the register maintained by or
on behalf of the Company in respect of the Exchangeable Shares;
"Liquidation Amount" has the meaning ascribed thereto in Section 5.1 of these
share provisions;
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"Liquidation Date" has the meaning ascribed thereto in Section 5.1 of these
share provisions;
"Nasdaq" means the National Association of Securities Dealers Automated
Quotation System;
"Parent" means Bio Syntech, Inc. (formerly Dream Team International Inc.), a
Nevada Corporation;
"Parent Common Shares" mean the shares of common stock in the capital of Parent
and any other securities into which such shares may be changed;
"Parent Control Transaction" means any merger, amalgamation, tender offer,
material sale of shares or rights or interests therein or thereto or similar
transactions involving Parent, or any proposal to do so;
"Parent Dividend Declaration Date" means the date on which the Board of
Directors of Parent declares any dividend on the Parent Common Shares;
"Parent Call Notice" has the meaning ascribed thereto in Section 6.3 of these
share provisions;
"Person" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Governmental Entity, syndicate or other entity,
whether or not having legal status;
"Purchase Price" has the meaning ascribed thereto in Section 6.3 of these share
provisions;
"Redemption Date" means the date, if any, established by the Board of Directors
for the redemption by the Company of all but not less than all of the
outstanding Exchangeable Shares pursuant to Article 7 of these share provisions,
which date shall be no earlier than December 31, 2004, unless:
(a) there are fewer than 1,000,000 Exchangeable Shares outstanding
(other than Exchangeable Shares held by Parent and its
affiliates, and as such
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number of shares may be adjusted as deemed appropriate by the Board of Directors
to give effect to any subdivision or consolidation of or stock dividend on the
Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable
Shares or securities exchangeable for or convertible into Exchangeable Shares,
any issue or distribution of other securities or rights or evidences of
indebtedness or assets; or
(b) any other capital reorganization or other transaction
affecting the Exchangeable Shares), in which case the Board of
Directors may accelerate such redemption date to such date
prior to December 31, 2004 as it may determine, upon at least
60 days' prior written notice to the registered holders of the
Exchangeable Shares and the Trustee;
(c) a Parent Control Transaction occurs, in which case, provided
that the Board of Directors determines, in good faith and in
its sole discretion, that it is not reasonably practicable to
substantially replicate the terms and conditions of the
Exchangeable Shares in connection with such Parent Control
Transaction and that the redemption of all but not less than
all of the outstanding Exchangeable Shares is necessary to
enable the completion of such Parent Control Transaction in
accordance with its terms, the Board of Directors may
accelerate such redemption date to such date prior to December
31, 2004 as it may determine, upon such number of days' prior
written notice to the registered holders of the Exchangeable
Shares and the Trustee as the Board of Directors may determine
to be reasonably practicable in such circumstances;
provided, however, that the accidental failure or omission to give any notice of
redemption under clauses (a) or (b) above to less than 10% of such holders of
Exchangeable Shares shall not affect the validity of any such redemption;
"Redemption Price" has the meaning ascribed thereto in Section 7.1 of these
share provisions;
"Retracted Shares" has the meaning ascribed thereto in Section 6.1(a) of these
share provisions;
"Retraction Date" has the meaning ascribed thereto in Section 6.1(b) of these
share provisions;
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"Retraction Price" has the meaning ascribed thereto in Section 6.1 of these
share provisions;
"Retraction Request" has the meaning ascribed thereto in Section 6.1 of these
share provisions;
"Securities Act" means the Securities Act (Quebec) and the rules, regulations
and policies made thereunder, as now in effect and as they may be amended from
time to time prior to the Effective Date;
"Support Agreement" means the agreement made among Parent, Bio Syntech and 9083-
5661 Quebec Inc in connection with the Amalgamation;
"Transfer Agent" means the transfer agent for the Exchangeable Shares;
"Trustee" means the trustee under the Exchange and Voting Agreement;
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over the Common
Shares and any other shares ranking junior to the Exchangeable Shares, but shall
rank junior to the Preference Shares, with respect to the payment of dividends
and the distribution of assets in the event of the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary, or any other
distribution of the assets of the Company, among its shareholders for the
purpose of winding up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the Board
of Directors shall, subject to applicable law, on each Parent Dividend
Declaration Date, declare a dividend on each Exchangeable Share:
(a) in the case of a cash dividend declared on the Parent Common
Shares, in an amount in cash for each Exchangeable Share in
U.S. dollars, or the Canadian Dollar Equivalent thereof on the
Parent Dividend Declaration
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Date, in each case, corresponding to the cash dividend
declared on each Parent Common Share;
(b) in the case of a stock dividend declared on the Parent Common
Shares to be paid in Parent Common Shares by the issue or
transfer by the Company of such number of Exchangeable Shares
for each Exchangeable Share as is equal to the number of
Parent Common Shares to be paid on each Parent Common Share;
or
(c) in the case of a dividend declared on the Parent Common Shares
in property other than cash or Parent Common Shares, in such
type and amount of property for each Exchangeable Share as is
the same as or economically equivalent to (to be determined by
the Board of Directors as contemplated by Section 3.5 hereof)
the type and amount of property declared as a dividend on each
Parent Common Share.
3.2 Such dividends shall be paid out of money, assets or property of the Company
properly applicable to the payment of dividends, or out of authorized but
unissued shares of the Company, as applicable.
3.3 Cheques of the Company payable at par at any branch of the bankers of the
Company shall be issued in respect of any cash dividends contemplated by Section
3.1 (a) hereof and the sending of such a cheque to each holder of an
Exchangeable Share shall satisfy the cash dividend represented thereby unless
the cheque is not paid on presentation. Certificates registered in the name of
the registered holder of Exchangeable Shares shall be issued or transferred in
respect of any stock dividends contemplated by Section 3.1 (b) hereof and the
sending of such a certificate to each holder of an Exchangeable Share shall
satisfy the stock dividend represented thereby. Such other type and amount of
property in respect of any dividends contemplated by Section 3.1 (c) hereof
shall be issued, distributed or transferred by the Company in such manner as it
shall determine and the issuance, distribution or transfer thereof by the
Company to each holder of an Exchangeable Share shall satisfy the dividend
represented thereby. No holder of an Exchangeable Share shall be entitled to
recover by action or other legal process against the Company any dividend that
is represented by a cheque that has not been duly presented to the Company's
bankers for payment or that otherwise remains unclaimed for a period of six
years from the date on which such dividend was payable.
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3.4 The record date for the determination of the holders of Exchangeable Shares
entitled to receive payment of, and the payment date for, any dividend declared
on the Exchangeable Shares under Section 3.1 hereof shall be the same dates as
the record date and payment date, respectively, for the corresponding dividend
declared on the Parent Common Shares.
3.5 If on any payment date for any dividends declared on the Exchangeable Shares
under Section 3.1 hereof the dividends are not paid in full on all of the
Exchangeable Shares then outstanding, any such dividends that remain unpaid
shall be paid on a subsequent date or dates determined by the Board of Directors
on which the Company shall have sufficient money, assets or property properly
applicable to the payment of such dividends.
3.6 The Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence for the purposes of Section 3.1 hereof, and
each such determination shall be conclusive and binding on the Company and its
shareholders. In making each such determination, the following factors shall,
without excluding other factors determined by the Board of Directors to be
relevant, be considered by the Board of Directors:
(a) in the case of any stock dividend or other distribution
payable in Parent Common Shares, the number of such shares
issued in proportion to the number of Parent Common Shares
previously outstanding;
(b) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase Parent Common
Shares (or securities exchangeable for or convertible into or
carrying rights to acquire Parent Common Shares), the
relationship between the exercise price of each such right,
option or warrant and the Current Market Price;
(c) in the case of the issuance or distribution of any other form
of property (including without limitation any shares or
securities of Parent of any class other than Parent Common
Shares, any rights, options or warrants other than those
referred to in Section 3.5(b) above, any evidences of
indebtedness of or any assets of Parent) the relationship
between the fair market value (as determined by the Board of
Directors in the manner above contemplated) of such property
to be issued or distributed with respect to each outstanding
Parent Common Share and the Current Market Price; and
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o in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation
consequences to holders of Parent Common Shares as a result of
differences between taxation laws of Canada and the United
States (except for any differing consequences arising as a
result of differing marginal taxation rates and without regard
to the individual circumstances of holders of Exchangeable
Shares).
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the Company shall
not at any time without, but may at any time with, the approval of the holders
of the Exchangeable Shares given as specified in Section 10.2 of these share
provisions:
(a) pay any dividends on the Common Shares or any other shares
ranking junior to the Exchangeable Shares, other than stock
dividends payable in Common Shares or any such other shares
ranking junior to the Exchangeable Shares, as the case may be;
(b) redeem or purchase or make any capital distribution in respect
of Common Shares or any other shares ranking junior to the
Exchangeable Shares;
(c) redeem or purchase any other shares of the Company ranking
equally with the Exchangeable Shares with respect to the
payment of dividends or on any liquidation distribution; or
(d) except pursuant to and in accordance with the terms of Bio
Syntech Options, issue any Exchangeable Shares or any other
shares of the Company ranking equally with, or superior to,
the Exchangeable Shares other than by way of stock dividends
to the holders of such Exchangeable Shares.
4.2 The restrictions in Sections 4.1(a), (b), (c) and (d) above shall not apply
if all dividends on the outstanding Exchangeable Shares corresponding to
dividends declared and paid to date on the Parent Common Shares shall have been
declared and paid on the Exchangeable Shares.
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ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the Company or
any other distribution of the assets of the Company among its shareholders for
the purpose of winding up its affairs, a holder of Exchangeable Shares shall be
entitled, subject to applicable law, to receive from the assets of the Company
in respect of each Exchangeable Share held by such holder on the effective date
(the "Liquidation Date") of such liquidation, dissolution or winding-up, before
any distribution of any part of the assets of the Company among the holders of
the Common Shares or any other shares ranking junior to the Exchangeable Shares,
an amount per share (the "Liquidation Amount") equal to the Current Market Price
of a Parent Common Share on the last Business Day prior to the Liquidation Date,
which shall be satisfied in full by the Company causing to be delivered to such
holder one Parent Common Share, plus the Dividend Amount.
5.2 On or promptly after the Liquidation Date, and subject to the exercise by
Parent of the Call Right, the Company shall cause to be delivered to the holders
of the Exchangeable Shares the Liquidation Amount for each such Exchangeable
Share upon presentation and surrender of the certificates representing such
Exchangeable Shares, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the Act and the
Articles of the Company and such additional documents and instruments as the
Transfer Agent and the Company may reasonably require, at the registered office
of the Company or at any office of the Transfer Agent as may be specified by the
Company by notice to the holders of the Exchangeable Shares. Payment of the
total Liquidation Amount for such Exchangeable Shares shall be made by delivery
to each holder, at the address of the holder recorded in the register of members
of the Company for the Exchangeable Shares or by holding for pick-up by the
holder at the registered office of the Company or at any office of the Transfer
Agent as may be specified by the Company by notice to the holders of
Exchangeable Shares, on behalf of the Company of certificates representing
Parent Common Shares (which shares shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or encumbrance)
and a cheque of the Company payable at par at any branch of the bankers of the
Company in respect of the remaining portion, if any, of the total Liquidation
Amount (in each case less any amounts withheld on account of tax required to be
deducted and withheld therefrom). On and after the
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Liquidation Date, the holders of the Exchangeable Shares shall cease to be
holders of such Exchangeable Shares and shall not be entitled to exercise any of
the rights of holders in respect thereof, other than the right to receive their
proportionate part of the total Liquidation Amount, unless payment of the total
Liquidation Amount for such Exchangeable Shares shall not be made upon
presentation and surrender of share certificates in accordance with the
foregoing provisions, in which case the rights of the holders shall remain
unaffected until the total Liquidation Amount has been paid in the manner
hereinbefore provided. The Company shall have the right at any time after the
Liquidation Date to deposit or cause to be deposited the total Liquidation
Amount in respect of the Exchangeable Shares represented by certificates that
have not at the Liquidation Date been surrendered by the holders thereof in a
custodial account with any chartered bank or trust company in Canada. Upon such
deposit being made, the rights of the holders of Exchangeable Shares after such
deposit shall be limited to receiving their proportionate part of the total
Liquidation Amount (in each case less any amounts withheld on account of tax
required to be deducted and withheld therefrom) for such Exchangeable Shares so
deposited, against presentation and surrender of the said certificates held by
them, respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of the total Liquidation Amount, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all purposes
to be holders of the Parent Common Shares delivered to them or the custodian on
their behalf.
5.3 After the Company has satisfied its obligations to pay the holders of the
Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant to
Section 5.1 of these share provisions, such holders shall not be entitled to
share in any further distribution of the assets of the Company.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject to
the exercise by Parent of the Call Right and otherwise upon compliance with the
provisions of this Article 6, to require the Company to redeem any or all of the
Exchangeable Shares registered in the name of such holder for an amount per
share equal to the Current Market Price of a Parent Common Share on the last
Business Day prior to the Retraction Date (the "Retraction Price"), which shall
be satisfied in full by the Company causing to be delivered to such holder one
Parent Common Share for each Exchangeable Share presented and surrendered by the
holder. To effect such redemption, the holder shall
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present and surrender at the registered office of the Company or at any office
of the Transfer Agent as may be specified by the Company by notice to the
holders of Exchangeable Shares the certificate or certificates representing the
Exchangeable Shares which the holder desires to have the Company redeem,
together with such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under the Act and the Articles of the Company
and such additional documents and instruments as the Transfer Agent and the
Company may reasonably require, and together with a duly executed statement (the
"Retraction Request") in the form of Schedule A hereto or in such other form as
may be acceptable to the Company:
(a) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by
such certificate or certificates (the "Retracted Shares")
redeemed by the Company;
(b) stating the Business Day on which the holder desires to have
the Company redeem the Retracted Shares (the "Retraction
Date"), provided that the Retraction Date shall be not less
than 10 Business Days nor more than 15 Business Days after the
date on which the Retraction Request is received by the
Company and further provided that, in the event that no such
Business Day is specified by the holder in the Retraction
Request, the Retraction Date shall be deemed to be the 15th
Business Day after the date on which the Retraction Request is
received by the Company; and
(c) acknowledging, as the case may be, the overriding right (the
"Call Right") of Parent to purchase all but not less than all
the Retracted Shares directly from the holder and that the
Retraction Request shall be deemed to be a revocable offer by
the holder to sell the Retracted Shares to Parent in
accordance with the Call Right on the terms and conditions set
out in Section 6.3 below.
6.2 Subject to the exercise by Parent of the Call Right, upon receipt by the
Company or the Transfer Agent in the manner specified in Section 6.1 hereof of a
certificate or certificates representing the number of Retracted Shares,
together with a Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7, the Company
shall redeem the Retracted Shares effective at the close of business on the
Retraction Date and shall cause to be delivered to such holder the total
Retraction Price. If only a part of the Exchangeable Shares represented by any
certificate is redeemed (or purchased by Parent pursuant to the Call Right), a
new certificate for the balance of such Exchangeable Shares shall be issued to
the holder at the expense of the Company.
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6.3 Upon receipt by the Company of a Retraction Request, the Company shall
immediately notify Parent thereof and shall provide to Parent a copy of the
Retraction Request. In order to exercise the Call Right, Parent must notify the
Company of its determination to do so (the "Parent Call Notice") within five
Business Days of notification to Parent by the Company of the receipt by the
Company of the Retraction Request. If Parent does not so notify the Company
within such five Business Day period, the Company will notify the holder as soon
as possible thereafter that Parent will not exercise the Call Right. If Parent
delivers the Parent Call Notice within such five Business Day period, and
provided that the Retraction Request is not revoked by the holder in the manner
specified in Section 6.7, the Retraction Request shall thereupon be considered
only to be an offer by the holder to sell the Retracted Shares to Parent in
accordance with the Call Right. In such event, the Company shall not redeem the
Retracted Shares and Parent shall purchase from such holder and such holder
shall sell to Parent on the Retraction Date the Retracted Shares for a purchase
price (the "Purchase Price") per share equal to the Retraction Price per share,
plus on the designated payment date therefor, to the extent not paid by the
Company on the designated payment date therefor, any Dividend Amount. To the
extent that Parent pays the Dividend Amount in respect of the Retracted Shares,
the Company shall no longer be obligated to pay any declared and unpaid
dividends on such Retracted Shares. Provided that Parent has complied with
Section 6.4, the closing of the purchase and sale of the Retracted Shares
pursuant to the Call Right shall be deemed to have occurred as at the close of
business on the Retraction Date and, for greater certainty, no redemption by the
Company of such Retracted Shares shall take place on the Retraction Date. In the
event that Parent does not deliver a Parent Call Notice within such five
Business Day period, and provided that the Retraction Request is not revoked by
the holder in the manner specified in Section 6.7, the Company shall redeem the
Retracted Shares on the Retraction Date and in the manner otherwise contemplated
in this Article 6.
6.4 The Company or Parent, as the case may be, shall deliver or cause the
Trustee to deliver to the relevant holder, at the address of the holder recorded
in the register of members of the Company for the Exchangeable Shares or at the
address specified in the holder's Retraction Request or by holding for pick-up
by the holder at the registered office of the Company or at any office of the
Transfer Agent as may be specified by the Company by notice to the holders of
Exchangeable Shares, certificates representing the Parent Common Shares (which
shares shall be duly issued as fully paid and non-assessable and shall be free
and clear of any lien, claim or encumbrance) registered in the name of the
holder or in such other name as the holder may request, and, if applicable and
on or before the payment date therefor, a cheque payable at par at any branch of
the
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bankers of the Company or Parent, as applicable, representing the aggregate
Dividend Amount, in payment of the total Retraction Price or the total Purchase
Price, as the case may be, in each case, less any amounts withheld on account of
tax required to be deducted and withheld therefrom, and such delivery of such
certificates and cheques on behalf of the Company or by Parent, as the case may
be, or by the Transfer Agent shall be deemed to be payment of and shall satisfy
and discharge all liability for the total Retraction Price or total Purchase
Price, as the case may be, to the extent that the same is represented by such
share certificates and cheques (plus any tax deducted and withheld therefrom and
remitted to the proper tax authority).
6.5 On and after the close of business on the Retraction Date, the holder of the
Retracted Shares shall cease to be a holder of such Retracted Shares and shall
not be entitled to exercise any of the rights of a holder in respect thereof,
other than the right to receive his proportionate part of the total Retraction
Price or total Purchase Price, as the case may be, unless upon presentation and
surrender of certificates in accordance with the foregoing provisions, payment
of the total Retraction Price or the total Purchase Price, as the case may be,
shall not be made as provided in Section 6.4, in which case the rights of such
holder shall remain unaffected until the total Retraction Price or the total
Purchase Price, as the case may be, has been paid in the manner hereinbefore
provided. On and after the close of business on the Retraction Date, provided
that presentation and surrender of certificates and payment of the total
Retraction Price or the total Purchase Price, as the case may be, has been made
in accordance with the foregoing provisions, the holder of the Retracted Shares
so redeemed by the Company or purchased by Parent shall thereafter be considered
and deemed for all purposes to be a holder of the Parent Common Shares delivered
to it.
6.6 Notwithstanding any other provision of this Article 6, the Company shall not
be obligated to redeem Retracted Shares specified by a holder in a Retraction
Request to the extent that such redemption of Retracted Shares would be contrary
to solvency requirements or other provisions of applicable law. If the Company
believes that on any Retraction Date it would not be permitted by any of such
provisions to redeem the Retracted Shares tendered for redemption on such date,
and provided that Parent shall not have exercised the Call Right with respect to
the Retracted Shares, the Company shall only be obligated to redeem Retracted
Shares specified by a holder in a Retraction Request to the extent of the
maximum number that may be so redeemed (rounded down to a whole number of
shares) as would not be contrary to such provisions and shall notify the holder
at least two Business Days prior to the Retraction Date as to the number of
Retracted Shares which will not be redeemed by the Company. In any case in which
the
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redemption by the Company of Retracted Shares would be contrary to solvency
requirements or other provisions of applicable law, the Company shall redeem
Retracted Shares in accordance with Section 6.2 of these share provisions on a
pro rata basis and shall issue to each holder of Retracted Shares a new
certificate, at the expense of the Company, representing the Retracted Shares
not redeemed by the Company pursuant to Section 6.2 hereof. Provided that the
Retraction Request is not revoked by the holder in the manner specified in
Section 6.7, the holder of any such Retracted Shares not redeemed by the Company
pursuant to Section 6.2 of these share provisions as a result of solvency
requirements or other provisions of applicable law shall be deemed by giving the
Retraction Request to require Parent to purchase such Retracted Shares from such
holder on the Retraction Date or as soon as practicable thereafter on payment by
Parent to such holder of the Purchase Price for each such Retracted Share, all
as more specifically provided in the Exchange and Voting Agreement.
6.7 A holder of Retracted Shares may, by notice in writing given by the holder
to the Company before the close of business on the Business Day immediately
preceding the Retraction Date, withdraw its Retraction Request, in which event
such Retraction Request shall be null and void and, for greater certainty, the
revocable offer constituted by the Retraction Request to sell the Retracted
Shares to Parent shall be deemed to have been revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE COMPANY
7.1 Subject to applicable law, and provided Parent has not exercised the Call
Right, the Company shall on the Redemption Date redeem all but not less than all
of the then outstanding Exchangeable Shares for an amount per share equal to the
Current Market Price of a Parent Common Share on the last Business Day prior to
the Redemption Date (the "Redemption Price"), which shall be satisfied in full
by the Company causing to be delivered to each holder of Exchangeable Shares one
Parent Common Share for each Exchangeable Share held by such holder, together
with the Dividend Amount.
7.2 In any case of a redemption of Exchangeable Shares under this Article 7, the
Company shall, at least 60 days before the Redemption Date (other than a
Redemption Date established in connection with a Parent Control Transaction, an
Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event),
send or cause to be sent to each holder of Exchangeable Shares a notice in
writing of the redemption by the Company or the purchase by Parent under the
Call Right, as the case may be, of the Exchangeable Shares held by such holder.
In the case of a Redemption Date established in connection with a Parent Control
Transaction, an Exchangeable Share Voting Event or an
<PAGE>
16
Exempt Exchangeable Share Voting Event, the written notice of redemption by the
Company or the purchase by Parent under the Call Right will be sent on or before
the Redemption Date, on as many days prior written notice as may be determined
by the Board of Directors of the Company to be reasonably practicable in the
circumstances. In any such case, such notice shall set out the formula for
determining the Redemption Price or the Call Purchase Price, as the case may be,
the Redemption Date and, if applicable, particulars of the Call Right.
7.3 On or after the Redemption Date and subject to the exercise by Parent of the
Call Right, the Company shall cause to be delivered to the holders of the
Exchangeable Shares to be redeemed the Redemption Price for each such
Exchangeable Share, together with the Dividend Amount upon presentation and
surrender at the registered office of the Company or at any office of the
Trustee as may be specified by the Company in such notice of the certificates
representing such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the Act and the Articles of the Company and such additional documents and
instruments as the Transfer Agent and the Company may reasonably require.
Payment of the total Redemption Price for such Exchangeable Shares, together
with payment of the Dividend Amount, shall be made by delivery to each holder,
at the address of the holder recorded in the register of members of the Company
or by holding for pick-up by the holder at the registered office of the Company
or at any office of the Transfer Agent as may be specified by the Company in
such notice, on behalf of the Company of certificates representing Parent Common
Shares (which shares shall be duly issued as fully paid and non- assessable and
shall be free and clear of any lien, claim or encumbrance) and, if applicable, a
cheque of the Company payable at par at any branch of the bankers of the Company
in payment of any Dividend Amounts, in each case, less any amounts withheld on
account of tax required to be deducted and withheld therefrom. On and after the
Redemption Date, the holders of the Exchangeable Shares called for redemption
shall cease to be holders of such Exchangeable Shares and shall not be entitled
to exercise any of the rights of holders in respect thereof, other than the
right to receive their proportionate part of the total Redemption Price and any
Dividend Amount, unless payment of the total Redemption Price and any Dividend
Amount for such Exchangeable Shares shall not be made upon presentation and
surrender of certificates in accordance with the foregoing provisions, in which
case the rights of the holders shall remain unaffected until the total
Redemption Price and any Dividend Amount shall have been paid in the manner
hereinbefore provided. The Company shall have the right at any time after the
sending of notice of its intention to redeem the Exchangeable Shares as
aforesaid to deposit or cause to be deposited the total Redemption Price for and
the full amount of the Dividend Amount on (except as otherwise provided in this
Section 7.3) the Exchangeable Shares so called for redemption, or of such of the
said Exchangeable
<PAGE>
17
Shares represented by certificates that have not at the date of such deposit
been surrendered by the holders thereof in connection with such redemption, in a
custodial account with any chartered bank or trust company in Canada named in
such notice, less any amounts withheld on account of tax required to be deducted
and withheld therefrom. Upon the later of such deposit being made and the
Redemption Date, the Exchangeable Shares in respect whereof such deposit shall
have been made shall be redeemed and the rights of the holders thereof after
such deposit or Redemption Date, as the case may be, shall be limited to
receiving their proportionate part of the total Redemption Price and the
Dividend Amount for such Exchangeable Shares so deposited, against presentation
and surrender of the said certificates held by them, respectively, in accordance
with the foregoing provisions. Upon such payment or deposit of the total
Redemption Price and the full Dividend Amount, the holders of the Exchangeable
Shares shall thereafter be considered and deemed for all purposes to be holders
of the Parent Common Shares delivered to them or the custodian on their behalf.
ARTICLE 8
PURCHASE FOR CANCELLATION
8.1 Subject to applicable law, the Company may at any time and from time to time
purchase for cancellation all or any part of the outstanding Exchangeable Shares
at any price by tender to all the holders of record of Exchangeable Shares then
outstanding or through the facilities of any stock exchange on which the
Exchangeable Shares are listed or quoted at any price per share. If in response
to an invitation for tenders under the provisions of this Section 8.1, more
Exchangeable Shares are tendered at a price or prices acceptable to the Company
than the Company is prepared to purchase, the Exchangeable Shares to be
purchased by the Company shall be purchased as nearly as may be pro rata
according to the number of shares tendered by each holder who submits a tender
to the Company, provided that when shares are tendered at different prices, the
pro rating shall be effected (disregarding fractions) only with respect to the
shares tendered at the price at which more shares were tendered than the Company
is prepared to purchase after the Company has purchased all the shares tendered
at lower prices. If part only of the Exchangeable Shares represented by any
certificate shall be purchased, a new certificate for the balance of such shares
shall be issued at the expense of the Company.
<PAGE>
18
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and by Article 10 hereof, the holders
of the Exchangeable Shares shall not be entitled as such to receive notice of or
to attend any meeting of the Shareholders of the Company or to vote at any such
meeting.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.
10.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition attaching to the
Exchangeable Shares or any other matter requiring the approval or consent of the
holders of the Exchangeable Shares shall be deemed to have been sufficiently
given if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be evidenced by resolution passed by not
less than two-thirds of the votes cast on such resolution at a meeting of
holders of Exchangeable Shares duly called and held at which the holders of at
least 10% of the outstanding Exchangeable Shares at that time are present or
represented by proxy; provided that if at any such meeting the holders of at
least 10% of the outstanding Exchangeable Shares at that time are not present or
represented by proxy within one-half hour after the time appointed for such
meeting, then the meeting shall be adjourned to such date not less than five
days thereafter and to such time and place as may be designated by the Chairman
of such meeting. At such adjourned meeting the holders of Exchangeable Shares
present or represented by proxy thereat may transact the business for which the
meeting was originally called and a resolution passed thereat by the affirmative
vote of not less than two-thirds of the votes cast on such resolution at such
meeting shall constitute the approval or consent of the holders of the
Exchangeable Shares.
ARTICLE 11
INTENTIONALY DELETED
<PAGE>
19
ARTICLE 12
ACTIONS BY THE COMPANY UNDER SUPPORT AGREEMENT
12.1 The Company will take all such actions and do all such things as shall be
necessary or advisable to perform and comply with and to ensure performance and
compliance by Parent and the Company with all provisions of the Support
Agreement applicable to Parent and the Company, respectively, in accordance with
the terms thereof including, without limitation, taking all such actions and
doing all such things as shall be necessary or advisable to enforce to the
fullest extent possible for the direct benefit of the Company all rights and
benefits in favour of the Company under or pursuant to such agreement.
12.2 The Company shall not propose, agree to or otherwise give effect to any
amendment to, or waiver or forgiveness of its rights or obligations under, the
Support Agreement without the approval of the holders of the Exchangeable Shares
given in accordance with Section 10.2 of these share provisions other than such
amendments, waivers and/or forgiveness as may be necessary or advisable for the
purposes of:
(a) adding to the covenants of the other parties to such agreement
for the protection of the Company or the holders of the
Exchangeable Shares thereunder;
(b) making such provisions or modifications not inconsistent with
such agreement as may be necessary or desirable with respect
to matters or questions arising thereunder which, in the good
faith opinion of the Board of Directors, it may be expedient
to make, provided that the Board of Directors shall be of the
good faith opinion, after consultation with counsel, that such
provisions and modifications will not be prejudicial to the
interests of the holders of the Exchangeable Shares; or
(c) making such changes in or corrections to such agreement which,
on the advice of counsel to the Company, are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
manifest error contained therein, provided that the Board of
Directors shall be of the good faith opinion, after
consultation with counsel, that such changes or corrections
will not be prejudicial to the interests of the holders of the
Exchangeable Shares.
<PAGE>
20
ARTICLE 13
LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS
13.1 The certificates evidencing the Exchangeable Shares held by Shareholders
who have intervened to the Exchange and Voting Agreement shall contain or have
affixed thereto a legend in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the Call Rights and the
Exchange and Voting Agreement (including the provisions with respect to the
voting rights, exchange right and automatic exchange thereunder).
13.2 The Company, Parent and the Trustee shall be entitled to deduct and
withhold from any dividend or consideration otherwise payable to any holder of
Exchangeable Shares such amounts as the Company, Parent or the Trustee is
required or permitted to deduct and withhold with respect to such payment under
the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or
any provision of provincial, state, local or foreign tax law, in each case, as
amended. To the extent that amounts are so withheld, such withheld amounts shall
be treated for all purposes hereof as having been paid to the holder of the
shares in respect of which such deduction and withholding was made, provided
that such withheld amounts are actually remitted to the appropriate taxing
authority. To the extent that the amount so required or permitted to be deducted
or withheld from any payment to a holder exceeds the cash portion of the
consideration otherwise payable to the holder, the Company, Parent and the
Trustee are hereby authorized to sell or otherwise dispose of such portion of
the consideration as is necessary to provide sufficient funds to the Company,
Parent or the Trustee, as the case may be, to enable it to comply with such
deduction or withholding requirement and the Company, Parent or the Trustee
shall notify the holder thereof and remit any unapplied balance of the net
proceeds of such sale.
ARTICLE 14
NOTICES
14.1 Any notice, request or other communication to be given to the Company by a
holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by telecopy or by delivery to
the registered office of the Company and addressed to the attention of the
President of the Company. Any such notice, request or other communication, if
given by mail, telecopy or delivery, shall only be deemed to have been given and
received upon actual receipt thereof by the Company.
<PAGE>
21
14.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Company or the Trustee of certificates representing Exchangeable Shares in
connection with the liquidation, dissolution or winding-up of the Company or the
retraction or redemption of Exchangeable Shares shall be made by registered mail
(postage prepaid) or by delivery to the registered office of the Company or to
such office of the Trustee as may be specified by the Company, in each case,
addressed to the attention of the President of the Company. Any such
presentation and surrender of certificates shall only be deemed to have been
made and to be effective upon actual receipt thereof by the Company or the
Trustee, as the case may be. Any such presentation and surrender of certificates
made by registered mail shall be at the sole risk of the holder mailing the
same.
14.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Company shall be in writing and shall
be valid and effective if given by mail (postage prepaid) or by delivery to the
address of the holder recorded in the register of members of the Company or, in
the event of the address of any such holder not being so recorded, then at the
last known address of such holder. Any such notice, request or other
communication, if given by mail, shall be deemed to have been given and received
on the third Business Day following the date of mailing and, if given by
delivery, shall be deemed to have been given and received on the date of
delivery. Accidental failure or omission to give any notice, request or other
communication to one or more holders of Exchangeable Shares shall not invalidate
or otherwise alter or affect any action or proceeding to be taken by the Company
pursuant thereto.
SCHEDULE A
TO PROVISIONS ATTACHING TO THE
EXCHANGEABLE SHARES
RETRACTION REQUEST
To Bio Syntech Canada Inc. (the "Company") and Bio Syntech, Inc. ("Bio Syntech")
This notice is given pursuant to Article 6 of the provisions (the "Share
Provisions") attaching to the Exchangeable Shares of the Company represented by
this certificate and all capitalized words and expressions used in this notice
that are defined in the Share Provisions have the meanings ascribed to such
words and expressions in such Share Provisions.
<PAGE>
22
The undersigned hereby notifies the Company that, subject to the Call Right
referred to below, the undersigned desires to have the Company redeem in
accordance with Article 6 of the Share Provisions:
all share(s) represented by this certificate; or
_____________________ share(s) only represented by this certificate.
The undersigned hereby notifies Bio Syntech that the Retraction Date shall be
_________________
NOTE: The Retraction Date must be a Business Day and must not be less than 10
Business Days nor more than 15 Business Days after the date upon which this
notice is received by the Company. If no such Business Day is specified above,
the Retraction Date shall be deemed to be the 15th Business Day after the date
on which this notice is received by the Company.
The undersigned, provided he has intervened to the Exchange and Voting
Agreement, acknowledges the overriding Call Right of Bio Syntech, Inc to
purchase all but not less than all the Retracted Shares from the undersigned and
that this notice is and shall be deemed to be a revocable offer by the
undersigned to sell the Retracted Shares to Bio Syntech, Inc in accordance with
the Call Right on the Retraction Date for the Purchase Price and on the other
terms and conditions set out in Section 6.3 of the Share Provisions. This
Retraction Request, and this offer to sell the Retracted Shares to Bio Syntech,
may be revoked and withdrawn by the undersigned only by notice in writing given
to the Company at any time before the close of business on the Business Day
immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law, the Company is unable to redeem all Retracted Shares, the
undersigned will be deemed to have exercised the Insolvency Exchange Right (as
defined in the Exchange and Voting Agreement) so as to require the Company to
purchase the unredeemed Retracted Shares.
The undersigned hereby represents and warrants to the Company and Bio Syntech,
Inc that the undersigned:
o is
(select one)
<PAGE>
23
o is not
a non-resident of Canada for purposes of the Income Tax Act (Canada). The
undersigned acknowledges that in the absence of an indication that the
undersigned is not a non-resident of Canada, withholding on account of Canadian
tax may be made from amounts payable to the undersigned on the redemption or
purchase of the Retracted Shares.
The undersigned hereby represents and warrants to the Company and Bio Syntech
that the undersigned has good title to, and owns, the share(s) represented by
this certificate to be acquired by the Company or Bio Syntech, as the case may
be, free and clear of all liens, claims and encumbrances.
------ ------------------------- -----------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up by the
shareholder from the trustee under the Exchange and Voting Agreement (the
"Trustee"), failing which the securities and any cheque(s) will be mailed to the
last address of the shareholder as it appears on the register.
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Trustee may require, must be deposited with the
Trustee. The securities and any cheque(s) resulting from the retraction or
purchase of the Retracted Shares will be issued and registered in, and made
payable to, respectively, the name of the shareholder as it appears on the
register of the Company and the securities and any cheque(s) resulting from such
retraction or purchase will be delivered to such shareholder as indicated above,
unless the form appearing immediately below is duly completed.
The shares of common stock of Bio Syntech Inc., a Nevada corporation, to be
issued in exchange for the Exchangeable Shares represented by this certificate
have not been registered under the U.S. Securities Act of 1933, as amended, and
may not be sold or otherwise transferred unless a compliance with the
registration provisions of such Act has been made or unless availability of an
exemption from such registration provisions has been established, or unless sold
pursuant to rule 144 under the Securities Act of 1933.
Date:____________________
<PAGE>
24
Name of Person in Whose Name Securities or Cheque(s)Are to be Registered, Issued
or Delivered:
_________________________________
Street Address or P.O. Box: ____________________________________________________
Signature of Shareholder: ____________________________________________________
City, Province and Postal Code: ________________________________________________
Signature Guaranteed by: _______________________________________________________
NOTE: If this Retraction Request is for less than all of the shares represented
by this certificate, a certificate representing the remaining share(s) of the
Company represented by this certificate will be issued and registered in the
name of the shareholder as it appears on the register of the Company, unless the
Share Transfer Power on the share certificate is duly completed in respect of
such share(s).
EXCHANGE AND VOTING AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 16 day of February 2000.
AMONG: BIOSYNTECH, INC. (formerly Dream Team Inc.), a corporation
subsisting under the laws of the State of Nevada;
(hereinafter referred to as the "Parent")
AND: 9083-5661 QUEBEC INC., a corporation incorporated under the
laws of the Province of Quebec;
(hereinafter referred to as the "Purchaser"),
AND:
PIERRE BARNARD, attorney, having a business address at De
Grandpre Chaurette Levesque, 2000 McGill College Avenue, suite
1600, Montreal, Quebec H3B 3H3
(hereinafter referred to as the "Trustee").
AND:
BIO SYNTECH LTEE., a corporation incorporated under the laws
of the Province of Quebec;
(hereinafter referred to as the "Bio Syntech")
W H E R E A S:
A. The Purchaser is the wholly owned subsidiary of the Parent;
B. Pursuant to the Amalgamation Agreement, the Purchaser agreed to
amalgamate with Bio Syntech to form Bio Syntech Canada Inc.("Mergeco.")
in consideration of among other things: (i) the Shareholders of
Biosyntech receiving one Exchangeable Non-Voting Share (as herein
defined) of Mergeco for each share of Bio Syntech held by them
immediately before the Amalgamation and (ii) the Parent, granting to
each Shareholder Voting Rights (as herein defined) in the Parent on the
basis of each Shareholder having an equivalent number of votes in the
Parent as the number of Exchangeable Non- Voting Shares held by such
Shareholder;
<PAGE>
2
C. As security for the Parent's covenant to issue common shares in its
capital stock in exchange for Exchangeable Non-Voting Shares, the
Parent agreed to issue a number of common shares (as herein defined as
the "Parent Common Shares") to the Trustee corresponding to the number
of issued Exchangeable Non-Voting Shares;
D. In accordance with the Amalgamation Agreement and the Exchangeable
Share Provisions, this Agreement stipulates the means by which: (i) the
Shareholders have voting rights in the Parent; ii) the Trustee holds
the Parent Common Shares for the Shareholders; (iii) the Shareholders
exercise their rights of exchange of the Exchangeable Non-Voting
Shares; and (iv) the Parent exercises its Call Right.
E. As consideration for the grant by the Parent of the above rights to the
Shareholders, the Shareholders who have intervened to this Agreement
have granted to the Parent a right to acquire the Exchangeable
Non-Voting Shares tendered by them for Retraction (the "Call Right");
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS. In this Agreement, the following terms shall have the following
meanings:
"AFFILIATE" of any person means any other person directly or indirectly
controlled by, or under common control of, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control of"), as applied to any person, means
the possession by another person, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that first mentioned
person, whether through the ownership of voting securities, by contract or
otherwise.
"AMALGAMATION AGREEMENT" means the Amalgamation Agreement dated December 2, 1999
between the Parent, the Purchaser and Bio Syntech, as amended and restated on
the date hereof.
"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of Parent to
<PAGE>
3
effect the automatic exchange of Exchangeable Non-Voting Shares for Parent
Common Shares pursuant to Section 4.11 hereof.
"BOARD OF DIRECTORS" means the Board of Directors of Mergeco.
"BUSINESS DAY" means a day other than a Saturday, Sunday or a day when banks are
not open for business in Nova Scotia;
"CALL RIGHT" means the right of the Parent to acquire in certain circumstances
described in the statutes of Mergeco, Exchangeable Non-Voting Shares from the
holders thereof who have intervened to this Agreement, on the basis of one
Parent Common Share for each Exchangeable Non-Voting Share so tendered.
"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a
foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying (a) the Foreign Currency Amount by (b) the exchange rate
on such date for such foreign currency expressed in Canadian dollars as reported
in The Wall Street Journal under "Currency Trading; Exchange Rates" or, in the
event such exchange rate is not available, such exchange rate on such date for
such foreign currency expressed in Canadian dollars as may be deemed by the
Board of Directors to be appropriate for such purpose.
"CURRENT MARKET PRICE" means, in respect of a Parent Common Share on any date,
the Canadian Dollar Equivalent of closing price of Parent Common Shares on the
day before such date, on such stock exchange or automated quotation system on
which the Parent Common Shares are listed or quoted, as the case may be, as may
be selected by the Board of Directors for such purpose; provided, however, that
if there is no public distribution or trading activity of Parent Common Shares
during such period, then the Current Market Price of a Parent Common Share shall
be determined by the Board of Directors based upon the advice of such qualified
independent financial advisors as the Board of Directors may deem to be
appropriate, and provided further that any such selection, opinion or
determination by the Board of Directors shall be conclusive and binding.
"EXCHANGEABLE NON-VOTING SHARES" means the Exchangeable Non-Voting Shares
without par value in the capital stock of Mergeco issuable under the
Amalgamation Agreement.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions and
conditions attached to the Exchangeable Non-Voting Shares as set forth in the
Amalgamation Agreement.
"INSOLVENCY EVENT" means the institution by Mergeco of any proceeding to be
<PAGE>
4
adjudicated bankrupt or insolvent or to be dissolved or wound up, or the consent
of Mergeco to the institution of bankruptcy, insolvency, dissolution or winding
up proceedings against it, or the filing of a petition, answer or consent
seeking dissolution or winding up under any bankruptcy, insolvency or analogous
laws, including without limitation the Companies Creditors' Arrangement Act
(Canada) and the Bankruptcy and Insolvency Act (Canada), and the failure by
Mergeco to contest in good faith any such proceedings commenced in respect of
Mergeco within fifteen (15) days of becoming aware thereof, or the consent by
Mergeco to the filing of any such petition or to the appointment of a receiver,
or the making by Mergeco of a general assignment for the benefit of creditors,
or the admission in writing by Mergeco of its inability to pay its debts
generally as they become due, or Mergeco not being permitted, pursuant to
solvency requirements of applicable law, to redeem any Retracted Shares pursuant
to section 6 of the Exchangeable Share Provisions.
"INSOLVENCY EXCHANGE RIGHT" has the meaning ascribed thereto in Section 4.1.
"LIQUIDATION EVENT" has the meaning ascribed thereto in Section 4.12.
"LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in Section
4.12(c).
"LIST" has the meaning ascribed thereto in Section 3.8.
"OFFICER'S CERTIFICATE" means, with respect to the Parent or Mergeco, as the
case may be, a certificate signed by any one of the Chairman of the Board, the
Vice- Chairman of the Board, the President, any Vice-President or any other
officer of the Parent or Mergeco, as the case may be.
"PARENT COMMON SHARES" means the shares of common stock of the Parent, without
par value, having voting rights of one vote per share, and any other securities
into which such shares may be changed.
"PARENT CONSENT" has the meaning ascribed thereto in Section 3.2.
"PARENT MEETING" has the meaning ascribed in Section 3.2.
"PARENT SUCCESSOR" has the meaning ascribed thereto in Section 11.1(a).
"PERSON" includes an individual, partnership, corporation, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"RETRACTED SHARES" has the meaning ascribed thereto in Section 4.7.
<PAGE>
5
"SHAREHOLDERS" means the registered holders from time to time of Exchangeable
Non-Voting Shares, other than the Parent and its Affiliates, as listed in
Appendix "A" hereto.
"SHAREHOLDER VOTES" has the meaning ascribed thereto in Section 3.2.
"SUPPORT AGREEMENT" means that certain support agreement made as of the same
date hereof between the Purchaser and the Parent.
"TRUST" means the trust created by this Agreement.
"TRUST ESTATE" means the Trust Shares and any other securities, money or other
property which may be held by the Trustee from time to time pursuant to this
Agreement.
"TRUST SHARES" has the meaning ascribed thereto in Section 2.2.
"VOTING RIGHTS" has the meaning ascribed thereto in Section 3.1.
INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this Agreement
into articles, sections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
NUMBER, GENDER, ETC. Words importing the singular number only shall include the
plural and vice versa. Words importing the use of any gender shall include all
genders.
DATE FOR ANY ACTION. If any date on which any action is required to be taken
under this Agreement is not a Business Day, such action shall be required to be
taken on the next succeeding Business Day.
ARTICLE 2
TRUST SHARES
2.1 ESTABLISHMENT OF TRUST. One purpose of this Agreement is to create the
Trust for the benefit of the Shareholders, as herein provided. The
Trustee will hold the Parent Common Shares acquired pursuant to the
requirements of the Amalgamation Agreement, Exchangeable Share
Provisions and Support Agreement both to support the Parent's and
Mergeco's obligations thereunder in the event of default and to provide
a mechanism for Shareholders of each Exchangeable Non-Voting Share to
direct the voting of a corresponding Parent
<PAGE>
6
Common Share held by the Trustee.
2.2 ISSUE AND OWNERSHIP OF THE PARENT COMMON SHARES. Upon execution of this
Agreement, the Parent shall transfer to the Trustee a number of Parent
Common Shares equal to the number of Exchangeable Non-Voting Shares
issued to Shareholders under the Amalgamation Agreement, such shares to
be hereafter held of record by the Trustee as trustee for and on behalf
of, and for the use and benefit of, the Shareholders and in accordance
with the provisions of this Agreement. From time to time, the Parent
shall transfer additional shares of Parent Common Shares to the Trustee
as required under the Amalgamation Agreement, Exchangeable Share
Provisions and Support Agreement, also to be held of record by the
Trustee as trustee for and on behalf of, and for the use and benefit
of, the Shareholders and in accordance with the provisions of this
Agreement. All Parent Common Shares so transferred by the Parent to the
Trustee pursuant to this Section 3.1 shall hereafter be referred to as
the "Trust Shares". The Parent hereby acknowledges receipt from the
Trustee as trustee for and on behalf of the Shareholders of good and
valuable consideration (and the adequacy thereof) for the issuance of
the Trust Shares by the Parent to the Trustee. During the term of the
Trust and subject to the terms and conditions of this Agreement, the
Trustee shall possess and be vested with full legal ownership of the
Trust Shares and, subject to the terms hereof, shall be entitled to
exercise all of the rights and powers of an owner with respect to the
Trust Shares, provided that the Trustee shall:
(a) hold the Trust Shares and the rights associated therewith as
conveyed by this Agreement as trustee solely for the use and
benefit of the Shareholders in accordance with the provisions
of this Agreement; and
(b) except as specifically authorized by this Agreement, have no
power or authority to sell, transfer, vote or otherwise deal
in or with the Trust Shares and the Trust Shares shall not be
used or disposed of by the Trustee for any purpose other than
the purposes for which this Trust is created pursuant to this
Agreement.
ARTICLE 3
VOTING
3.1 VOTING RIGHTS. The Parent will grant to the Shareholders, by requisite
shareholder or director resolutions, the right for each Shareholder to
receive notice and attend each Parent Meeting and to consent to or to
vote in person or by proxy, on any matter, question or proposition
whatsoever that may
<PAGE>
7
properly come before the stockholders of the Parent at a Parent Meeting
or in connection with a Parent Consent (in each case, as hereinafter
defined) (the "Voting Rights") on the basis of one Voting Right for
every one Exchangeable Non-Voting Share held by a Shareholder, as if
and to the same extent and effect as if the Shareholder held an
equivalent number of Parent Common Shares. The Voting Rights shall be
and remain vested in and exercised by the Shareholders.
3.2 NUMBER OF VOTES. With respect to all meetings of stockholders of the
Parent at which holders of shares of Parent Common Shares are entitled
to vote (a "Parent Meeting") and with respect to all written consents
sought by the Parent from its stockholders including the holders of
shares of Parent Common Shares (a "Parent Consent"), each Shareholder
shall be entitled to cast and exercise, in the manner instructed, the
Voting Rights ordinarily attributable to one Parent Common Share for
each Exchangeable Non-Voting Share owned of record by such Shareholder
on the record date established by the Parent or by applicable law for
such Parent Meeting or Parent Consent, as the case may be (the
"Shareholder Votes") in respect of each matter, question or proposition
to be voted on at such Parent Meeting or to be consented to in
connection with such Parent Consent.
3.3 LEGENDED SHARES CERTIFICATES. Mergeco will cause each certificate
representing Exchangeable Non-Voting Shares to bear an appropriate
legend notifying the Shareholders of their right to a number of votes
in the Parent as is equal to the number of shares represented by the
Exchangeable Non-Voting Share certificates.
3.4 SAFEKEEPING OF CERTIFICATES. The certificate(s) representing the Trust
Shares shall at all times be held in safe keeping by the Trustee or its
agent.
3.5 MAILINGS TO SHAREHOLDERS OF EXCHANGEABLE NON-VOTING SHARES. With
respect to each Parent Meeting and Parent Consent, the Parent will mail
or cause to be mailed (or otherwise communicate in the same manner as
the Parent utilizes in communications to holders of Parent Common
Shares, to each of the Shareholders named in the List (as defined
below) on the same day as the initial mailing or notice (or other
communication) with respect thereto is given by the Parent to its
stockholders:
(a) a copy of such notice, together with any proxy or information
statement and related materials to be provided to stockholders
of the Parent;
(b) a statement that such Shareholder is entitled to the exercise
of the Shareholder Votes with respect to such Parent Meeting
or Parent Consent, as
<PAGE>
8
the case may be, and to attend such Parent Meeting and to
exercise personally the Shareholder Votes thereat;
(c) a statement as to the manner in which to give a proxy to a
designated agent or other representative of the management of
the Parent to exercise such Shareholder Votes; and
(d) a statement of (i) the time and date by which such must be
received by the Parent in order to be binding upon it, which
in the case of a Parent Meeting shall not be earlier than the
close of business on the second Business Day prior to such
meeting, and (ii) the method for revoking or amending such
proxies.
For the purpose of determining Shareholder Votes to which a Shareholder is
entitled in respect of any such Parent Meeting or Parent Consent, the number of
Exchangeable Non-Voting Shares owned of record by the Shareholder shall be
determined at the close of business on the record date established by the Parent
or by applicable law for purposes of determining stockholders entitled to vote
at such Parent Meeting or to give written consent in connection with such Parent
Consent.
3.6 COPIES OF STOCKHOLDER INFORMATION. The Parent will deliver to the
Shareholders copies of all proxy materials (including notices of Parent
Meetings), information statements, reports (including without
limitation all interim and annual financial statements) and other
written communications that are to be distributed from time to time to
holders of Parent Common Shares.
3.7 OTHER MATERIALS. Immediately after receipt by the Parent or any
stockholder of the Parent of any material sent or given generally to
the holders of Parent Common Shares by or on behalf of a third party,
including without limitation dissident proxy and information circulars
(and related information and material) and tender and exchange offer
circulars (and related information and material), the Parent shall use
its best efforts to obtain and deliver copies thereof to each
Shareholder as soon as possible thereafter.
3.8 LIST OF PERSONS ENTITLED TO VOTE. Mergeco shall (a) prior to each
annual, general and special Parent Meeting or the seeking of any Parent
Consents and (b) forthwith upon each request made at any time by the
Trustee or the Parent in writing, prepare or cause to be prepared a
list (a "List") of the names and addresses of the Shareholders arranged
in alphabetical order and showing the number of Exchangeable Non-Voting
Shares held of record by each such Shareholder, in each case at the
close of business on the date specified by the Trustee in such request
or, in the case of a List prepared in
<PAGE>
9
connection with a Parent Meeting or a Parent Consent, at the close of
business on the record date established by the Parent or pursuant to
applicable law for determining the holders of Parent Common Shares
entitled to receive notice of and/or to vote at such Parent Meeting or
to give consent in connection with such Parent Consent. Each such List
shall be delivered to the Parent promptly after receipt by Mergeco of
such request or the record date for such meeting or seeking of consent,
as the case may be, and in any event within sufficient time as to
enable the Parent to perform its obligations under this Agreement. The
Parent agrees to give Mergeco written notice (with a copy to the
Trustee) of the calling of any Parent Meeting or the seeking of any
Parent Consent, together with the record dates therefor, sufficiently
prior to the date of the calling of such meeting or seeking of such
consent so as to enable Mergeco to perform its obligations under this
Section 3.8.
3.9 DISTRIBUTION OF WRITTEN MATERIALS. Any written materials to be
distributed by the Parent to the Shareholders pursuant to this
Agreement shall be delivered or sent by mail (or otherwise communicated
in the same manner as the Parent utilizes in communications to holders
of Parent Common Shares) to each Shareholder at its address as shown on
the books of Mergeco. Mergeco shall provide or cause to be provided to
the Parent for this purpose, on a timely basis and without charge or
other expense current lists of the Shareholders.
3.10 TERMINATION OF VOTING RIGHTS. All of the rights of a Shareholder with
respect to the Shareholder Vote exercisable in respect of each
Exchangeable Non-Voting Share held by such Shareholder shall be deemed
to be surrendered by the Shareholder to the Parent and such Shareholder
Votes and the Voting Rights represented thereby shall cease immediately
upon the exchange, retraction or redemption of the Exchangeable
Non-Voting Shares by or from the Shareholder.
3.11 ALTERNATIVE VOTING RIGHTS. In the event it is alleged or determined by
any chairman at a shareholders' meeting, the board of directors of the
Parent, a shareholder, or by any corporate or third party action or
securities or judicial authority having jurisdiction that the
Shareholders are not properly entitled to vote the Shareholder Votes or
the Voting Rights, for whatever reason, then at the sole discretion and
judgment of a Shareholder, such Shareholder may elect to suspend such
Shareholder's exercise of the Shareholder Votes or the Voting Rights
and direct the Trustee, as the holder of record of the Trust Shares, to
be entitled to all of the Voting Rights attributable to such Trust
Shares. The Trustee shall exercise the Voting Rights only on the basis
of instructions received pursuant to this section 3.11 from
Shareholders entitled to instruct the Trustee as to the voting thereof
at the time at which the Parent Consent
<PAGE>
10
is sought or the Parent Meeting is held. To the extent that no
instructions are received from a Shareholder with respect to the Voting
Rights to which such Shareholder is entitled, the Trustee shall not
exercise or permit the exercise of such Shareholder's Voting Rights.
Any Shareholder named in a List prepared in connection with any Parent
Meeting or any Parent Consent will be entitled (a) to instruct the
Trustee with respect to the exercise of the Shareholder Votes to which
such Shareholder is entitled or (b) to attend such meeting and
personally to exercise thereat (or to exercise with respect to any
written consent), as the proxy of the Trustee, the Shareholder Votes to
which such Shareholder is entitled except, in each case, to the extent
that such Shareholder has transferred the ownership of any Exchangeable
Non-Voting Shares in respect of which such Shareholder is entitled to
Shareholder Votes after the close of business on the record date for
such meeting or seeking of consent.
In connection with each Parent Meeting and Parent Consent, the Trustee
shall exercise, either in person or by proxy, in accordance with the
instructions received from a Shareholder , the Shareholder Votes as to
which such Shareholder is entitled to direct the Voting Rights (or any
lesser number thereof as may be set forth in the instructions);
provided, however, that such written instructions are received by the
Trustee from the Shareholder prior to the time and date fixed by it for
receipt of such instructions in the notice given by the Trustee to the
Shareholder.
The Trustee shall cause such representatives as are empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting Rights
to attend each Parent Meeting. Upon submission by a Shareholder (or its
designee) of identification satisfactory to the Trustee's
representatives, and at the Shareholder's request, such representatives
shall sign and deliver to such Shareholder (or its designee) a proxy to
exercise personally the Shareholder Votes as to which such Shareholder
is otherwise entitled hereunder to direct the vote, if such Shareholder
either (i) has not previously given the Trustee instructions in respect
of such meeting, or (ii) submits to the Trustee's representatives
written revocation of any such previous instructions. At such meeting,
the Shareholder exercising such Shareholder Votes shall have the same
rights as the Trustee to speak at the meeting in respect of any matter,
question or proposition, to vote by way of ballot at the meeting in
respect of any matter, question or proposition and to vote at such
meeting by way of a show of hands in respect of any matter, question or
proposition.
<PAGE>
11
ARTICLE 4
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
4.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT. The Parent hereby grants to
the Shareholders the right, upon the occurrence and during the
continuance of an Insolvency Event, to require the Parent to purchase
from each or any Shareholder all or any part of the Exchangeable
Non-Voting Shares held by the Shareholder in accordance with the
provisions of this Agreement (the "Insolvency Exchange Right"). The
Parent hereby acknowledges receipt from the Shareholders of good and
valuable consideration (and the adequacy thereof) for the issuance of
the Insolvency Exchange Right to them.
4.2 LEGENDED SHARE CERTIFICATES. Mergeco will cause each certificate
representing Exchangeable Non-Voting Shares to bear an appropriate
legend notifying the Shareholders of:
(a) their right with respect to the exercise of the Insolvency
Exchange Right in respect of the Exchangeable Non-Voting
Shares held by a Shareholder; and
(b) the Automatic Exchange Rights.
4.3 PURCHASE PRICE. The purchase price payable by the Parent for each
Exchangeable Non-Voting Share to be purchased by the Parent under the
Insolvency Exchange Right shall be an amount per share equal to (a) the
Current Market Price of a Parent Common Share on the last Business Day
prior to the day of closing of the purchase and sale of such
Exchangeable NonVoting Share under the Insolvency Exchange Right plus
(b) an additional amount equivalent to the full amount of all dividends
declared and unpaid on each such Exchangeable Non-Voting Share and all
dividends declared on Parent Common Shares which have not been declared
on such Exchangeable NonVoting Shares in accordance with the
Exchangeable Share Provisions (provided that if the record date for any
such declared and unpaid dividends occurs on or after the day of
closing of such purchase and sale the purchase price shall not include
such additional amount equivalent to such declared and unpaid
dividends). In connection with each exercise of the Insolvency Exchange
Right, the Parent will provide to the Shareholders an Officer's
Certificate setting forth the calculation of the purchase price for
each Exchangeable Non-Voting Share. The purchase price for each such
Exchangeable Non-Voting Share so purchased may be satisfied only by
delivering or causing to be delivered to the relevant Shareholder, one
Parent Common Share and a check for the balance, if any, of the
purchase price without interest.
<PAGE>
12
4.4 EXERCISE INSTRUCTIONS. Subject to the terms and conditions set forth
herein, a Shareholder shall be entitled, upon the occurrence and during
the continuance of an Insolvency Event, to exercise the Insolvency
Exchange Right with respect to all or any part of the Exchangeable
Non-Voting Shares registered in the name of such Shareholder on the
books of Mergeco. To cause the exercise of the Insolvency Exchange
Right, the Shareholder shall deliver to the Parent, in person or by
certified or registered mail the certificates representing the
Exchangeable Non-Voting Shares which such Shareholder desires the
Parent to purchase, duly endorsed in blank, and accompanied by such
other documents and instruments as may be required to effect a transfer
of Exchangeable Non-Voting Shares under the Company Act (Quebec), and
the articles of Mergeco and such additional documents and instruments
as the Parent may reasonably require together with (a) a duly completed
form of notice of exercise of the Insolvency Exchange Right, contained
on the reverse of or attached to the Exchangeable Non-Voting Share
certificates, stating (i) that the Shareholder elects to exercise the
Insolvency Exchange Right so as to require the Parent to purchase from
the Shareholder the number of Exchangeable Non-Voting Shares specified
therein, (ii) that such Shareholder has good title to and owns all such
Exchangeable Non-Voting Shares to be acquired by Parent free and clear
of all liens, claims and encumbrances, (iii) the name in which the
certificates representing Parent Common Shares deliverable in
connection with the exercise of the Insolvency Exchange Right are to be
issued and (iv) the names and addresses of the persons to whom such new
certificates should be delivered, and (b) payment (or evidence
satisfactory to Mergeco and the Parent of payment) of the taxes (if
any) payable as contemplated by Section 4.7 of this Agreement. If only
a part of the Exchangeable Non-Voting Shares represented by any
certificate or certificates delivered to the Trustee are to be
purchased by the Parent under the Insolvency Exchange Right, a new
certificate for the balance of such Exchangeable Non-Voting Shares
shall be issued to the Shareholder at the expense of Mergeco.
4.5 DELIVERY OF PARENT COMMON SHARES; EFFECT OF EXERCISE. Promptly, and as
soon as reasonably practicable after receipt of the certificates
representing the Exchangeable Non-Voting Shares which the Shareholder
desires the Parent to purchase under the Insolvency Exchange Right,
together with such documents and instruments of transfer and a duly
completed form of notice of exercise of the Insolvency Exchange Right
(and payment of taxes, if any, or evidence thereof), duly endorsed for
transfer to the Parent, the Parent shall immediately thereafter upon
receipt of such notice deliver or cause to be delivered to the
Shareholder of such Exchangeable Non-Voting Shares (or to such other
persons, if any, properly designated by such Shareholder), the
certificates for the number of Parent Common Shares deliverable in
connection
<PAGE>
13
with the exercise of the Insolvency Exchange Right, which shares shall
be duly issued as fully paid and non-assessable and shall be free and
clear of any lien, claim or encumbrance, and checks for the balance, if
any, of the total purchase price therefor. The Parent may instruct the
Trustee to use the Trust Shares it holds for delivery to the
Shareholder under the previous sentence. The Parent shall, immediately
upon receipt of such certificates representing the Exchangeable
Non-Voting Shares from the Shareholder, deliver the certificates to the
registered office of Mergeco for cancellation. Immediately upon the
giving of notice by the Shareholder to the Parent of the exercise of
the Insolvency Exchange Right, as provided in this Section 4.5, the
closing of the transaction of purchase and sale contemplated by the
Insolvency Exchange Right shall be deemed to have occurred, and the
Shareholder of such Exchangeable Non-Voting Shares shall be deemed to
have transferred to the Parent its right, title and interest in and to
such Exchangeable Non-Voting Shares and shall cease to be a Shareholder
of such Exchangeable Non-Voting Shares and shall not be entitled to
exercise any of the rights of a Shareholder in respect thereof, other
than the right to receive his proportionate part of the total purchase
price therefor, unless the requisite number of Parent Common Shares
(together with a check for the balance, if any, of the total purchase
price therefor) is not allotted, issued and delivered by the Parent to
such Shareholder (or to such other persons, if any, properly designated
by such Shareholder), within five (5) Business Days of the date of the
giving of such notice by the Shareholder, in which case the rights of
the Shareholder shall remain unaffected until such Parent Common Shares
are so allotted, issued and delivered by the Parent and any such check
is so delivered and paid. Concurrently with such Shareholder ceasing to
be a Shareholder of Exchangeable Non-Voting Shares, the Shareholder
shall be considered and deemed for all purposes to be the holder of
Parent Common Shares delivered to it pursuant to the Insolvency
Exchange Right.
4.6 EXERCISE OF INSOLVENCY EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the
event that a Shareholder has exercised its right under Article 6 of the
Exchangeable Share Provisions to require Mergeco to redeem any or all
of the Exchangeable Non-Voting Shares held by the Shareholder (the
"Retracted Shares") and is notified by Mergeco pursuant to section 6.6
of the Exchangeable Share Provisions that Mergeco will not be permitted
as a result of solvency requirements of applicable law to redeem all
such Retracted Shares, and the Shareholder has not revoked the
retraction request delivered by the Shareholder to Mergeco pursuant to
section 6.7 of the Exchangeable Share Provisions, the retraction
request will constitute and will be deemed to constitute notice from
the Shareholder to the Parent to exercise the Insolvency Exchange Right
with respect to those Retracted Shares which Mergeco is unable to
redeem. In any such event, Mergeco hereby agrees with the
<PAGE>
14
Shareholder immediately to notify the Parent of such prohibition
against Mergeco redeeming all of the Retracted Shares and immediately
to forward or cause to be forwarded to the Parent all relevant
materials delivered by the Shareholder to Mergeco of the Exchangeable
Non-Voting Shares (including without limitation a copy of the
retraction request delivered pursuant to section 6.1 of the
Exchangeable Share Provisions) in connection with such proposed
redemption of the Retracted Shares and the Parent will thereupon
exercise the Insolvency Exchange Right with respect to the Retracted
Shares that Mergeco is not permitted to redeem and will purchase such
shares in accordance with the provisions of this Article 4.
4.7 STAMP OR OTHER TRANSFER TAXES. Upon any sale of Exchangeable NonVoting
Shares to the Parent pursuant to the Insolvency Exchange Right or the
Automatic Exchange Rights, the share certificate or certificates
representing Parent Common Shares to be delivered in connection with
the payment of the total purchase price therefor shall be issued in the
name of the Shareholder of the Exchangeable Non-Voting Shares so sold
without charge to the Shareholder of the Exchangeable Non-Voting Shares
so sold; provided, however that such Shareholder (a) shall pay (and
neither the Parent, Mergeco nor the Trustee shall be required to pay)
any documentary, stamp, transfer, withholding or other taxes that may
be payable in respect of any transfer involved in the issuance or
delivery of such shares to a person other than such Shareholder, or (b)
shall have established to the satisfaction of the Trustee, the Parent
and Mergeco that such taxes, if any, have been paid.
4.8 NOTICE OF INSOLVENCY EVENT. Immediately upon the occurrence of an
Insolvency Event or any event which with the giving of notice or the
passage of time or both would be an Insolvency Event, Mergeco and the
Parent shall give written notice thereof to the Trustee and the
Shareholders, which notice shall contain a brief statement of the right
of the Shareholders with respect to the Insolvency Exchange Right.
4.9 QUALIFICATION OF PARENT COMMON SHARES. The Parent represents and
warrants that it has taken all actions and done all things as are
necessary under any United States or Canadian federal, provincial or
state law or regulation or pursuant to the rules and regulations of any
regulatory authority or the fulfilment of any other legal requirement
(collectively, the "Applicable Laws") as they exist on the date hereof
and will in good faith expeditiously take all such actions and do all
such things as are necessary under Applicable Laws as they may exist in
the future to cause the Parent Common Shares to be issued and delivered
pursuant to the Exchangeable Share Provisions, the Insolvency Exchange
Right or the Automatic Exchange Rights; provided that all Parent Common
Shares will be subject to such resale restrictions as
<PAGE>
15
imposed by applicable securities legislation.
4.10 RESERVATION OF PARENT COMMON SHARES. The Parent hereby represents,
warrants and covenants that it has irrevocably reserved for issuance
and will at all times keep available, free from preemptive and other
rights, out of its authorized and unissued capital stock such number of
Parent Common Shares (a) as is equal to the sum of (i) the number of
Exchangeable Non-Voting Shares issued and outstanding from time to time
and (ii) the number of Exchangeable Non-Voting Shares issuable upon the
exercise of all rights to acquire Exchangeable Non-Voting Shares
outstanding from time to time and (b) as are now and may hereafter be
required to enable and permit Mergeco and the Parent to meet their
respective obligations hereunder, under the Support Agreement, under
the Exchangeable Share Provisions and under any other security or
commitment pursuant to which the Parent may now or hereafter be
required to issue Parent Common Shares. To the extent permitted under
Article 5 hereof, the Trust Shares may be used to satisfy the Parent's
obligations under this Section 4.10.
4.11 AUTOMATIC EXCHANGE ON LIQUIDATION OF THE PARENT
(a) The Parent will give the Trustee and the Shareholders notice
of each of the following events (each a "Liquidation Event")
at the time set forth below:
(i) in the event of any determination by the board of
directors of the Parent to institute voluntary
liquidation, dissolution or winding-up proceedings
with respect to the Parent or to effect any other
distribution of assets of the Parent among its
shareholders for the purpose of winding up its
affairs, at least sixty (60) days prior to the
proposed effective date of such liquidation,
dissolution, winding-up or other distribution; or
(ii) immediately, upon the earlier of (A) receipt by the
Parent of notice of or (B) the Parent otherwise
becoming aware of any threatened or instituted claim,
suit, petition or other proceedings with respect to
the involuntary liquidation, dissolution or winding-up
of the Parent or to effect any other distribution of
assets of the Parent notifying its shareholders for
the purpose of winding up its affairs.
(b) Such notice shall include a brief description of the automatic
exchange of Exchangeable Non-Voting Shares for Parent Common
Shares provided for in Section 4.12(c) and the ability of a
Shareholder not to participate
<PAGE>
16
in such automatic exchange.
(c) In order that the Shareholders will be able to participate on
a pro rata basis with the holders of Parent Common Shares in
the distribution of assets of the Parent in connection with a
Liquidation Event, on the fifth Business Day prior to the
effective date of a Liquidation Event (the "Liquidation Event
Effective Date") all of the then outstanding Exchangeable
Non-Voting Shares shall be automatically exchanged for Parent
Common Shares in the absence of an affirmative written
election from a Shareholder not to participate in the
automatic exchange received by the Parent before the fifth
Business Day before the Liquidation Event Effective Date. To
effect such automatic exchange the Parent shall purchase each
Exchangeable Non-Voting Share outstanding on the fifth
Business Day prior to the Liquidation Event Effective Date and
held by Shareholders, and each Shareholder shall sell the
Exchangeable Non-Voting Shares held by it at such time, for a
purchase price per share equal to (a) the Current Market Price
of one (1) Parent Common Share on the fifth Business Day prior
to the Liquidation Event Effective Date, which shall be
satisfied in full by the Parent delivering or causing to be
delivered to the Shareholder one Parent Common Share, plus (b)
an additional amount equivalent to the full amount of all
dividends declared and unpaid on each such Exchangeable
Non-Voting Share and all dividends declared on Parent Common
Shares which have not been declared on such Exchangeable
Non-Voting Shares in accordance with section 3 of the
Exchangeable Share Provisions (provided that if the record
date for any such declared and unpaid dividends occurs on or
after the day of closing of such purchase and sale the
purchase price shall not include such additional amount
equivalent to such declared and unpaid dividends). In
connection with such automatic exchange, the Parent will
provide to the Shareholders an Officer's Certificate setting
forth the calculation of the purchase price for each
Exchangeable Non-Voting Share, together with a notice of the
anticipated Liquidation Event Effective Date.
(d) On the fifth Business Day prior to the Liquidation Event
Effective Date, the closing of the transaction of purchase and
sale contemplated by the automatic exchange of Exchangeable
Non-Voting Shares for Parent Common Shares shall be deemed to
have occurred, and each Shareholder shall be deemed to have
transferred to the Parent all of the Shareholder's right,
title and interest in and to its Exchangeable Non- Voting
Shares and shall cease to be a Shareholder of such
Exchangeable Non-Voting Shares and the Parent shall deliver or
cause to be delivered to the Shareholder Parent Common Shares
deliverable upon the
<PAGE>
17
automatic exchange of Exchangeable Non-Voting Shares for
Parent Common Shares and shall deliver to the Shareholder a
check for the balance, if any, of the total purchase price for
such Exchangeable NonVoting Shares. Concurrently with such
Shareholder ceasing to be a Shareholder, the Shareholder shall
be considered and deemed for all purposes to be the holder of
Parent Common Shares issued to it pursuant to the automatic
exchange of Exchangeable Non-Voting Shares for Parent Common
Shares and the certificates held by the Shareholder previously
representing the Exchangeable Non-Voting Shares exchanged by
the Shareholder with the Parent pursuant to such automatic
exchange shall thereafter be deemed to represent Parent Common
Shares delivered to the Shareholder by the Parent pursuant to
such automatic exchange prior to the surrender by the
Shareholder of the Exchangeable Non-Voting Share certificates.
Upon the request of a Shareholder and the surrender by the
Shareholder of Exchangeable NonVoting Share certificates
deemed to represent Parent Common Shares, duly endorsed in
blank and accompanied by such instruments of transfer as the
Parent may reasonably require, the Parent shall deliver or
cause to be delivered to the Shareholder certificates
representing Parent Common Shares of which the Shareholder is
the holder.
4.12 WITHHOLDING RIGHTS. The Parent will retain tax counsel to advise the
Parent and the Trustee on all income tax and withholding obligations of
the Parent, the Trust and the Trustee. The Parent and the Trustee shall
be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any Shareholder such amounts as
the Parent or the Trustee is required or permitted to deduct and
withhold with respect to the making of such payment under the United
States Internal Revenue Code of 1986 as amended (the "Code"), the
Income Tax Act (Canada) or any provision of state, local, provincial or
foreign tax law. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the Shareholder of the shares in respect of which
such deduction and withholding was made, provided that such withheld
amounts are actually remitted to the appropriate taxing authority. To
the extent that the amount so required or permitted to be deducted or
withheld from any payment to a Shareholder exceeds the cash portion of
the consideration otherwise payable to the Shareholder, the Parent or
the Trustee is hereby authorized to sell or otherwise dispose of at
fair market value such portion of the consideration as is necessary to
provide sufficient funds to the Parent or the Trustee, as the case may
be, in order to enable it to comply with such deduction or withholding
requirement and shall account to the relevant Shareholder for any
balance of such sale proceeds.
<PAGE>
18
ARTICLE 5
DIVIDENDS
5.1 The holders of Exchangeable Non-Voting Shares will be entitled to
participate in all dividends declared by Mergeco, in accordance with
the provisions of the Exchangeable Share Provisions and the Support
Agreement.
5.2 The Trustee hereby expressly waives, for and on its own behalf and on
behalf of all Shareholders, all rights to receive dividends of every
nature as may be payable to it as holder of the Trust Shares, and the
parties acknowledge that the Parent need not include the Trust Shares
in its calculations for purposes of determining the payment of
dividends, and need not pay or distribute any dividends (either in
cash, shares or otherwise) to the Trustee as holder of the Trust
Shares, provided however that such waiver may be rescinded by the
Trustee upon receipt of notice from a Shareholder that Mergeco has
omitted to pay any dividends otherwise payable or that either the
Parent or Mergeco contests the right of the holders of Exchangeable
Non-Voting Shares to receive dividends, or the right to receive
dividends on the Exchangeable Non-Voting Shares that are otherwise in
doubt whereupon the Parent will pay and the Trustee shall collect all
dividends paid on the Trust Shares from time to time until the Trustee
receives an Officer's Certificate from Mergeco certifying that Mergeco
is in compliance with its obligations to pay dividends in accordance
with the Exchangeable Share Provisions. Any dividends received by the
Trustee on the Trust Shares shall be paid to the Shareholders in the
same manner as dividends would have been paid by Mergeco to the holders
of Exchangeable Non-Voting Shares.
5.3 For clarity, the Voting Rights and exchange rights granted by the
Parent to the Shareholders hereunder do not in any manner confer any
additional rights to the Shareholders, including, but subject to the
provisions of the Support Agreement, any rights to receive or
participate in dividends declared or paid by the Parent.
ARTICLE 6
SUPPORT PROVISIONS
6.1 USE OF TRUST SHARES IN CONNECTION WITH SUPPORT AGREEMENT. Pursuant to
section 2.11 of the Support Agreement, the Trust Shares provide
additional security for the Parent's and Mergeco's obligations under
the Amalgamation Agreement, the Exchangeable Share Provisions and the
Support Agreement. In the event that Mergeco and the Parent both
default on their obligations to acquire the Exchangeable Non-Voting
Shares pursuant to the Exchangeable Share Provisions, the Support
Agreement, or Article 4 of this
<PAGE>
19
Agreement, a Shareholder may provide written notice to the Parent,
Mergeco and the Trustee of such default. If such default is not cured
within ten (10) Business Days, the Shareholder may provide written
notice to the Trustee of such failure to cure. The Trustee shall then
use the Trust Shares to satisfy the Parent's obligation to acquire the
Exchangeable Non-Voting Shares as if the Parent had instructed the
Trustee to use the Trust Shares for such purpose pursuant to section
4.5 hereof. The Exchangeable Non-Voting Shares acquired by the Trustee
in such transaction shall be distributed to the Parent. In the event
that the Trustee uses the Trust Shares to so acquire Exchangeable
NonVoting Shares, and if the Parent is obligated to pay any declared
but unpaid dividends (or dividends declared on Parent Common Shares
which have not been declared on such Exchangeable Non-Voting Shares in
accordance with section 3 of the Exchangeable Share Provisions), the
Parent shall remain obligated to pay such amount to the Shareholder.
6.2 APPLICATION OF TRUST SHARES. At such time as either the Mergeco or the
Parent acquires Exchangeable Non-Voting Shares from a Shareholder, it
shall provide the Trustee with an Officer's Certificate specifying (i)
the former Shareholder, (ii) the number of Exchangeable Non-Voting
Shares acquired, (iii) the form of the acquisition, designated by the
provision of the applicable agreement (Exchangeable Share Provisions,
Support Agreement or this Agreement) and (iv) the date of such
acquisition. If such certification is made, the Trustee shall
distribute to the Parent a number of Trust Shares equal to the number
of Exchangeable Non-Voting Shares so acquired by the Parent (or, if so
requested by the Parent, distributed such Parent Common Shares to the
former Shareholder on behalf of the Parent).
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE. The rights, powers and authorities of
the Trustee under this Agreement, in its capacity as trustee of the
Trust, shall include:
(a receiving and depositing the Trust Shares from the Parent as
trustee for and on behalf of the Shareholders in accordance
with the provisions of this Agreement;
(b) distributing materials to Shareholders as provided in this
Agreement;
(c) holding title to the Trust Estate;
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20
(d) investing any moneys forming, from time to time, a part of the
Trust Estate as provided in this Agreement; and
(e) taking such other actions and doing such other things as are
specifically provided in this Agreement.
In the exercise of such rights, powers and authorities the Trustee
shall have (and is granted) such incidental and additional rights,
powers and authority not in conflict with any of the provisions of this
Agreement as the Trustee, acting in good faith and in the reasonable
exercise of its discretion, may deem necessary or appropriate to effect
the purpose of the Trust. Any exercise of such discretionary rights,
powers and authorities by the Trustee shall be final, conclusive and
binding upon all persons. Notwithstanding anything to the contrary
herein, the Trustee shall have no obligation to exercise any discretion
in the performance of its obligations hereunder and shall only be
required to act upon the express written instructions of the Parent,
Mergeco or the Shareholders. For greater certainty, the Trustee shall
have only those duties as are set out specifically in this Agreement.
The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith and in accordance with
its fiduciary duties to the Shareholders and shall exercise the care,
diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances. The Trustee shall not be required to take any
notice of, or to do or to take any act, action or proceeding as a
result of any default or breach of any provision hereunder, unless and
until notified in writing of such default or breach, which notice shall
distinctly specify the default or breach desired to be brought to the
attention of the Trustee and, in the absence of such notice, the
Trustee may for all purposes of this Agreement conclusively assume that
no default or breach has been made in the observance or performance of
any of the representations, warranties, covenants, agreements or
conditions contained herein.
7.2 NO CONFLICT OF INTEREST. The Trustee represents to the Purchaser and
the Parent that at the date of execution and delivery of this Agreement
there exists no material conflict of interest in the role of the
Trustee as a fiduciary hereunder and the role of the Trustee in any
other capacity. The Trustee shall, within ninety (90) days after it
becomes aware that such a material conflict of interest exists, either
eliminate such material conflict of interest or resign in the manner
and with the effect specified in Article 9.
7.3 DEALINGS WITH THIRD PARTIES. The Purchaser and the Parent irrevocably
authorize the Trustee, from time to time, to:
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21
(a) consult, communicate and otherwise deal with any respective
registrars, transfer agents, payment agents or any other
person or entity appointed from time to time by the Parent in
connection with any matter relating to the Exchangeable
Non-Voting Shares and Parent Common Shares; and
(b) requisition, from time to time, (i) from any such registrar,
transfer agent payment agent or other person or entity,
appointed from time to time by the Parent, as applicable, any
information readily available from the records maintained by
it which the Trustee may reasonably require for the discharge
of its duties and responsibilities under this Agreement; and
(ii) from Mergeco, the holder of Parent Common Shares, and any
subsequent holder or agent of such shares, the share
certificates issuable upon the exercise from time to time of
the Insolvency Exchange Right and pursuant to the Automatic
Exchange Rights in the manner specified in Article 4 hereof.
The Purchaser and the Parent irrevocably authorize their
respective payment agent, or any other authorized agent
appointed from time to time by the Parent to comply with all
such requests.
7.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection,
during normal business hours, by the Parent and Mergeco, at the
Trustee's principal office, correct and complete books and records of
account relating to the Trustee's actions under this Agreement,
including without limitation all information relating to mailings and
instructions to and from Shareholders.
7.5 INCOME TAX RETURNS AND REPORTS. The Trustee will allocate and
distribute all income and losses of the Trust to the Shareholders in
each year such that the Trust is not in a position to pay any tax or
file any tax returns. Shareholders will be individually and personally
responsible for all income and losses incurred by the Trust. In this
regard, the Parent will retain tax counsel on behalf of the Trust, and
agrees to prepare and distribute to each Shareholder all necessary tax
forms for them to complete their United States and Canadian tax
returns. The Shareholders may obtain the advice and assistance of such
experts as they may consider necessary or advisable.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The Trustee shall
exercise any or all of the rights, duties, powers or authorities vested
in it by this Agreement at the request, order or direction of any
Shareholder upon such Shareholder furnishing to the Trustee reasonable
funding, security and indemnity against the costs, expenses and
liabilities which may be incurred by the Trustee therein or thereby.
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22
The Trustee shall not be required to expend any of its own funds or
otherwise incur any financial liability in the exercise of any of its
rights, powers, duties or authorities, but instead shall be entitled to
be fully funded, given security and indemnity in advance as aforesaid.
7.7 ACTIONS BY SHAREHOLDERS. Shareholders shall be entitled to take
proceedings in any court of competent jurisdiction to enforce any of
their rights hereunder as against Mergeco and the Parent.
7.8 RELIANCE UPON DECLARATIONS. The Trustee shall not be considered to be
in contravention of any of its rights, powers, duties and authorities
hereunder if, when required, it acts and relies in good faith upon
lists, mailing labels, notices, statutory declarations, certificates,
opinions, reports or other papers or documents furnished pursuant to
the provisions hereof or required by the Trustee to be furnished to it
in the exercise of its rights, powers, duties and authorities
hereunder.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE. Mergeco and the Parent shall furnish
to the Trustee evidence of compliance with the conditions provided for
in this Agreement relating to any action or step required or permitted
to be taken by Mergeco and/or the Parent for the Trustee under this
Agreement or as a result of any obligation imposed under this Agreement
including, without limitation, in respect of the Insolvency Exchange
Right or the Automatic Exchange Rights and the taking of any other
action to be taken by the Trustee at the request of or on the
application of Mergeco and the Parent forthwith if and when:
(a) such evidence is required by any other section of this
Agreement to be furnished to the Trustee in accordance with
the terms of this Section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Agreement, gives Mergeco and/or the
Parent written notice requiring it to furnish such evidence in
relation to any particular action or obligation specified in
such notice.
Such evidence shall consist of an Officer's Certificate of Mergeco
and/or the Parent, a statutory declaration or a certificate made by
persons entitled to sign an Officer's Certificate stating that any such
condition has been complied with in accordance with the terms of this
Agreement.
Whenever such evidence relates to a matter other than the Voting
Rights, the Insolvency Exchange Right or the Automatic Exchange Rights
and, except as
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23
otherwise specifically provided herein, such evidence may consist of a
report or opinion of any solicitor, auditor, accountant, appraiser,
valuer, engineer or other expert or any other person whose
qualifications give authority to a statement made by him, provided that
if such report or opinion is furnished by a director, officer or
employee of Mergeco and/or the Parent shall be in the form of an
Officer's Certificate or a statutory declaration.
Each statutory declaration, certificate, opinion, report or other paper
or document furnished to the Trustee as evidence of compliance with a
condition provided for in this Agreement shall include a statement by
the person giving the evidence:
(a) declaring that he has read and understands the provisions of
this Agreement relating to the condition in question;
(b) describing the nature and scope of the examination or
investigation upon which he based the statutory declaration,
certificate, statement or opinion; and
(c) declaring that he has made such examination or investigation
as he believes is necessary to enable him to make the
statements or give the opinions contained or expressed
therein.
7.10 EXPERTS, ADVISORS AND AGENTS. The Trustee may:
(a) in relation to these presents, act and rely on the opinion or
advice of or information obtained from any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert,
whether retained by the Trustee or by Mergeco and/or the
Parent or otherwise, and may employ such assistants as may be
necessary to the proper discharge of its powers and duties and
determination of its rights hereunder and may pay proper and
reasonable compensation for all such legal and other advice or
assistance as aforesaid without taxation for costs and fees;
and
(b) employ such agents and other assistants as it may reasonably
require for the proper discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all
services performed for it, (and shall be entitled to receive
reasonable remuneration for all services performed by it) in
the discharge of the trusts hereof and compensation for all
disbursements, costs and expenses made or incurred by it in
the discharge of its duties hereunder and in the management of
the Trust without taxation for costs and fees, which
compensation reimbursement may be requested to be received in
advance prior to undertaking any
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24
actions hereunder.
7.11 INVESTMENT OF MONEYS HELD BY THE TRUSTEE. Unless otherwise provided in
this Agreement, any moneys held by or on behalf of the Trustee which
under the terms of this Agreement may or ought to be invested or which
may be on deposit with the Trustee or which may be in the hands of the
Trustee may be invested and reinvested in the name or under the control
of the Trustee in securities in which, under the laws of the State of
Pennsylvania, trustees are authorized to invest trust moneys, provided
that such securities are stated to mature within two (2) years after
their purchase by the Trustee, and the Trustee shall so invest such
moneys on the written direction of Mergeco. Pending the investment of
any moneys as hereinbefore provided, such moneys may be deposited in
the name of the Trustee in any bank, loan or trust company authorized
to accept deposits under the laws of the United States, Canada or any
state or province thereof, at the rate of interest then current on
similar deposits.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be
required to give any bond or security in respect of the execution of
the trusts, rights, duties, powers and authorities of this Agreement or
otherwise in respect of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON CORPORATION'S REQUEST. Except as in this
Agreement or otherwise specifically provided, the Trustee shall not be
bound to act in accordance with any direction or request of Mergeco
and/or the Parent or the directors thereof until a duly authenticated
copy of the instrument or resolution containing such direction or
request shall have been delivered to the Trustee and the Trustee shall
be empowered to act and rely upon any such copy purporting to be
authenticated and believed by the Trustee to be genuine.
7.14 CONFLICTING CLAIMS. If conflicting claims or demands are made or
asserted with respect to any interest of any Shareholder in any
Exchangeable NonVoting Shares, including any disagreement between the
heirs, representatives, successors or assigns succeeding to all or any
part of the interest of any Shareholder in any Exchangeable Non-Voting
Shares resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, at
its sole discretion, to refuse to recognize or to comply with any such
claim or demand. In so refusing, the Trustee may elect not to exercise
any Insolvency Exchange Right or Automatic Exchange Rights subject to
such conflicting claims or demands and in so doing, the Trustee shall
not be or become liable to any person on account of such election or
its
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25
failure or refusal to comply with any such conflicting claims or
demands. The Trustee shall be entitled to continue to refrain from
acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the
Insolvency Exchange Right or Automatic Exchange Rights subject
to such conflicting claims or demands have been adjudicated by
a final judgment of a court of competent jurisdiction; or
(b) all differences with respect to the Insolvency Exchange Right
or Automatic Exchange Rights subject to such conflicting
claims or demands have been conclusively settled by a valid
written agreement binding on all such adverse claimants, and
the Trustee shall have been furnished with an executed copy of
such agreement. If the Trustee elects to recognize any claim
or comply with any demand made by any such adverse claimant,
it may in its discretion require such claimant to furnish such
surety bond or other security satisfactory to the Trustee as
it shall deem appropriate fully to indemnify it as between all
conflicting claims or demands.
7.15 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust created and
provided for by and in this Agreement and agrees to perform the same
upon the terms and conditions set forth herein and to hold all rights,
privileges and benefits conferred hereby and by law in trust for the
various persons who shall from time to time be Shareholders, subject to
all the terms and conditions set forth herein.
7.16 VALIDITY OF CERTIFICATES. If at any time in the performance of its
duties under this Agreement, it shall be necessary for the Trustee to
receive, accept, act or rely upon any certificate, notice, request,
waiver, consent, receipt, direction, affidavit or other paper, writing
or document furnished to it and purporting to have been executed or
issued by Mergeco, the Parent or the Shareholders or their authorized
officers or attorneys, the Trustee shall be entitled to rely and act
upon the genuineness and authenticity of any such writing submitted to
it. It shall not be necessary for the Trustee to ascertain whether or
not the persons who have executed, signed or otherwise issued,
authenticated or receipted such papers, writings or documents have
authority to do so or that they are the same persons named therein or
otherwise to pass upon any requirement of such papers, writing or
documents that may be essential for their validity or effectiveness or
upon the truth and acceptability of any information contained therein
which the Trustee in good faith believes to be genuine.
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26
ARTICLE 8
COMPENSATION
8.1 FEES AND EXPENSES OF THE TRUSTEE. The Parent, Purchaser and he
Shareholders jointly and severally agree to pay to the Trustee
reasonable compensation for all of the services rendered by it under
his Agreement and will reimburse the Trustee for all reasonable
expenses and disbursements, including, without limitation, legal fees
and expenses and the reasonable compensation and disbursements f all
other advisors, agents and assistants not regularly in its employ and
the cost and expense of any suit or litigation of any character and any
proceedings before any governmental agency reasonably incurred by the
Trustee in connection with its rights and duties under this Agreement;
provided that the Parent and Mergeco shall have no obligation to
reimburse the Trustee for any expenses or disbursements paid, incurred
or suffered by the Trustee in any suit or litigation in which the
Trustee is determined to have acted fraudulently or in bad faith or
with gross negligence or willful misconduct. The Trustee shall be
obliged to provide only one account or invoice to the Parent from time
to time during this Agreement in connection with any services rendered
by it under this Agreement on behalf of any of the parties.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE. The Parent, Purchaser and the
Shareholders jointly and severally agree to indemnify and hold harmless
the Trustee and each of its directors, officers, partners, employees
and agents appointed and acting in accordance with this Agreement
(collectively, the "Indemnified Parties") against all claims, losses,
damages, costs, penalties, fines and reasonable expenses (including
reasonable expenses of the Trustee's legal counsel) which, without
fraud, gross negligence, willful misconduct or bad faith on the part of
such Indemnified Party, may be paid, incurred or suffered by the
Indemnified Party by reason of or as a result of the Trustee's
acceptance or administration of the Trust, its compliance with its
duties set forth in this Agreement, or any written or oral instructions
delivered to the Trustee by the Parent or Mergeco pursuant hereto.
Subject to (ii), below, the Parent and Mergeco shall be entitled to
participate at their own expense in the defence and, if the Parent and
Mergeco so elect at any time after receipt of such notice, either of
them may assume the defence of any suit brought to enforce any such
claim. In the event the Parent and/or Mergeco assume the defence of the
Trustee, no settlement of any claim shall be entered into without the
prior approval of the Trustee; and the Trustee shall have the right
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27
to re-assume the defence of any suit if the Parent or Mergeco fail to
actively continue such defence so assumed. The Trustee shall have the
right to employ separate counsel in any such suit and participate in
the defence thereof but the fees and expenses of such counsel shall be
at the expense of the Trustee unless: (i) the employment of such
counsel has been authorized by the Parent or Mergeco; or (ii) the named
parties to any such suit include both the Trustee and the Parent; or
(iii) Mergeco and the Trustee shall have been advised by counsel
acceptable to the Parent or Mergeco that there may be one or more legal
defences available to the Trustee which are different from or in
addition to those available to the Parent or Mergeco (in which case
Mergeco shall not have the right to assume the defence of such suit on
behalf of the Trustee but shall be liable to pay the reasonable fees
and expenses of counsel for the Trustee).
9.2 LIMITATION OF LIABILITY. The Trustee shall not be liable for any act or
omission by it except where such act or omission occurs as a result of
the Trustee's gross negligence or willful misconduct. The Trustee shall
not be liable for any losses or damages due to the acts or omissions of
third parties, including without limitation, the failure by the Parent
and/or Mergeco to comply with its obligations under this Agreement, as
the case may be. Under no circumstances shall the Trustee be liable for
any special, indirect or consequential losses or damages (including
without limitation loss of profits and penalties) whether caused by the
Trustee's negligence or that of its employees, agents or otherwise. The
Trustee shall not be held liable for any loss which may occur by reason
of depreciation of the value of any part of the Trust Estate or any
loss incurred on any investment of funds pursuant to this Agreement
except to the extent that such loss is attributable to the fraud, gross
negligence, willful misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION. The Trustee, or any trustee hereafter appointed, may at
any time resign by giving written notice of such resignation to the
Parent and Mergeco specifying the date on which it desires to resign,
provided that such notice shall never be given less than thirty (30)
days before such desired resignation date unless the Parent and Mergeco
otherwise agree and provided further that such resignation shall not
take effect until the date of the appointment of a successor trustee
and the acceptance of such appointment by the successor trustee. Upon
receiving such notice of resignation, the Parent and Mergeco shall
promptly appoint a successor trustee by written instrument in
duplicate, one copy of which shall be delivered to the resigning
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28
trustee and one copy to the successor trustee.
10.2 REMOVAL. The Trustee, or any trustee hereafter appointed at any time on
thirty (30) days' prior notice by written instrument executed by the
Parent and Mergeco, in duplicate, one copy of which shall be delivered
to the trustee so removed and one copy to the successor trustee. Any
successor trustee to be appointed upon the removal of the Trustee shall
be appointed in accordance with the provisions as provided under
Section 10.3 of this Agreement.
10.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided under
this Agreement shall execute, acknowledge and deliver to the Parent and
Mergeco and to its predecessor trustee an instrument accepting such
appointment. Thereupon the resignation or removal of the predecessor
trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, duties and obligations of its predecessor under this
Agreement with like effect as if originally named as trustee in this
Agreement. However, on the written request of the Parent and Mergeco or
of the successor trustee, the trustee ceasing to act shall, upon
payment of any amounts then due it pursuant to the provisions of this
Agreement, execute and deliver an instrument transferring to such
successor trustee all of the rights and powers of the trustee so
ceasing to act. Upon the request of any such successor trustee, the
Parent and Mergeco and such predecessor trustee shall execute any and
all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE. Upon acceptance of appointment by a
successor trustee as provided herein the Parent and Mergeco shall cause
to be mailed notice of the succession of such trustee hereunder to each
Shareholder at the address of such Shareholder shown on the register of
Shareholders of Exchangeable Non-Voting Shares. If the Parent or
Mergeco shall fail to cause such notice to be mailed within ten (10)
days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense
of the Parent and Mergeco.
ARTICLE 11
THE PARENT SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. The Parent shall
not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or
otherwise)
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29
whereby all or substantially all of its undertaking, property and
assets would become the property of any other person or, in the case of
a merger, of the continuing corporation resulting therefrom unless:
(a) such other person or continuing corporation is a corporation
(herein called the "Parent Successor") incorporated under the
laws of any state of the United States or the laws of Canada
or any province thereof; and
(b) the Parent Successor, by operation of law, becomes, without
more, bound by the terms and provisions of this Agreement or,
if not so bound, executes, prior to or contemporaneously with
the consummation of such transaction a Agreement supplemental
hereto and such other instruments (if any) as are satisfactory
to the Trustee and in the opinion of legal counsel to the
Trustee are necessary or advisable to evidence the assumption
by the Parent Successor of liability for all moneys payable
and property deliverable hereunder and the covenant of such
Parent Successor to pay and deliver or cause to be delivered
the same and its agreement to observe and perform all of the
covenants and obligations of the Parent under this Agreement.
11.2 VESTING OF POWERS IN SUCCESSOR. Whenever the conditions of Section 11.1
hereof have been duly observed and performed, the Trustee, if required
by Section 11.1 hereof, the Parent Successor and Mergeco shall execute
and deliver the supplemental Agreement provided for in Article 12 and
thereupon the Parent Successor shall possess and from time to time may
exercise each and every right and power of the Parent under this
Agreement in the name of the Parent or otherwise and any act or
proceeding by any provision of this Agreement required to be done or
performed by the board of directors of Parent or any officers of the
Parent may be done and performed with like force and effect by the
directors or officers of such the Parent Successor.
11.3 WHOLLY-OWNED SUBSIDIARIES. Nothing herein shall be construed as
preventing the amalgamation, merger or sale of any wholly-owned
subsidiary of the Parent with or into the Parent, the winding-up or
merger of any wholly-owned subsidiary of the Parent with or into the
Parent, or the winding-up, liquidation or dissolution of any
wholly-owned subsidiary of the Parent, and nothing herein shall
prohibit the Parent in any manner whatsoever from selling, transferring
or otherwise disposing of any and all of the assets of the Parent
including, without limitation, any and all of the assets of such
subsidiary provided that all of the assets of such subsidiary are
transferred to the Parent or another wholly-owned subsidiary of the
Parent.
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30
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC. This Agreement may not be amended or
modified except by an agreement in writing executed by Mergeco and the
Parent.
12.2 MEETING TO CONSIDER AMENDMENTS. Mergeco, at the request of the Parent
shall call a meeting or meetings of the Shareholders for the purpose of
considering any proposed amendment or modification requiring approval
pursuant hereto. Any such meeting or meetings shall be called and held
in accordance with the by-laws of Mergeco, the Exchangeable Share
Provisions and all applicable laws.
12.3 CHANGES IN CAPITAL OF PARENT OR Mergeco. At all times after the
occurrence of any event effected pursuant to section 2.7 or 2.8 of the
Support Agreement, as a result of which either Parent Common Shares or
the Exchangeable Non-Voting Shares or both are in any way changed, this
Agreement shall forthwith be amended and modified as necessary in order
that it shall apply with full force and effect, mutatis mutandis, to
all new securities into which Parent Common Shares or the Exchangeable
Non-Voting Shares or both are so changed and the parties hereto shall
execute and deliver a supplemental Agreement giving effect to and
evidencing such necessary amendments and modifications.
12.4 EXECUTION OF SUPPLEMENTAL AGREEMENTS. No amendment to or modification
or waiver of any of the provisions of this Agreement otherwise than as
permitted hereunder shall be effective unless made in writing and
signed by all of the parties hereto. From time to time the parties may,
subject to the provisions of these presents, and they shall, when so
directed by these presents, execute and deliver by their proper
officers, Agreements or other instruments supplemental hereto, which
thereafter shall form part hereof, for any one or more of the following
purposes:
(a) evidencing the succession of Parent Successors to the Parent
and the covenants of and obligations assumed by each such
Parent Successor in accordance with the provisions of Article
11 and the successor of any successor trustee in accordance
with the provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Insolvency Exchange Right
or the Automatic Exchange Rights which, in the opinion of the
Parent and its counsel, will
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31
not be prejudicial to the interests of the Shareholders as a
whole or are in the opinion of counsel to the Parent necessary
or advisable in order to incorporate, reflect or comply with
any legislation the provisions of which apply to the parties
or this Agreement; and
(c) for any other purposes not inconsistent with the provisions of
this Agreement, including without limitation to make or
evidence any amendment or modification to this Agreement as
contemplated hereby, provided that, in the opinion of the
Parent and its counsel, the rights of the Trustee and the
Shareholders as a whole will not be prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 TERM. The Trust created by this Agreement shall continue until the
earliest to occur of the following events:
(a) no outstanding Exchangeable Non-Voting Shares are held by any
Shareholder;
(b) each of Mergeco and the Parent acts in writing to terminate
the Trust and such termination is approved by the Shareholders
of the Exchangeable Non-Voting Shares in accordance with
section 10 of the Exchangeable Share Provisions; and
(c) December 31, 2098.
13.2 SURVIVAL OF AGREEMENT. Subject to the provisions of Section 13.1(b)
hereof, this Agreement shall survive any termination of the Trust and
shall continue until there are no Exchangeable Non-Voting Shares
outstanding held by any Shareholder; and for clarity, that the
provisions of Articles 8 and 9 shall survive any such termination of
the Trust or this Agreement.
ARTICLE 14
GENERAL
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14.1 SEVERABILITY. If any provision of this Agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of
the remainder of this Agreement shall not in any way be affected or
impaired thereby and the agreement shall be carried out as nearly as
possible in accordance with its original terms and conditions.
14.2 INUREMENT. This Agreement shall be binding upon and endure to the
benefit of the parties hereto and their respective successors and
permitted assigns and to the benefit of the Shareholders.
14.3 NOTICES TO PARTIES. All notices and other communications between the
parties hereunder shall be in writing and shall be deemed to have been
given if delivered personally or by confirmed facsimile to the parties
at the following addresses (or at such other address for such party as
shall be specified in like notice):
if to the Parent or Mergeco:
Bio Syntech, Inc. (formerly Dream Team International Inc.
c/o Mr. Randall J. Lanham, Esq.
Lanham & Associates
45 Glen Echo, Unit A
Dove Canyon, California 92679
if to the Trustee at:
Mr. Pierre Barnard
De Grandpre Chaurette Levesque
2000 McGill College Avenue
Suite 1600
Montreal (Quebec) H3B 3H3
if to the Shareholders:
Mr. Amine Selmani
President
Bio Byntech Ltee
2084 Jessop
Laval (Quebec)
H7S 1X4
Any notice or other communication given personally shall be deemed to
have been given and received upon delivery thereof and if given by
telecopy shall be
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33
deemed to have been given and received on the date of receipt thereof
unless such day is not a Business Day in which case it shall be deemed
to have been given and received upon the immediately following Business
Day.
14.4 NOTICE OF SHAREHOLDERS. Any and all notices to be given and any
documents to be sent to any Shareholders may be given or sent to the
address of such Shareholder shown on the register of Shareholders in
any manner permitted by the by-laws of Mergeco from time to time in
force in respect of notices to shareholders and shall be deemed to be
received (if given or sent in such manner) at the time specified in
such by-laws, the provisions of which by-laws shall apply mutatis
mutandis to notices or documents as aforesaid sent to such
Shareholders.
14.5 RISK OF PAYMENTS BY MAIL. Whenever payments are to be made or documents
are to be sent to any Shareholder by the Trustee or by Mergeco, or by
such Shareholder to the Trustee or to the Parent or Mergeco, the making
of such payment or sending of such document sent through the mail shall
be at the risk of Mergeco, in the case of payments made or documents
sent by the Trustee or Mergeco, and the Shareholder, in the case of
payments made or documents sent by the Shareholder.
14.6 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.
14.7 JURISDICTION. This Agreement shall be construed and enforced in
accordance with the laws of the Province of Quebec and the laws of
Canada applicable therein.
14.8 ATTORNMENT. The Parent and the Purchaser each agree that any action or
proceeding arising out of or relating to this Agreement may be
instituted in the courts of the Province of Quebec, each waives any
objection which it may have now or hereafter to the venue of any such
action or proceeding, irrevocably submits to the non-exclusive
jurisdiction of the said courts in any such action or proceeding,
agrees to be bound by any judgment of the said courts and not to seek,
and hereby waives, any review of the merits of any such judgment by the
courts of any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
<PAGE>
34
BIOSYNTECH INC. (formerly Dream Team Inc.)
By: /s/ Amine Selmani
-------------------------------------
Name: AMINE SELMANI
Title: President
9083-5661 QUEBEC INC.
By: /s/ Pierre Barnard
-------------------------------------
Name: Pierre Barnard
Title: President
/s/ Pierre Barnard
- -----------------------------------------
PIERRE BARNARD
BIOSYNTECH LTEE
By: /s/ Amine Selmani
-------------------------------------
Name: Amine Selmani
Title: President
SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the day of the 15 day of February 2000
AMONG:
BIO SYNTECH INC. (formerly Dream Team International Inc.), a
corporation subsisting under the laws of the State of Nevada;
(hereinafter referred to as the "Parent")
AND:
9083-5661 QUEBEC INC., a corporation incorporated under the
laws of the Province of Quebec;
(hereinafter referred to as the "Purchaser"),
AND:
BIO SYNTECH LTD., a corporation incorporated under the laws of
the Province of Quebec;
(hereinafter referred to as the "Biosyntech")
WHEREAS in connection with an amalgamation agreement (the "Amalgamation
Agreement") made as of between Parent, BioSyntech and Purchaser, Bio Syntech and
Purchaser are to amalgamate to create Bio Syntech Canada Inc. ("Mergeco.").
WHEREAS upon the amalgamation, Mergeco is to issue Exchangeable Non-Voting
Preferred Shares (the Exchangeable Shares") to the shareholders of securities of
Bio Syntech.
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
covenant and agree as follows:
<PAGE>
2
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms
Each term denoted herein by initial capital letters and not otherwise defined
herein shall have the meaning ascribed thereto in the rights, privileges,
restrictions and conditions (collectively, the "Share Provisions") attaching to
the Exchangeable Shares attached as Appendix 1 hereto, unless the context
requires otherwise.
1.2 Interpretation Not Affected by Headings
The division of this agreement into Articles, sections and other portions and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this agreement. Unless otherwise
indicated, all references to an "Article" or "section" followed by a number
and/or a letter refer to the specified Article or section of this agreement. The
terms "this Agreement", "hereof", "herein" and "hereunder" and similar
expressions refer to this agreement and not to any particular Article, section
or other portion hereof and include any agreement or instrument supplementary or
ancillary hereto.
1.3 Number, Gender
Words importing the singular number only shall include the plural and vice
versa. Words importing any gender shall include all genders.
1.4 Date for any Action
If any date on which any action is required to be taken under this agreement is
not a Business Day, such action shall be required to be taken on the next
succeeding Business Day. For the purposes of this agreement, a "Business Day"
means any day on which commercial banks are open for business in Montreal other
than a Saturday, a Sunday or a day observed as a holiday in Montreal, under the
laws of the Province of Quebec or the federal laws of Canada.
ARTICLE 2
COVENANTS OF PARENT AND PURCHASER
<PAGE>
3
2.1 Covenants Regarding Exchangeable Shares
So long as any Exchangeable Shares not owned by Parent or its Affiliates are
outstanding, Parent covenants that it will:
(a) not declare or pay any dividend on the Parent Common Shares
unless (i) Mergeco shall simultaneously declare or pay, as the
case may be, an equivalent dividend (as provided for in the
Share Provisions) on the Exchangeable Shares and (ii) Mergeco
shall have sufficient money or other assets or authorized but
unissued securities available to enable the due declaration
and the due and punctual payment, in accordance with
applicable law, of any such dividend on the Exchangeable
Shares;
(b) advise Mergeco sufficiently in advance of the declaration by
Parent of any dividend on Parent Common Shares and take all
such other actions as are reasonably necessary, in
co-operation with Mergeco, to ensure that the respective
declaration date, record date and payment date for a dividend
on the Exchangeable Shares shall be the same as the
declaration date, record date and payment date for the
corresponding dividend on the Parent Common Shares;
(c) ensure that the record date for any dividend declared on
Parent Common Shares is not less than 10 Business Days after
the declaration date of such dividend;
(d) take all such actions and do all such things as are reasonably
necessary or desirable to enable and permit Mergeco, in
accordance with applicable law, to pay and otherwise perform
its obligations with respect to the satisfaction of the
Liquidation Amount, the Retraction Price or the Redemption
Price in respect of each issued and outstanding Exchangeable
Share (other than Exchangeable Shares owned by Parent or its
Affiliates) upon the liquidation, dissolution or winding-up of
Mergeco, the delivery of a Retraction Request by a holder of
Exchangeable Shares or a redemption of Exchangeable Shares by
Mergeco, as the case may be, including without limitation all
such actions and all such things as are necessary or desirable
to enable and permit Mergeco to cause to be delivered Parent
Common Shares to the holders of Exchangeable Shares in
accordance with the provisions of Article 5, 6 or 7, as the
case may be, of the Share Provisions; and
(e) take all such actions and do all such things as are reasonably
necessary or desirable to enable and permit Parent, in
accordance with applicable law, to perform its obligations
arising upon the exercise by it of the Call Rights, including
without limitation all such actions and all such things as are
<PAGE>
4
necessary or desirable to enable and permit Parent to cause to
be delivered Parent Common Shares to the holders of
Exchangeable Shares in accordance with the provisions of the
Call Rights.
2.2 Segregation of Funds
Parent further covenants that it will cause Mergeco to deposit a sufficient
amount of funds in a separate account of Mergeco and segregate a sufficient
amount of such other assets and property, as is necessary to enable Mergeco to
pay dividends when due and to pay or otherwise satisfy its obligations under
Article 5, 6 or 7 of the Share Provisions, as applicable.
2.3 Reservation of Parent Common Shares
Parent hereby represents, warrants and covenants in favour of Purchaser and Bio
Syntech that Parent has reserved for issuance and will, at all times while any
Exchangeable Shares (other than Exchangeable Shares held by Parent or its
Affiliates) are outstanding, keep available, free from pre-emptive and other
rights, out of its authorized and unissued capital stock such number of Parent
Common Shares (or other shares or securities into which Parent Common Shares may
be reclassified or changed as contemplated by section 2.7 hereof) (a) as is
equal to the sum of (i) the number of Exchangeable Shares issued and outstanding
from time to time and (ii) the number of Exchangeable Shares issuable upon the
exercise of all rights to acquire Exchangeable Shares outstanding from time to
time and (b) as are now and may hereafter be required to enable and permit
Parent to meet its obligations under the Voting and Exchange Trust Agreement and
under any other security or commitment pursuant to which Parent may now or
hereafter be required to issue Parent Common Shares, to enable and permit Parent
to meet its obligations under the Call Rights and to enable and permit Mergeco
to meet its respective obligations hereunder and under the Share Provisions.
2.4 Notification of Certain Events
In order to assist Parent to comply with its obligations hereunder and to permit
Parent to exercise the Call Rights, Mergeco will notify Parent of each of the
following events at the time set forth below:
(a) in the event of any determination by the Board of Directors of
Mergeco to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to Mergeco or to effect
any other distribution of the assets of Mergeco among its
shareholders for the purpose of winding up its affairs, at
least 60 days prior to the proposed effective date of such
liquidation, dissolution, winding-up or other distribution;
<PAGE>
5
(b) promptly, upon the earlier of receipt by Mergeco of notice of
and Mergeco otherwise becoming aware of any threatened or
instituted claim, suit, petition or other proceedings with
respect to the involuntary liquidation, dissolution or
winding-up of Mergeco or to effect any other distribution of
the assets of Mergeco among its shareholders for the purpose
of winding up its affairs;
(c) immediately, upon receipt by Mergeco of a Retraction Request;
(d) on the same date on which notice of redemption is given to
holders of Exchangeable Shares, upon the determination of a
Redemption Date in accordance with the Share Provisions; and
(e) as soon as practicable upon the issuance by Mergeco of any
Exchangeable Shares or rights to acquire Exchangeable Shares
(other than the issuance of Exchangeable Shares and rights to
acquire Exchangeable Shares in exchange for outstanding Bio
Syntech common shares pursuant to the Amalgamation).
2.5 Delivery of Common Shares to Mergeco
In furtherance of its obligations under sections 2.1(d) and (e) hereof, upon
notice from Mergeco of any event that requires Mergeco to cause to be delivered
Parent Common Shares to any holder of Exchangeable Shares, Parent shall
forthwith cause to be delivered to Mergeco the requisite number of Parent Common
Shares to be received by, and issued to or to the order of, the former holder of
the surrendered Exchangeable Shares, as Mergeco shall direct. All such Parent
Common Shares shall be duly authorized and validly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or encumbrance. In
consideration of the issuance and delivery of each such Parent Common Share,
Mergeco shall pay a cash purchase price equal to the fair market value of such
Parent Common Shares.
2.6 Intentionnaly Deleted
2.7 Economic Equivalence
So long as any Exchangeable Shares not owned by Parent or its Affiliates are
outstanding:
(a) Parent will not without prior approval of Mergeco and the
prior approval of the holders of the Exchangeable Shares given
in accordance with section 10.2 of the Share Provisions:
(i) issue or distribute Parent Common Shares (or
securities exchangeable for or convertible into or
carrying rights to acquire Parent Common Shares) to
the holders of all or substantially all of the then
outstanding
<PAGE>
6
Parent Common Shares by way of stock dividend or other
distribution, other than an issue of Parent Common
Shares (or securities exchangeable for or convertible
into or carrying rights to acquire Parent Common
Shares) to holders of Parent Common Shares who
exercise an option to receive dividends in Parent
Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Parent
Common Shares) in lieu of receiving cash dividends; or
(ii) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then
outstanding Parent Common Shares entitling them to
subscribe for or to purchase Parent Common Shares (or
securities exchangeable for or convertible into or
carrying rights to acquire Parent Common Shares); or
(iii) issue or distribute to the holders of all or
substantially all of the then outstanding Parent
Common Shares (A) shares or securities of Parent of
any class other than Parent Common Shares (other than
shares convertible into or exchangeable for or
carrying rights to acquire Parent Common Shares), (B)
rights, options or warrants other than those referred
to in section 2.7(a)(ii) above, (C) evidences of
indebtedness of Parent or (D) assets of Parent,
unless the economic equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness or other assets
is issued or distributed simultaneously to holders of the Exchangeable
Shares; provided that, for greater certainty, the above restrictions
shall not apply to any securities issued or distributed by Parent in
order to give effect to and to consummate the transactions contemplated
by, and in accordance with, the Amalgamation Agreement.
(b) Parent will not without the prior approval of Mergeco and the
prior approval of the holders of the Exchangeable Shares given
in accordance with section 10.2 of the Share Provisions:
(i) subdivide, redivide or change the then outstanding
Parent Common Shares into a greater number of Parent
Common Shares; or
(ii) reduce, combine, consolidate or change the then
outstanding Parent Common Shares into a lesser number
of Parent Common Shares; or
(iii) reclassify or otherwise change Parent Common Shares or
effect an amalgamation, merger, reorganization or
other transaction affecting Parent Common Shares,
unless the same or an economically equivalent
<PAGE>
7
change shall simultaneously be made to, or in the
rights of the holders of, the Exchangeable Shares.
(c) Parent will ensure that the record date for any event referred
to in section 2.7(a) or 2.7(b) above, or (if no record date is
applicable for such event) the effective date for any such
event, is not less than five Business Days after the date on
which such event is declared or announced by Parent (with
contemporaneous notification thereof by Parent to Mergeco).
(d) The Board of Directors of Mergeco shall determine, in good
faith and in its sole discretion, economic equivalence for the
purposes of any event referred to in section 2.7(a) or 2.7(b)
above and each such determination shall be conclusive and
binding on Parent. In making each such determination, the
following factors shall, without excluding other factors
determined by the Board of Directors of Mergeco to be
relevant, be considered by the Board of Directors of Mergeco:
(i) in the case of any stock dividend or other
distribution payable in Parent Common Shares, the
number of such shares issued in proportion to the
number of Parent Common Shares previously outstanding;
(ii) in the case of the issuance or distribution of any
rights, options or warrants to subscribe for or
purchase Parent Common Shares (or securities
exchangeable for or convertible into or carrying
rights to acquire Parent Common Shares), the
relationship between the exercise price of each such
right, option or warrant and the Current Market Price;
(iii) in the case of the issuance or distribution of any
other form of property (including without limitation
any shares or securities of Parent of any class other
than Parent Common Shares, any rights, options or
warrants other than those referred to in section 2.7
(d) (ii) above, any evidences of indebtedness of
Parent or any assets of Parent), the relationship
between the fair market value (as determined by the
Board of Directors of Mergeco in the manner above
contemplated) of such property to be issued or
distributed with respect to each outstanding Parent
Common Share and the Current Market Price;
(iv) in the case of any subdivision, redivision or change
of the then outstanding Parent Common Shares into a
greater number of Parent Common Shares or the
reduction, combination, consolidation or change of the
then outstanding Parent Common Shares into a lesser
number of Parent Common Shares or any amalgamation,
merger,
<PAGE>
8
reorganization or other transaction affecting Parent
Common Shares, the effect thereof upon the then
outstanding Parent Common Shares; and
(v) in all such cases, the general taxation consequences
of the relevant event to holders of Exchangeable
Shares to the extent that such consequences may differ
from the taxation consequences to holders of Parent
Common Shares as a result of differences between
taxation laws of Canada and the United States (except
for any differing consequences arising as a result of
differing marginal taxation rates and without regard
to the individual circumstances of holders of
Exchangeable Shares).
(c) Purchaser agrees that, to the extent required, upon due notice
from Parent, Mergeco will use its best efforts to take or
cause to be taken such steps as may be necessary for the
purposes of ensuring that appropriate dividends are paid or
other distributions are made by Mergeco, or subdivisions,
redivisions or changes are made to the Exchangeable Shares, in
order to implement the required economic equivalent with
respect to the Parent Common Shares and Exchangeable Shares as
provided for in this section 2.7.
2.8 Tender Offers
In the event that a tender offer, share exchange offer, issuer bid, take-over
bid or similar transaction with respect to Parent Common Shares (an "Offer") is
proposed by Parent or is proposed to Parent or its shareholders and is
recommended by the Board of Directors of Parent, or is otherwise effected or to
be effected with the consent or approval of the Board of Directors of Parent,
and the Exchangeable Shares are not redeemed by Mergeco or purchased by Parent
pursuant to the Call Rights, Parent will use its reasonable efforts
expeditiously and in good faith to take all such actions and do all such things
as are necessary or desirable to enable and permit holders of Exchangeable
Shares (other than Parent and its Affiliates) to participate in such Offer to
the same extent and on an economically equivalent basis as the holders of Parent
Common Shares, without discrimination. Without limiting the generality of the
foregoing, Parent will use its reasonable efforts expeditiously and in good
faith to ensure that holders of Exchangeable Shares may participate in each such
Offer without being required to retract Exchangeable Shares as against Mergeco
(or, if so required, to ensure that any such retraction, shall be effective only
upon, and shall be conditional upon, the closing of such Offer and only to the
extent necessary to tender or deposit to the Offer). Nothing herein shall affect
the rights of Mergeco to redeem (or Parent to purchase pursuant to the Call
Rights) Exchangeable Shares, as applicable, in the event of a Parent Control
Transaction.
2.9 Ownership of Outstanding Shares
<PAGE>
9
Without the prior approval of Mergeco and the prior approval of the holders of
the Exchangeable Shares given in accordance with section 10.2 of the Share
Provisions, Parent covenants and agrees in favour of Purchaser that, as long as
any outstanding Exchangeable Shares are owned by any Person other than Parent or
any of its Affiliates, Parent will be and remain the direct or indirect
beneficial owner of all issued and outstanding voting shares in the capital of
Mergeco.
2.10 Parent and Affiliates Not to Vote Exchangeable Shares
Parent covenants and agrees that it will appoint and cause to be appointed
proxyholders with respect to all Exchangeable Shares held by it and its
Affiliates for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. Parent further covenants and agrees that it will not, and will cause
its Affiliates not to, exercise any voting rights which may be exercisable by
holders of Exchangeable Shares from time to time pursuant to the Share
Provisions or pursuant to the provisions of the Act (or any successor or other
corporate statute by which Mergeco may in the future be governed) with respect
to any Exchangeable Shares held by it or by its Affiliates in respect of any
matter considered at any meeting of holders of Exchangeable Shares.
2.11 Rule 10b-18 Purchases
For certainty, nothing contained in this Agreement, including without limitation
the obligations of Parent contained in section 2.8 hereof, shall limit the
ability of Parent or Mergeco to make a "Rule 10b-18 Purchase" of Parent Common
Shares pursuant to Rule 10b- 18 of the United States Securities Exchange Act of
1934, as amended.
ARTICLE 3
PARENT SUCCESSORS
3.1 Certain Requirements in Respect of Combination, etc.
Parent shall not consummate any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or other-wise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other Person or, in the case of a merger, of the
continuing corporation resulting therefrom unless, but may do so if:
(a) such other Person or continuing corporation (the "Parent
Successor") by operation of law, becomes, without more, bound
by the terms and provisions of this Agreement or, if not so
bound, executes, prior to or contemporaneously with the
consummation of such transaction, an agreement
<PAGE>
10
supplemental hereto and such other instruments (if any) as are
reasonably necessary or advisable to evidence the assumption
by the Parent Successor of liability for all moneys payable
and property deliverable hereunder and the covenant of such
Parent Successor to pay and deliver or cause to be delivered
the same and its agreement to observe and perform all the
covenants and obligations of Parent under this Agreement; and
(b) such transaction shall be upon such terms and conditions as
substantially to preserve and not to impair in any material
respect any of the rights, duties, powers and authorities of
the other parties hereunder.
3.2 Vesting of Powers in Successor
Whenever the conditions of section 3.1 have been duly observed and performed,
the parties, if required by section 3.1, shall execute and deliver the
supplemental agreement provided for in section 3.1(a) and thereupon the Parent
Successor shall possess and from time to time may exercise each and every right
and power of Parent under this Agreement in the name of Parent or otherwise and
any act or proceeding by any provision of this Agreement required to be done or
performed by the Board of Directors of Parent or any officers of Parent may be
done and performed with like force and effect by the directors or officers of
such Parent Successor.
3.3 Wholly-Owned Subsidiaries
Nothing herein shall be construed as preventing the amalgamation or merger of
any wholly-owned direct or indirect subsidiary of Parent with or into Parent or
the winding-up, liquidation or dissolution of any wholly-owned subsidiary of
Parent provided that all of the assets of such subsidiary are transferred to
Parent or another wholly-owned direct or indirect subsidiary of Parent and any
such transactions are expressly permitted by this Article 3.
ARTICLE 4
GENERAL
4.1 Term
This Agreement shall come into force and be effective as of the date hereof and
shall terminate and be of no further force and effect at such time as no
Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any Person
other than Parent and any of its Affiliates.
4.2 Changes in Capital of Parent and Mergeco
<PAGE>
11
At all times after the occurrence of any event contemplated pursuant to sections
2.7 and 2.8 hereof or otherwise, as a result of which either Parent Common
Shares or the Exchangeable Shares or both are in any way changed, this agreement
shall forthwith be amended and modified as necessary in order that it shall
apply with full force and effect, mutatis mutandis, to all new securities into
which Parent Common Shares or the Exchangeable Shares or both are so changed and
the parties hereto shall execute and deliver an agreement in writing giving
effect to and evidencing such necessary amendments and modifications.
4.3 Severability
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
Agreement shall not in any way be affected or impaired thereby and this
Agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
4.4 Amendments, Modifications
This Agreement may not be amended or modified except by an agreement in writing
executed by Mergeco and Parent and approved by the holders of the Exchangeable
Shares in accordance with section 10.2 of the Share Provisions.
4.5 Ministerial Amendments
Notwithstanding the provisions of section 4.4, the parties to this Agreement may
in writing at any time and from time to time, without the approval of the
holders of the Exchangeable Shares, amend or modify this Agreement for the
purposes of:
(a) adding to the covenants of any or all parties provided that
the Board of Directors of each of Mergeco and Parent shall be
of the good faith opinion that such additions will not be
prejudicial to the rights or interests of the holders of the
Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with
this Agreement as may be necessary or desirable with respect
to matters or questions which, in the good faith opinion of
the Board of Directors of each of Mergeco and Parent, it may
be expedient to make, provided that each such Board of
Directors shall be of the good faith opinion that such
amendments or modifications will not be prejudicial to the
rights or interests of the holders of the Exchangeable Shares;
or
(c) making such changes or corrections which, on the advice of
counsel to Mergeco and Parent, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake
<PAGE>
12
or manifest error, provided that the Boards of Directors of
each of Mergeco and Parent shall be of the good faith opinion
that such changes or corrections will not be prejudicial to
the rights or interests of the holders of the Exchangeable
Shares.
4.6 Meeting to Consider Amendments
Mergeco, at the request of Parent, shall call a meeting or meetings of the
holders of the Exchangeable Shares for the purpose of considering any proposed
amendment or modification requiring approval pursuant to section 4.4 hereof. Any
such meeting or meetings shall be called and held in accordance with the bylaws
of Mergeco, the Share Provisions and all applicable laws.
4.7 Amendments Only in Writing
No amendment to or modification or waiver of any of the provisions of this
Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto.
4.8 Enurement
This Agreement shall be binding upon and enure to the benefit of the Parties
hereto and their respective successors and assigns.
4.9 Notices to Parties
All notices and other communications between the parties to this Agreement hall
be in writing and shall be deemed to have been given if delivered personally or
by confirmed telecopy to the parties at the following addresses (or at such
other address for any such party as shall be specified in like notice):
BioSyntech Inc.
475 Armand Frappier
Laval (Quebec) H7V 4A7
Attention: Mr. Amine Selmani
Telecopier No.: 450-686-8952
with a copy to:
De Grandpre Chaurette Levesque
2000 McGill College Avenue
Suite 1600
<PAGE>
13
Montreal (Quebec) H3B 3H3
Attention: Mr. Pierre Barnard
Telecopier No.: (514) 499-0469
Bio Syntech, Inc.
c/o Lanham & Associates
45 Glen Echo, Unit A
Dove Canyon, California 92679
Attention: Mr. Randall J. Lanham
Telecopier No. (949) 858-6774
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of confirmed receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business Day.
4.10 Counterparts
This Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which taken together shall constitute one and the same
instrument.
4.11 Jurisdiction
This Agreement shall be construed and enforced in accordance with the laws of
the Province of Quebec and the laws of Canada applicable therein.
4.12 Attornment
Each of the parties hereto agrees that any action or proceeding arising out of
or relating to this Agreement may be instituted in the courts of the Province of
Quebec, waives any objection which it may have now or hereafter to the venue of
any such action or proceeding, irrevocably submits to the jurisdiction of the
said courts in any such action or proceeding, agrees to be bound by any judgment
of the said courts and not to seek, and hereby waives, any review of the merits
of any such judgment by the courts of any other jurisdiction and Parent hereby
appoints Mergeco at its registered office in the Province of Quebec as attorney
for service of process.
<PAGE>
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
BIO SYNTECH INC. (formerly Dream Team Inc.)
By: /s/ Amine Selmani
-----------------------------------------
Name: Amine Selmani
Title: President
9083-5661 QUEBEC INC.
By: /s/ Pierre Barnard
-----------------------------------------
Name: Pierre Barnard
Title: President
BIO SYNTECH LTD.
By: /s/ Amine Selmani
-----------------------------------------
Name: Amine Selmani
Title: President
