Exhibit (d)(xxi)
PARTNERSHIP INTEREST TRANSFER AGREEMENT
THIS AGREEMENT is made as of the 30th day of April, 2004
BETWEEN:
MDS INC., a corporation governed by the laws of Canada ("MDS")
OF THE FIRST PART
- and -
HEMOSOL INC., a corporation incorporated under the laws of
Ontario ("HEMOSOL") (to be renamed LPBP Inc.)
OF THE SECOND PART
- and -
MDS LABORATORY SERVICES INC., a corporation incorporated under
the laws of Canada (the "GENERAL PARTNER"), as General Partner
of MDS Laboratory Services, L.P., a limited partnership
established under the laws of Ontario (the "PARTNERSHIP")
OF THE THIRD PART
WHEREAS MDS and Hemosol entered into an arrangement agreement
dated as of February 11, 2004 to set out the terms and conditions of an
arrangement (the "ARRANGEMENT") of Hemosol, its securityholders and MDS under
section 182 of the Business Corporations Act (Ontario);
AND WHEREAS, in connection with the Arrangement, the
Partnership was established under the laws of Ontario by Declaration dated the
13th day of April, 2004;
AND WHEREAS MDS has a 99.99% limited partnership interest in
the Partnership (the "LP INTEREST") currently represented by 9,999 Units;
AND WHEREAS, in accordance with the terms of the Arrangement,
MDS will transfer the LP Interest to Hemosol and Hemosol will acquire the LP
Interest from MDS and MDS will surrender to Hemosol 500,000 Tranche A Warrants
and the right to acquire 2,000,000 Tranche B Warrants (as such terms are
hereinafter defined);
AND WHEREAS in consideration for the aforementioned transfer
and surrender, Hemosol will issue to MDS 44,872,287 Class A Shares and
11,134,648,627 Class B Shares (as such terms are hereinafter defined);
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AND WHEREAS Hemosol and MDS have agreed that MDS will also
have a right of first refusal and an option to purchase the LP Interest, in
whole or in part, in certain circumstances;
NOW THEREFORE IN CONSIDERATION of the premises and the mutual
covenants in this Agreement and other consideration (the receipt and sufficiency
of which are acknowledged), the Parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"AFFILIATE" has the meaning ascribed thereto in the Canada Business
Corporations Act;
"AGREEMENT" means this partnership interest transfer agreement and any
agreement supplementing or amending this Agreement;
"BUSINESS DAY" means any day of the week except Saturday, Sunday or any
statutory or civic holiday observed in Toronto, Ontario;
"CLASS A SHARES" means the Class A voting common shares in the capital of
Hemosol to be created and issued at the Effective Time;
"CLASS B SHARES" means the Class B non-voting shares in the capital of
Hemosol to be created and issued at the Effective Time;
"EFFECTIVE TIME" means 11:59 p.m. (Toronto time) on the effective date of
the Arrangement;
"INCLUDING" and "INCLUDES" shall be deemed to be followed by the statement
"without limitation" and neither of such terms shall be construed to limit
any word or statement which it follows to the specific or similar items or
matters immediately following it;
"LIMITED PARTNERSHIP AGREEMENT" means the limited partnership agreement
between MDS, as initial limited partner, and the General Partner, as
general partner, dated as of April 13, 2004;
"LP INTEREST" means the 99.99% limited partnership interest in the
Partnership, currently represented by 9,999 Units;
"MDS MOU" means the memorandum of understanding between MDS and Hemosol
dated October 22, 2002, as amended on December 23, 2003;
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"NEW HEMOSOL" means Hemosol Corp., a corporation incorporated under the
laws of Ontario;
"NEW MOU" means the memorandum of understanding to be entered into by MDS
and New Hemosol which shall be substantially similar to the MDS MOU other
than (i) the number of Tranche B Warrants contemplated therein shall be
reduced by one-half and (ii) the exercise price per Tranche B Warrant shall
be reduced by $0.04;
"OPTION EVENT" means any one of the events set out in Section 3.3 hereof;
"PARTIES" means the Partnership, MDS and Hemosol and "PARTY" means any one
of them;
"PERSON" includes an individual, body corporate, partnership, joint
venture, trust, unincorporated organization, the Crown or any agency or
instrumentality thereof or any other entity recognized by law;
"PLAN OF ARRANGEMENT" means the plan of arrangement of Hemosol as
contemplated by the Arrangement Agreement;
"PURCHASED UNITS" has the meaning set out in Section 3.5;
"SHARE CONSIDERATION" has the meaning set out in Section 2.1;
"SURRENDERED WARRANTS" has the meaning set out in Section 2.1;
"TAX ACT" means the Income Tax Act (Canada);
"TRANCHE A WARRANT CERTIFICATE" means the certificate dated November 22,
2002 registered in the name of MDS evidencing the Tranche A Warrants;
"TRANCHE A WARRANTS" means the warrants of Hemosol issued to MDS entitling
MDS to acquire, on the due exercise thereof, up to 6,000,000 common shares
of Hemosol at an exercise price of $1.00 per share on the terms and
conditions set out in the Tranche A Warrant Certificate;
"TRANCHE B WARRANTS" means the warrants of Hemosol to purchase up to
4,000,000 shares of Hemosol to be issued to MDS in certain circumstances on
the terms and conditions set out in the MDS MOU; and
"UNIT" means a unit in the capital of the Partnership.
1.2 INTERPRETATION
(a) In this Agreement, words in the singular include the plural and
vice-versa and words in one gender include all genders.
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(b) This Agreement shall be governed by, and interpreted and enforced in
accordance with, the laws in force in the Province of Ontario and the
laws of Canada applicable therein.
(c) If any action required by this Agreement is to be taken on a day which
is not a Business Day, such action shall be taken on the next
succeeding Business Day.
(d) All payments to be made by any Party to another shall be paid in
Canadian dollars in cash, by bank draft or by certified cheque.
ARTICLE 2
TRANSFER OF LP INTEREST AND SURRENDER OF WARRANTS
2.1 TRANSFER OF LP INTEREST AND SURRENDER OF WARRANTS
Effective at the Effective Time MDS shall sell, transfer and deliver the LP
Interest to Hemosol and Hemosol shall acquire the LP Interest, all as provided
in this Agreement. In conjunction with the foregoing and at the time
contemplated in the Plan of Arrangement, MDS shall surrender 500,000 Tranche A
Warrants and the right to receive 2,000,000 Tranche B Warrants (collectively,
the "SURRENDERED WARRANTS"). As consideration for the LP Interest and the
surrender by MDS of the Surrendered Warrants, Hemosol shall issue to MDS
38,322,390 Class A Shares and 11,134,648,627 Class B Shares (collectively, the
"SHARE CONSIDERATION") having a fair market value of $502,745,640, which shares
shall be issued as fully paid and non-assessable shares.
2.2 EVIDENCE OF TRANSFER
Hemosol shall cause its registrar and transfer agent to deliver to MDS
share certificates evidencing the Share Consideration in accordance with the
delivery terms set out in the Plan of Arrangement. MDS and Hemosol shall enter
into an amendment to the Tranche A Warrant Certificate and, subject to the prior
execution by New Hemosol of the New MOU, shall terminate the MDS MOU to reflect
the surrender by MDS of the Surrendered Warrants.
2.3 TAX ELECTIONS
MDS and Hemosol agree that the transfer of the LP Interest and the
Surrendered Warrants to Hemosol shall occur on a tax-deferred basis under
section 85 of the Tax Act and the corresponding provisions of any applicable
provincial income tax legislation. MDS and Hemosol agree to file joint elections
pursuant to subsection 85(1) of the Tax Act in the prescribed form and within
the prescribed time. The elected amount shall be determined by MDS. In no event
shall the elected amount in respect of the LP Interest and the Surrendered
Warrants be less than $1.00. MDS and Hemosol agree to file jointly corresponding
elections under the corresponding provisions of any applicable provincial income
tax legislation. MDS shall prepare and file all such elections.
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ARTICLE 3
TRANSFER OF LP INTEREST
3.1 GENERAL RESTRICTIONS
(a) Hemosol may not and covenants and agrees that it will not directly or
indirectly sell, transfer or otherwise dispose of all or part of the
LP Interest except as expressly required or permitted by this
Agreement.
(b) The Partnership agrees that it will not recognize any sale, transfer
or other disposition of all or part of the LP Interest by Hemosol
except as expressly required or permitted by this Agreement.
(c) Hemosol may not and covenants and agrees that it will not, directly or
indirectly, mortgage, pledge, charge, hypothecate or otherwise
encumber all or part of the LP Interest to or in favour of any Person,
including a Canadian chartered bank or trust company by way of
collateral security for a loan or outstanding indebtedness.
3.2 RIGHT OF FIRST REFUSAL
If Hemosol receives from a bona fide third party purchaser (the "THIRD
PARTY PURCHASER") an offer to purchase all or part of the Units held by Hemosol
(the "OFFERED UNITS") which Hemosol desires to accept (a "THIRD PARTY OFFER"),
Hemosol shall promptly give MDS a notice (an "OFFER NOTICE") to that effect
together with a copy of the Third Party Offer. The following provisions of this
Section 3.2 shall then apply:
(a) The Offer Notice shall be deemed to be an offer by Hemosol to sell the
Offered Units to MDS on the same terms and conditions as those set
forth in the Third Party Offer, which offer shall be irrevocable for a
period of thirty (30) days from the date the Offer Notice is given to
MDS (the "Offer Period").
(b) Prior to the expiry of the Offer Period, MDS shall send a written
notice to Hemosol either:
(i) accepting the offer and setting out the number of Offered Units
that MDS is willing to purchase from Hemosol; or
(ii) declining to purchase any of the Offered Units.
If MDS fails to give such written notice prior to the expiry of the
Offer Period, MDS shall be conclusively deemed to have declined to
purchase any of the Offered Units.
(c) If MDS does not accept the offer or MDS does not agree to buy all of
the Offered Units, then the Offered Units may be sold by Hemosol to
the Third Party Purchaser within sixty (60) days of the expiry of the
Offer Period on the terms and conditions of the Third Party Offer.
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(d) If Hemosol has not sold the Offered Units to the Third Party on the
terms and conditions of the Third Party Offer within the sixty (60)
day period referred to in Section 3.2(c), or if Hemosol wishes to sell
the Offered Units to the Third Party on terms and conditions different
from the terms and conditions of the Third Party Offer, the Offeror
shall not sell any Offered Shares without again complying with the
provisions of this Section 3.2 from time to time.
3.3 OPTION EVENT
An "OPTION EVENT" under this Agreement shall be deemed to have occurred if:
(a) the Partnership is wound up or dissolved or any actions, or any
proceedings or actions are taken by or against it in respect of any of
the foregoing; or
(b) the Partnership proposes to sell all or substantially all of its
assets otherwise than in the ordinary course of business.
The Partnership shall notify the other parties hereto immediately upon the
occurrence of an Option Event in respect of it or a decision of it to proceed
with an Option Event.
3.4 RIGHTS ON OPTION EVENT
Within 20 Business Days of notification of an Option Event (the "OPTION
PERIOD"), MDS may elect to purchase the LP Interest from Hemosol for a purchase
price equal to the fair market value of the LP Interest, as determined (pursuant
to Section 3.6) as at the time immediately prior to the Option Event. The
following provisions of this Section shall govern that purchase:
(a) MDS may exercise its option to purchase the LP Interest at any time
within the Option Period, by giving the Partnership and Hemosol
written notice to that effect. The option, however, shall terminate
and be of no further force or effect if the Partnership decides not to
proceed with the Option Event, if applicable, before the purchase has
been completed; and
(b) MDS shall purchase the LP Interest within 20 Business Days of the end
of the Option Period.
3.5 GENERAL PROVISIONS RELATING TO LP INTEREST TRANSFER
In this Section 3.5, the term "PURCHASED UNITS" means the Units to be
purchased by MDS from Hemosol pursuant to Sections 3.2 or 3.4. The closing of
the purchase and sale of the Purchased Units shall, in the absence of a contrary
agreement between MDS and Hemosol, occur at MDS's principal place of business at
10:00 a.m. (Toronto time) on the date specified in the relevant notice or such
later date as is agreed by MDS and Hemosol. Such date and time are referred to
as the "DATE OF CLOSING" and the "TIME OF CLOSING", respectively.
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At the Time of Closing on the Date of Closing:
(a) MDS shall pay to Hemosol the aggregate purchase price payable for the
Purchased Units by delivery of a bank draft or certified cheque drawn
on a Canadian chartered bank in respect of the purchase price or shall
provide such other form of consideration as MDS and Hemosol agree; and
(b) Hemosol shall deliver to MDS: (i) a receipt for payment of the
purchase price for the Purchased Units; (ii) a written warranty from
Hemosol that: (A) Hemosol is the sole beneficial owner of the
Purchased Units, free and clear of all liens, charges, pledges,
security interests, adverse claims or other encumbrances; and (B)
there are no contractual or other restrictions on the transfer of the
Purchased Units which have not been complied with; and (iii) any deeds
and documents necessary to give effect to the transfer of the
Purchased Units.
3.6 FAIR MARKET VALUE
In this Agreement, "FAIR MARKET VALUE" of the LP Interest shall mean the
fair market value of the LP Interest, as determined by a mutually acceptable
accounting firm or investment banking firm that is independent of each of MDS
and Hemosol (an "INDEPENDENT VALUATOR"). The Independent Valuator shall be
instructed to provide MDS and Hemosol with full and open access to the working
papers and determinations made and prepared by the Independent Valuator. The
fees of such Independent Valuator shall be borne equally by MDS and Hemosol.
ARTICLE 4
MISCELLANEOUS
4.1 ASSIGNMENT
MDS may assign this agreement to an affiliate thereof. Subject to the
foregoing, this Agreement may not be assigned and shall be binding upon all of
the Parties and their respective successors and assigns.
4.2 NOTICE
All notices and other communications hereunder shall be in writing and
shall be delivered to the Parties at the following addresses or sent by fax at
the following facsimile numbers or at such other addresses or facsimile numbers
as shall be specified by the Parties by like notice:
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(a) if to Hemosol:
LPBP Inc.
100 International Blvd.
Toronto, Ontario
M9W 6J6
Attention: John Anderson
Facsimile No.: 416 924 2155
(b) if to MDS:
100 International Boulevard
Toronto, Ontario
M9W 6J6
Attention: James A.H. Garner
Facsimile No.: 416 213 4222
(c) if to MDS Laboratory Services, L.P.:
c/o MDS Laboratory Services Inc.
100 International Boulevard
Toronto, Ontario
M9W 6J6
Attention: General Manager
Facsimile No.: 416 213 4215
The date of receipt of any such notice shall be deemed to be the date of
delivery thereof (unless such day is not a Business Day, in which case the date
of receipt shall be deemed to be the next Business Day) or, in the case of
notice sent by facsimile, the date of successful transmission thereof (unless
transmission is received after normal business hours, in which case the date of
receipt shall be deemed to be the next Business Day).
4.3 FURTHER ASSURANCES
Each Party will execute any deeds, assignments, agreements, and further and
other instruments and writings and give such further assurances as may be
necessary or appropriate to give effect fully to the provisions and intent of
this Agreement. Each of the Partnership and the General Partner confirms its
knowledge of this Agreement and will carry out and be bound by the provisions of
this Agreement to the full extent that it has the capacity and power at law to
do so.
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4.4 AMENDMENTS
This Agreement may only be amended by an instrument in writing signed by
all Parties hereto.
4.5 COUNTERPARTS
This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original, but all such counterparts together shall constitute
one and the same instrument.
4.6 TERM
This Agreement shall terminate when Hemosol no longer owns the LP Interest.
4.7 SPECIAL RELIEF
Each of Hemosol and the Partnership agree that MDS may obtain an injunction
or other appropriate relief against either of them if either contravenes or
fails to comply with any provision of this Agreement in any way, and further
agrees that the provisions of this Section may be pleaded against Hemosol and/or
the Partnership, as applicable, by way of estoppel or defence.
4.8 INVALIDITY
The invalidity of any provision of this Agreement shall not affect the
validity of any other provision. If any provision of this Agreement is
determined to be void or unenforceable in whole or in part, it shall not be
deemed to affect or impair the validity of any other provision and such
provisions are declared to be separate, distinctive and severable.
4.9 CARRYING ON BUSINESS
The Partnership covenants and agrees to carry on its business and its
operations in accordance with the provisions of this Agreement and to take no
action which would constitute a contravention of any of its provisions. The
Partnership shall maintain a true copy of this Agreement at its head office for
examination.
4.10 CONFLICT WITH LIMITED PARTNERSHIP AGREEMENT
If there is a conflict between the provisions of this Agreement and the
provisions of the Limited Partnership Agreement, the Parties shall promptly do
whatever is required to amend the Limited Partnership Agreement so that it
conforms to the provisions of this Agreement.
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4.11 WAIVER
No waiver by any Party of any of its rights hereunder shall be effective
unless made in writing and no such waiver shall be construed as, nor constitute,
a continuing waiver of such right nor a waiver of any other right hereunder.
4.12 TIME
Time shall be of the essence hereof.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date
first above written.
MDS INC.
By:____________________________________
Name:
Title:
HEMOSOL INC.
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
MDS LABORATORY SERVICES, L.P., BY ITS
GENERAL PARTNER MDS LABORATORY
SERVICES INC.
By:____________________________________
Name:
Title: