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Exhibit 10.4
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is made as of the __ day of
_______, 1998 by and between BioChem Pharma Inc., a Canadian corporation
("BioChem"), and CliniChem Development Inc., a Canadian corporation
("CliniChem").
BACKGROUND
A. BioChem is the holder of all of the issued and outstanding shares in
the share capital of CliniChem. BioChem intends to make a Cdn$150 million
capital contribution to CliniChem, to license certain technology to CliniChem,
and to make other arrangements in order to establish CliniChem as a separate
enterprise to conduct research and development of potential human therapeutic
and vaccine products primarily for treatment of cancer and HIV infection and the
prevention of certain infectious diseases.
B. BioChem intends to distribute all of the CliniChem Common Shares (as
defined below) to the holders of BioChem Common Shares (as defined below).
Now, therefore, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
1.1 "Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency or commission or any arbitration tribunal.
1.2 "Affiliate" shall mean a corporation or any other entity that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the designated party. "Control"
shall mean ownership of shares to which are attached more than fifty percent
(50%) of the votes that may be cast for the election of directors in the case of
a corporation, and at least fifty percent (50%) of the interests in profits in
the case of a business entity other than a corporation. BioChem and CliniChem
shall not be considered Affiliates of each other. The BioChem Affiliates and
CliniChem shall not be considered Affiliates of each other.
1.3 "Agent" shall mean General Trust of Canada, as distribution
agent, appointed by BioChem to distribute share certificates representing the
CliniChem Common Shares pursuant to the Distribution.
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1.4 "BioChem/CliniChem Agreements" shall mean this Agreement, the
Research and Development Agreement, the Technology License Agreement, the
Product Option Agreement, the Services Agreement and the Purchase Option,
collectively.
1.5 "BioChem Common Shares" shall mean the Common Shares in the
share capital of BioChem.
1.6 "Canadian Jurisdictions" shall mean, collectively, all of the
provinces of Canada.
1.7 "Canadian Preliminary Prospectus" shall mean the preliminary
long-form prospectus of CliniChem dated February 9, 1998 in its English and
French versions used in Canada and relating to the CliniChem Common Shares.
1.8 "Canadian Prospectus" shall mean the final long-form
prospectus of CliniChem dated __________________, 1998 in its English and
French versions used in Canada and relating to the CliniChem Common Shares.
1.9 "Canadian Securities Laws" shall mean the applicable
securities legislation of the Canadian Jurisdictions and the regulations,
policy statements and rules made thereunder.
1.10 "Canadian Securities Regulators" shall mean the securities
commission or other securities regulatory authority in each of the Canadian
Jurisdictions.
1.11 "Class B Shares" shall mean the Class B Common Shares in the
share capital of CliniChem.
1.12 "CliniChem Common Shares" shall mean the Class A Common
Shares in the share capital of CliniChem.
1.13 "Distribution" shall mean the distribution of CliniChem
Common Shares to Holders immediately following completion of the transactions
contemplated in Sections 2 and 3 hereof.
1.14 "Distribution Date" shall mean the proposed date of effecting
the Distribution, which is anticipated to occur on or about _______, 1998.
1.15 "Effective Time" shall mean the time and date as of which the
Registration Statement becomes effective.
1.16 "Exchange Act" shall mean the United States Securities
Exchange Act of 1934, as amended.
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1.17 "Exchanges" shall mean, collectively, the Montreal Exchange
and The Toronto Stock Exchange.
1.18 "Form 8-A" shall mean the registration statement on Form 8-A
to be filed by CliniChem with the U.S. Commission to effect the registration of
the CliniChem Common Shares pursuant to the Exchange Act.
1.19 "Holders" shall mean the holders of record of BioChem Common
Shares on the Record Date.
1.20 "Jurisdictions" shall mean, collectively, the Canadian
Jurisdictions and the United States.
1.21 "Nasdaq" shall mean The Nasdaq Stock Market, Inc.
1.22 "Preliminary Prospectuses" shall mean, collectively, the
Canadian Preliminary Prospectus and the U.S. Preliminary Prospectus.
1.23 "Product Option Agreement" shall mean the Product Option
Agreement dated as of the date hereof between BioChem and/ or BioChem Affiliates
and CliniChem.
1.24 "Prospectuses" shall mean, collectively, the Canadian
Prospectus and the U.S. Prospectus.
1.25 "Purchase Option" shall mean that certain option contained in
CliniChem's Articles of Incorporation pursuant to which BioChem, as the holder
of the majority of the outstanding Class B Shares, has the right to acquire all,
but not less than all, of the outstanding CliniChem Common Shares.
1.26 "Record Date" shall mean the close of business on _______,
1998 or such other date as is determined by the BioChem Board of Directors or
any committee thereof.
1.27 "Registration Statement" shall mean the registration
statement on Form F-1 (No. 333-45871) registering the issuance of CliniChem
Common Shares pursuant to the Distribution.
1.28 "Research and Development Agreement" shall mean the Research
and Development Agreement dated as of the date hereof between BioChem and
CliniChem.
1.29 "Securities Act" shall mean the United States Securities Act
of 1933, as amended.
1.30 "Securities Laws" shall mean, collectively, the Canadian
Securities Laws and the U.S. Securities Laws.
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1.31 "Services Agreement" shall mean the Services Agreement dated as
of the date hereof between BioChem and CliniChem.
1.32 "Technology License Agreement" shall mean the Technology License
Agreement dated as of the date hereof between BioChem and/ or BioChem Affiliates
and CliniChem.
1.33 "U.S. Commission" shall mean the United States Securities and
Exchange Commission.
1.34 "U.S. Preliminary Prospectus" shall mean the preliminary
prospectus included in the Registration Statement and used in the United States
before the Effective Time.
1.35 "U.S. Prospectus" shall mean the prospectus relating to the
CliniChem Common Shares in the Registration Statement at the Effective Time and
used in the United States.
1.36 "U.S. Securities Laws" shall mean, collectively, the applicable
blue sky laws or laws of states or other political subdivisions of the United
States, the Exchange Act, the Securities Act and the rules of the U.S.
Commission thereunder.
2. PRELIMINARY ACTION.
2.1 REGISTRATION STATEMENT AND PRELIMINARY PROSPECTUS. CliniChem has
prepared and filed the Registration Statement with the U.S. Commission.
CliniChem has prepared and filed the Canadian Preliminary Prospectus with the
Canadian Securities Regulatorzs. Subject to the conditions set forth herein,
BioChem and CliniChem shall use reasonable efforts to cause the Registration
Statement to become effective under the Securities Act and to qualify the
CliniChem Common Shares for distribution in each of the Canadian Jurisdictions.
CliniChem has prepared, and BioChem shall cause to be distributed, the
Prospectuses to the Holders.
2.2 FORM 8-A. CliniChem has prepared and filed with the U.S.
Commission a Form 8-A which includes or incorporates by reference relevant
portions of the Registration Statement. Subject to the conditions set forth
herein, CliniChem shall use reasonable efforts to cause the Form 8-A to become
effective under the Exchange Act.
2.3 OTHER SECURITIES ACTION. CliniChem shall take all such action as
may be necessary or appropriate under the Canadian Securities Laws or the U.S.
Securities Laws in connection with the Distribution to permit the CliniChem
Common Shares to be distributed as described in the Prospectuses.
2.4 LISTING. CliniChem has prepared and filed an application to
effect the listing of the CliniChem Common Shares on each of the Exchanges and
on the Nasdaq. CliniChem shall use reasonable efforts to cause the CliniChem
Common Shares to be so listed.
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2.5 NO REPRESENTATIONS OR WARRANTIES; CONSENTS. Each party hereto
understands and agrees that no party hereto is, in this Agreement or in any
other agreement or document contemplated by this Agreement or otherwise,
representing or warranting in any way that the obtaining of any consents or
approvals, the execution and delivery of any agreements or the making of any
filings or applications contemplated by this Agreement will satisfy the
provisions of any or all applicable laws. Notwithstanding the foregoing, the
parties shall use reasonable efforts to obtain all consents and approvals, to
enter into all agreements and to make all filings and applications which may be
required for the consummation of the transactions contemplated by this
Agreement, including, without limitation, all applicable regulatory filings or
consents under Canadian federal or provincial laws or U.S. federal or state laws
and all necessary consents, approvals, agreements, filings and applications.
3. CONTRIBUTION; REORGANIZATION OF CLINICHEM'S SHARE CAPITAL.
3.1 CONTRIBUTION. Prior to the Distribution, BioChem will contribute
Cdn$150 million in cash to CliniChem as a capital contribution.
3.2 REORGANIZATION OF CLINICHEM'S SHARE CAPITAL. After the capital
contribution described in Section 3.1 but prior to the Distribution Date, and
immediately upon the filing of Articles of Amendment creating the CliniChem
Common Shares and the Class B Shares, the 1,000 issued and outstanding Common
Shares of CliniChem will be exchanged, and thereafter canceled, for
(i) 1,000 Class B Shares, and (ii) that number of CliniChem Common Shares
such that BioChem may distribute to Holders of BioChem Common Shares one
CliniChem Common Share for every 40 BioChem Common Shares held on the
Record Date. BioChem and CliniChem acknowledge that all of the CliniChem
Common Shares held by BioChem on the Record Date will be distributed by
BioChem to the Holders.
4. THE DISTRIBUTION.
4.1 THE DISTRIBUTION. CliniChem shall take all steps required by
BioChem or the Agent to effect the Distribution. Prior to the Distribution, and
subsequent to the receipt of the capital contribution described in Section 3
hereof, CliniChem shall cause to be issued to BioChem a certificate or
certificates representing a sufficient number of CliniChem Common Shares so that
BioChem may distribute one CliniChem Common Share for every 40 BioChem Common
Shares held on the Record Date (including one CliniChem Common Share for each
fractional CliniChem Common Share rounded up to a whole share).
4.2 EXPENSES OF DISTRIBUTION. All expenses related in any way to the
Distribution, including without limitation all legal, financial advisory and
accounting fees of BioChem and CliniChem, shall be borne by CliniChem, unless
otherwise agreed to by BioChem.
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5. ADDITIONAL ASSURANCES; INDEMNIFICATION.
5.1 MUTUAL ASSURANCES. BioChem and CliniChem agree to cooperate with
respect to the implementation of the BioChem/CliniChem Agreements and to execute
such further documents and instruments as may be necessary to confirm the
transactions contemplated thereby.
5.2 INDEMNIFICATION. If BioChem exercises the Purchase Option, from
and after such exercise, BioChem shall indemnify, defend and hold harmless
CliniChem's officers and directors to the same extent as provided in the by-laws
of CliniChem.
5.3 NOTICE. Any person entitled to indemnification pursuant to
Section 5.2 shall give BioChem prompt notice in writing, in the manner set forth
in Section 7.7 below, of any claim or demand made against such person for which
such person may be entitled to indemnification under Section 5.2.
6. CONDITIONS TO EFFECTIVENESS OF DISTRIBUTION.
The Distribution shall be subject to the satisfaction or waiver by BioChem
of the following conditions and the satisfaction or waiver by CliniChem of the
conditions in Sections 6.8 and 6.9:
6.1 BOARD APPROVAL. The BioChem/CliniChem Agreements (including
exhibits and schedules) shall have been approved by the Board of Directors of
BioChem and CliniChem and shall have been executed and delivered by appropriate
officers of BioChem and CliniChem, and the BioChem Board of Directors shall have
declared a dividend of the CliniChem Common Shares as of the Record Date to the
holders of record of the BioChem Common Shares.
6.2 SECURITIES LAW COMPLIANCE. The transactions contemplated hereby
shall be in compliance with applicable Canadian Securities Laws and U.S.
Securities Laws, the Registration Statement shall have been declared effective
and no stop orders shall have been instituted with respect thereto under the
U.S. Securities Laws and receipts shall have been obtained from the Canadian
Securities Regulators in respect of the Canadian Prospectus and no cease trade
orders shall have been instituted with respect thereto under Canadian Securities
Laws.
6.3 ARTICLES OF INCORPORATION. The Articles of Amendment of CliniChem
shall have been adopted by the Board of Directors of CliniChem, approved by
BioChem as sole shareholder of CliniChem, and filed with Industry Canada.
6.4 FORM 8-A EFFECTIVE. The Form 8-A shall have become effective
under the Exchange Act.
6.5 LISTING APPLICATIONS APPROVED. The CliniChem Common Shares shall
have been listed on the Exchanges and approved for quotation on the Nasdaq not
later than on
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the close of business on the last business day preceding the Distribution
Date and shall be posted for trading or quoted, as the case may be, as at the
opening of business on the Distribution Date.
6.6 FAIRNESS OPINION. BioChem shall have received an opinion of
Merrill Lynch, Pierce, Fenner & Smith Incorporated, investment advisor to
BioChem, in form and substance satisfactory to BioChem, to the effect that (i)
from a financial point of view, the Distribution provides a reasonable structure
to pursue the financial objectives described in the Prospectuses and (ii) from a
financial point of view, the Distribution is fair to the shareholders of
BioChem.
6.7 PERMITS AND LICENSES. CliniChem shall have received such permits
and licenses as may be necessary for the purpose of commencing operations
contemplated by the BioChem/CliniChem Agreements.
6.8 CONSENTS. Each of BioChem and CliniChem shall have received such
consents, and shall have received executed copies of such agreements or
amendments of agreements, as it shall deem necessary in connection with the
completion of the transaction contemplated by this Agreement.
6.9 OTHER INSTRUMENTS. All actions and other documents and
instruments deemed necessary or advisable in connection with the transactions
contemplated hereby shall have been taken or executed, as the case may be, in
form and substance satisfactory to BioChem and CliniChem.
6.10 LEGAL PROCEEDINGS. No legal proceedings affecting or arising out
of the transactions contemplated hereby or which could otherwise affect BioChem
or CliniChem in a materially adverse manner shall have been commenced or
threatened against BioChem, CliniChem or the directors or officers of either
BioChem or CliniChem.
6.11 MATERIAL CHANGES. No material adverse change shall have occurred
with respect to BioChem or CliniChem, the securities markets (either generally
or with respect to BioChem or CliniChem) or general economic or financial
conditions which shall, in the reasonable judgment of BioChem, make the
transactions contemplated by this Agreement inadvisable.
6.12 OTHER CONDITIONS. Such other conditions as may be set by the
Board of Directors of BioChem or any committee thereof in the resolutions
authorizing the Distribution shall have been satisfied.
7. MISCELLANEOUS.
7.1 WAIVER, REMEDIES AND AMENDMENT. Any waiver by either party hereto
of a breach of any provisions of this Agreement shall not be implied and shall
not be valid unless such waiver is recited in writing and signed by such party.
Failure of any party to require, in one or more instances, performance by the
other party in strict accordance with the terms and conditions of this Agreement
shall not be deemed a waiver or relinquishment of the future
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performance of any such terms or conditions or of any other terms and
conditions of this Agreement. A waiver by either party of any term or
condition of this Agreement shall not be deemed or construed to be a waiver of
such term or condition for any other term. All rights, remedies, undertakings,
obligations and agreements contained in this Agreement shall be cumulative and
none of them shall be a limitation of any other remedy, right, undertaking,
obligation or agreement of either party. This Agreement may not be amended
except in a writing signed by both parties.
7.2 ASSIGNMENT. Neither party may assign its rights and obligations
hereunder without the prior written consent of the other party, which consent
may not be unreasonably withheld; provided, however, that BioChem may assign
such rights and obligations hereunder to an Affiliate of BioChem or to any
person or entity with which BioChem is merged or consolidated or which acquires
all or substantially all of the assets of BioChem.
7.3 DISPUTE RESOLUTION. Any controversy, claim or dispute arising
out of or relating to this Agreement, including the interpretation, breach,
termination or invalidity thereof (a "Dispute") shall be definitively settled by
arbitration, in accordance with the provisions on arbitration found in the Code
of Civil Procedure of Qu#bec (the "CCP").
Prior to resorting to arbitration, the parties shall refer the Dispute
to the Chairman of the Board of BioChem and a director of CliniChem who has not
been appointed by BioChem for attempted resolution of such Dispute. The party
wishing to initiate negotiations shall send to the other party a notice of
negotiation, briefly identifying the object of the dispute. If the parties fail
to resolve a dispute within thirty (30) days of receipt by the second party of
such notice of negotiation, each party shall then have the right to refer such
dispute to arbitration, unless the parties agree in writing to extend such
thirty (30) day negotiation period. The seat of arbitration shall be in Montreal
and the proceedings shall be in English.
There shall be three (3) arbitrators. Each party shall appoint one
arbitrator, and the two (2) arbitrators thus appointed shall designate the third
arbitrator within fifteen (15) days of the appointment of the second arbitrator.
The third arbitrator shall serve as President of the arbitral tribunal. Should a
party fail to designate an arbitrator within the delay specified in the
applicable provisions of the CCP, such arbitrator shall be appointed by the
highest ranking officer of the Quebec National and International Commercial
Arbitration Centre ("Centre"). The two (2) arbitrators thus appointed shall
designate the third arbitrator within fifteen (15) days of the appointment of
the second arbitrator, failing which the third arbitrator shall be designated by
the Centre.
The arbitral tribunal shall render any final award or decision within
thirty (30) days following the completion of evidence and argument on
substantive issues in dispute between the parties. The parties recognize and
agree that any award rendered by the arbitral tribunal shall be final and
binding on the parties who hereby expressly waive, to the fullest extent
permitted by law, all rights of appeal or recourse to any court. The
apportionment of costs of any arbitration pursuant to this agreement shall be
left to the discretion of the arbitral tribunal. Nothing in this article has the
effect, or should be interpreted as having the effect of limiting the right of
one of the parties to
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obtain, from a common law court, a seizure before judgment, an injunction or
any other extraordinary recourse as defined by the CCP.
7.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute this Agreement.
7.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Province of Qu#bec and the federal
laws of Canada applicable therein, and shall be treated in all respects as a
Qu#bec contract.
7.6 HEADINGS. The headings set forth at the beginning of the
various sections of this Agreement are for convenience and form no part of the
Agreement between the parties.
7.7 NOTICES. Notices required under this Agreement shall be in
writing and sent by registered or certified mail, postage prepaid, or by
facsimile and confirmed by registered or certified mail, postage prepaid, and
addressed as follows:
If to BioChem:
BioChem Pharma Inc.
275 Armand-Frappier Blvd.
Laval, Qu#bec, Canada H7V 4A7
Facsimile: (514) 978-7994
Attention: Vice President,
Legal Affairs and Corporate Secretary
If to CliniChem:
CliniChem Development Inc.
275 Armand-Frappier Blvd.
Laval, Qu#bec, Canada H7V 4A7
Facsimile: (514) 978-7994
Attention: General Counsel and Secretary
All notices shall be deemed to be effective five days after the date of
mailing or upon receipt if sent by facsimile (but only if followed by certified
or registered confirmation). Either party may change the address at which notice
is to be received by written notice pursuant to this Section 7.7.
7.8 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid or unenforceable, it shall be
modified, if possible, to the minimum extent necessary to make it valid and
enforceable or, if such modification is not possible, it shall be stricken and
the remaining provisions shall remain in full force and effect.
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7.9 RELATIONSHIP OF THE PARTIES. For all purposes of this
Agreement, CliniChem and BioChem shall be deemed to be independent contractors
and anything in this Agreement to the contrary notwithstanding, nothing herein
shall be deemed to constitute CliniChem and BioChem as partners, joint
venturers, co-owners, an association or any entity separate and apart from each
party itself, nor shall this Agreement constitute any party hereto an employee
or agent, legal or otherwise, of the other party for any purposes whatsoever.
Neither party hereto is authorized to make any statements or representations on
behalf of the other party or in any way to obligate the other party, except as
expressly authorized in writing by the other party. Anything in this Agreement
to the contrary notwithstanding, no party hereto shall assume nor shall be
liable for any liabilities or obligations of the other party, whether past,
present or future.
7.10 SURVIVAL. The provisions of Sections 1, 5, 7.1, 7.3, 7.5, 7.6,
7.7, 7.8 and this Section 7.10 shall survive the termination for any reason of
this Agreement. Any payments due under this Agreement with respect to any period
prior to its termination shall be made notwithstanding the termination of this
Agreement. Neither party shall be liable to the other due to the termination of
this Agreement as provided herein, whether in loss of good will, anticipated
profits or otherwise.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
BIOCHEM PHARMA INC.
By:________________________________________
Title:_____________________________________
By:________________________________________
Title:_____________________________________
CLINICHEM DEVELOPMENT INC.
By:________________________________________
Title:_____________________________________
By:________________________________________
Title:_____________________________________
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