-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AfbIVEO1Zy+8G2eW0jkxYjOJ+HjH268OvrS22HC/8aY9rPPJ1R88A1MUCL3d91Nt X+6ZCvmya+wFhtjPA8e3NA== 0001021408-02-004623.txt : 20020415 0001021408-02-004623.hdr.sgml : 20020415 ACCESSION NUMBER: 0001021408-02-004623 CONFORMED SUBMISSION TYPE: 10KSB40 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SFBC INTERNATIONAL INC CENTRAL INDEX KEY: 0001089542 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 592407464 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB40 SEC ACT: 1934 Act SEC FILE NUMBER: 001-16119 FILM NUMBER: 02596230 BUSINESS ADDRESS: STREET 1: 11190 BISCAYNE BLVD CITY: NORTH MIAMI STATE: FL ZIP: 33181 BUSINESS PHONE: 3058950304 MAIL ADDRESS: STREET 1: 1645 PALM BEACH LAKES BLVD., STREET 2: SUITE 550 CITY: WEST PALM BEACH STATE: FL ZIP: 33401 10KSB40 1 d10ksb40.txt FORM 10-KSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-KSB [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 ----------------- Commission File Number: 1-16119 ------- SFBC International, Inc. ------------------------ (Exact name of small business issuer as specified in its charter) Delaware 59-2407464 -------- ---------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization)
11190 Biscayne Blvd., Miami, FL 33181 ------------------------------------- (Address of principal executive offices) (Zip code) (305) 895-0304 -------------- (Issuer's telephone number) Securities registered under Section 12(b) of the Exchange Act: None Securities Registered Pursuant to Section 12(g) of the Exchange Act Common Stock ------------ (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [_] No Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year. $31,470,528 ----------- State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.) $43,402,692 as of March 26, 2002 computed using the average bid and asked price of the common stock of the Company, par value $.001 per share, as listed on the National Market System of the Nasdaq Stock Market on the aforementioned date. State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 6,858,042 shares of common stock were outstanding as of March 26, 2002. DOCUMENTS INCORPORATED BY REFERENCE The Registrant's proxy statement for the annual meeting of stockholders to be held on June 24, 2002 is incorporated by reference into Part III of this Report. -2- PART I Item 1. Description of Business. About SFBC International, Inc. - ------------------------------ As used in this Form 10-KSB "we", "our", "us" and "SFBC" refer to SFBC International, Inc. and its subsidiaries unless the context requires otherwise. We provide pharmaceutical and biotechnology companies with specialized drug development services primarily in the areas of Phase I and Phase II clinical trials and bioanalytical laboratory services. We are a market leader in early clinical development. Our niche Phase III business is currently growing. We also conduct clinical trials for other drug development services companies. We differentiate ourselves from our competitors based on our ability to recruit specialized populations for difficult-to-recruit clinical trials and successfully execute logistically complex clinical trials involving large numbers of participants. Our clients include 100 of the largest pharmaceutical and biotechnology companies based on research and development expenditures. We have conducted Phase I and Phase II clinical trials of many leading drugs, including Vioxx, Claritin, Zoloft, Azithromax and Celebrex. Our revenues have grown from approximately $4.3 million in 1997 to $19.7 million in 2000 to $31.5 million in 2001. We have developed and currently maintain an extensive database of individuals appropriate for future trials. Our database enables us to contact and enroll trial participants quickly and to initiate clinical trials without having to go through a lengthy and costly advertising process to recruit participants. In addition to conducting clinical trials involving normal healthy participants, we have significant expertise in recruiting for and conducting trials involving the following special populations: . Cardiac; . Diabetes; . Dermatology; . Geriatrics; . Hepatic (liver) disease; . HIV positive; . Renal (kidney) disease; . Ophthalmology; . Pediatrics; and . Post-menopausal -3- Our largest freestanding facility located in Miami, Florida is a 500-bed, 73,000-square foot facility, which we believe is the largest Phase I and Phase II clinical trials facility in the United States. Our Miami facility allows us to conduct several large clinical trials simultaneously. Our strength in recruiting clinical trial participants and our ability to conduct large clinical trials provide our clients with the opportunity to generate the data they require with fewer clinical trials. We believe this capability helps our clients to reduce their drug development lead times and makes us a desirable drug development services partner. In Canada, as a result of the acquisition of Anapharm, Inc. on March 18, 2002 (see below) we now operate two clinical trials facilities in Quebec City and Montreal with a total of 206 beds. During 2002, we plan to expand our Montreal facility by 30 beds. We also operate a 48-bed, 7,500-square foot facility in Ft. Myers, Florida where we also conduct Phase I and Phase II trials. We expect to expand our Ft. Myers' capacity to 100 beds later this year when we move to a new location. We also have a Phase III clinical trials management operation in Charlotte, North Carolina. Additionally, we operate bioanalytical laboratories in Quebec City and in North Wales, Pennsylvania. Finally, we recently opened a state-of-the art central clinical laboratory in Miami, which we expect to use to serve all of our facilities and provide more efficient services to our clients. Our Acquisition of Anapharm On March 18, 2002, we acquired 100% of the capital stock of Anapharm, Inc. (Anapharm), which was the largest privately held Canadian provider of drug development services. Anapharm derives approximately 50% of its revenues from each of Phase I clinical trials and bioanalytical laboratory services. Anapharm also owns 49% of Danapharm, Inc., a London, Ontario, Canada based corporation specializing in Phase III and IV clinical trials. All dollar references in this Report are in United States dollars. We acquired 100% of the issued and outstanding stock of Anapharm for approximately $26.7 million in cash and approximately $2.9 million in common stock (167,375 shares) plus transaction fees and costs. Anapharm executives, who were also Anapharm stockholders, received approximately 30% of the total consideration including all of the SFBC common stock. The number of shares of SFBC common stock issued was based on a 20-day average closing price prior to execution of the Share Purchase Agreement, or $17.51 per share. Additionally, key Anapharm employees received stock options to purchase 110,000 shares of SFBC common stock exercisable at $23.97 per share. All employees of Anapharm have remained employed with Anapharm including its founder and president, Dr. Marc LeBel. Anapharm was formed in 1994. For its fiscal year ended April 30, 2001, Anapharm's revenues were approximately $19.7 million. Its net income after taxes was approximately $2.4 million excluding foreign currency gains rebates and tax credits not available to a foreign acquirer. -4- Industry Overview According to IMS Health Incorporated, a leading provider of global information solutions to the pharmaceutical and healthcare industries, worldwide pharmaceutical drug sales were estimated to be approximately $337 billion in 1999, and are projected to increase to $506 billion by 2004. Pharmaceutical and biotechnology companies invested approximately $65.5 billion in research and development activities in 2000, and we expect this number to grow. Discovering and developing new drugs is an expensive and time-consuming process. IMS Health estimates that the average cost of developing a drug exceeds $500 million and on average takes almost 15 years. The Drug Development Process. The drug research and development process consists of two stages: pre- clinical and clinical. The pre-clinical stage consists of screening chemical compounds to identify the most promising leads for continued drug development prior to human clinical trials. The clinical stage includes clinical trials with healthy participants, as well as those with targeted diseases, impairments or conditions. Prior to commencing human clinical trials in the United States, a pharmaceutical or biotechnology company must file an investigational new drug, or IND, application with the United States Food & Drug Administration, which includes manufacturing data, pre-clinical data, information about any use of the drug in humans for other purposes and a detailed plan for the proposed clinical trials. The design of these trials, referred to as a study protocol, is essential to the success of the drug development effort. The study protocol must anticipate correctly the nature of the data to be generated and results that the FDA require before approving the drug. If the FDA does not comment within 30 days after an IND application is filed, human clinical trials may begin. The clinical trials stage is the most time-consuming and expensive part of the drug research and development process. Human trials usually start on a small scale to assess safety and then expand to larger trials to test efficacy. Trials usually are grouped into three stages known as Phase I through Phase III. Multiple trials generally are conducted within each phase. These phases are: . Phase I trials involve testing a drug on a limited number of participants, typically 20 to 80 persons, to determine the drug's basic safety data, including tolerance, absorption, metabolism and excretion. This phase, which lasts an average of six months to one year, is comprised of numerous clinical trials of short duration; . Phase II trials involve testing a small number of participants, typically 100 to 200 persons, who qualify for inclusion in a clinical trial based upon meeting the protocol's criteria and having a particular condition, to determine the drug's effectiveness and how different doses work. This phase, which lasts an average of one to two years, is comprised of several longer duration clinical trials; and -5- . Phase III trials involve testing large numbers of participants, typically several hundred to several thousand persons, to verify drug efficacy on a large scale, as well as long-term safety. These trials involve numerous sites and generally last up to three years. After successfully completing all three clinical phases, a company submits a new drug application to the FDA requesting that the drug be approved for marketing. The new drug application is a comprehensive filing that includes, among other things, the results of all pre-clinical and clinical studies. Phase IV clinical trials, which are conducted after drug approval, may be required by the FDA. The FDA may require these additional trials in order to monitor long- term risks and benefits, to study different dosage levels or to evaluate different safety and efficacy parameters. The Drug Development Services Industry. The drug development services industry provides product development services to the pharmaceutical and biotechnology industries. This industry has evolved from providing limited clinical trial services in the 1970s to a full- service industry today that provides clients with comprehensive services, including pre-clinical evaluations, study protocol design, clinical trial management, data collection, and bioanalytical and statistical analysis. According to Frost & Sullivan, an international marketing and consulting company, the drug development services industry is expected to grow at an annual rate of 14% or more in the future. We believe that a number of trends are driving the growth and direction of the drug development services industry: Cost Containment Pressures. Market forces and governmental initiatives have placed downward pressure on drug prices. We believe that the pharmaceutical industry is responding to these price pressures by converting some of the fixed costs associated with maintaining their own research and development personnel and facilities to variable costs by outsourcing drug development activities to drug development services companies. Biotechnology Industry Growth. The United States biotechnology industry has grown rapidly over the last ten years. Biotechnology companies generate significant numbers of new drug candidates that require development and regulatory approval. Many of these new drug candidates are moving into clinical development at a time when many biotechnology companies do not have the necessary staff, operating procedures, experience or expertise to conduct their own clinical trials. -6- Difficulties in Recruiting Trial Participants are Lengthening Drug Development Times. One of the largest expenses and greatest delays in developing new drugs is recruiting clinical trial participants. According to CenterWatch, a publisher focused on clinical trials, 78% of all clinical trials are delayed by problems associated with recruiting participants and 12% face delays of more than six months. An increase in the number of drugs being tested by pharmaceutical and biotechnology companies and an increase in FDA testing requirements have exacerbated this trend. Importance of Therapeutic Expertise and Ability to Recruit Special Populations. Pharmaceutical companies increasingly are organizing their internal research and development departments into multiple groups according to therapeutic expertise. Therefore, a single pharmaceutical company typically represents multiple potential client groups, with each having authority to award drug development contracts. We believe that pharmaceutical and biotechnology companies increasingly are selecting drug development services partners based on their experience in recruiting for and conducting clinical trials within particular therapeutic areas and with special populations of trial participants. Recruiting difficulties often cause clinical trials to be conducted in multiple smaller groups of participants at multiple locations, which can lengthen development times and increase costs. We believe that specialization in a particular therapeutic area or within a special population allows a drug development services company to deliver a higher level of service in helping to develop trial protocols, in quickly recruiting participants from special populations, in conducting clinical trials and in gathering and reporting data. Increasing Regulatory Demands. We believe that regulatory agencies are becoming more demanding with regard to the data required to support new drug approvals and are seeking more evidence that new drugs are safer and more effective than existing products. According to the U.S. Department of Health and Human Services, the number of clinical trial participants per drug has expanded from an average of 1,321 in the early 1980s to 4,237 in 1994-95. In addition, according to the Boston Consulting Group, an international consulting firm, the number of drug development trials for a specific new drug has increased from 30 in 1994-95 to 68 in 1997. We believe that this trend will continue in the future. As a result, the complexity of clinical trials and the number of participants required for clinical trials are increasing. We believe that these demands are increasing the demand for the services provided by drug development services companies. Our Solution We have been providing pharmaceutical, biotechnology and drug development services companies with specialized drug development services for 17 years. -7- Our Ability to Recruit. We have the ability to recruit clinical trial participants from special populations and to conduct large clinical trials, creating value for our clients by saving time and costs and by quickly generating data for the FDA approval process. Our largest individual clinical trials facility is located in Miami, Florida, an area with a diverse population of more than five million residents, which facilitates our recruiting efforts. Since 1996, we have implemented and grown a proprietary database of potential future clinical trial participants, who have expressed a desire to participate in our future trials. Virtually all of our clinical trial participants for our Miami site are recruited from our database. We believe that our database gives us an advantage over our competitors in that it enables us to markedly reduce the costs and delays associated with advertising and other recruitment methods typically used in our industry. At our Anapharm facilities, the corridor linking Quebec City-Trois Riviers- Montreal has close to 5 million inhabitants and represents an excellent source of subjects for studies. In its eight years of operation Anapharm has developed a database of approximately 40,000 subjects including young male and female volunteers, post-menopausal women, elderly subjects, and special populations. We strive to provide a positive experience for our clinical trial participants. We believe that our reputation in the local community is critical to the continued successful recruitment of clinical trial participants. Our business philosophy is to treat our clinical trial participants like our clients. In keeping with this belief, we have designed each of our Miami, Ft. Myers, Montreal and Quebec City facilities with numerous amenities for our clinical trial participants who usually spend several days or weeks with us in the course of a clinical trial. -8- Our Largest Clinical Trials Operations. We believe our 500-bed, 73,000-square foot Miami, Florida Phase I and Phase II facility is the largest clinical trials site in the United States. This facility contains five clinical units, which we can segment further in order to facilitate conducting several smaller trials. We have designed our facility to enable us to conduct a number of clinical trials efficiently at the same time while maintaining all of the appropriate controls. The size and design of our facility combined with our ability to recruit gives us an important competitive advantage in that we can attract business from clients who prefer to outsource clinical trials involving a large number of participants to a single company at one location. We believe that the high fixed cost, low variable cost nature of the Phase I and Phase II business gives us a significant opportunity to take advantage of our large Phase I and Phase II operation in Miami, Florida. Our Miami operation's fixed costs include our facility, our dedicated staff of on-site physician investigators and clinical personnel, our administrative staff and our senior management team. As utilization of our Miami facility increases, we have the potential to generate higher revenues without the need to hire a considerable number of additional personnel or incur significant expenses beyond our current levels. We currently utilize approximately 33% of our capacity. Anapharm has 206 beds. Our Quebec City location has 126 beds with two independent units; our Montreal site has two independent units totaling 80 beds in a recently renovated environment. The independent units give us the flexibility to conduct different studies at the same time. The quality assurance unit operates independently to ensure the overall quality of the work performed. The Trois-Rivieres center is primarily is a recruitment center that determines where the subjects will be directed to, and for what length of time they will be tested for during the study. Our Strategy Increase Market Share With Existing Clients and Gain New Clients. Our clients are pharmaceutical and biotechnology companies that outsource a portion of their drug development activities in order to focus their efforts on drug discovery. We often generate business from multiple, and often independent, groups within our client companies. Our sales and marketing team focuses on gaining new business from our existing clients, developing relationships with new groups at existing clients, and marketing our services to pharmaceutical and biotechnology companies which we have not serviced in the past. As a result of our recent acquisition of Anapharm we gained a substantial number of new clients primarily generic drug manufacturers located in America, Europe and Asia. -9- Expand Our Bioanalytical Laboratory Business. Anapharm derives approximately 50% of its revenues from its bioanalytical laboratory, which substantially increases our capacity to provide these services to our clients. Our experience indicates that our clients spend approximately one dollar for bioanalytical laboratory services work for every dollar spent on Phase I and Phase II clinical trials. In furtherance of this strategy, we have made two bioanalytical laboratory acquisitions. Most significantly, our March 18, 2002 acquisition of Anapharm brought us a laboratory, which generated annual revenues of approximately $10 million for Anapharm's fiscal year ended April 30, 2001. Earlier, in August 2001, we acquired our first bioanalytical laboratory, SFBC Analytical Laboratories, Inc. located in New Wales, Pennsylvania. Prior to this acquisition, we did not participate in the bioanalytical laboratory revenues related to our trials as our clients independently outsourced the services they did not perform. As a result of our first acquisition of a bioanalytical laboratory that was primarily focused on pre-clinical, toxicology, and other studies for major pharmaceutical companies, we began providing bioanalytical laboratory services to several of our existing clients and are also attracting new clients. With the availability of the larger Anapharm laboratory, our bioanalytical business is substantially larger and is serving a broad spectrum of our clients' needs. Providing bioanalytical laboratory services within the same organization reduces administrative costs, coordination efforts, and clinical trial completion times and improves the level of control that we and our clients can exercise over the entire clinical trials process. Our management believes that our ability to provide bioanalytical laboratory services, in addition to our other services, enables us to compete more successfully for new business. We intend to devote more sales and marketing resources to encourage existing clients to use our bioanalytical laboratory services and to attract new business from companies that prefer to award all of their drug development services to one company. We Plan to Continue to Expand Our Services to Generic Manufacturers. We believe that we have a significant market opportunity to serve generic pharmaceutical companies since most of Anapharm's revenues are derived from the generic market. Over the next five years, more than $41 billion of branded pharmaceuticals are expected to lose patent protection, which is expected to drive demand for bioanalytical laboratory services by generic pharmaceutical companies. Bioanalytical laboratory services are necessary to determine whether a generic drug is equivalent to the branded drug facing patent expiration. Furthermore, drug development services companies that are able to provide bioanalytical laboratory services typically are able to attract the Phase I clinical trials work associated with the generic drug candidate. Expand into New Areas of Therapeutic Expertise. We believe that we are better able to serve our clients' needs by offering therapeutic expertise in addition to our core offering of drug development services. We have experience in a -10- number of therapeutic areas, which we believe enables us to grow our revenues from existing clients and generate new business. We plan to continue adding expertise in our existing therapeutic areas and developing new areas of expertise by hiring experienced personnel, training our existing staff in new areas, and selectively making strategic acquisitions. Pursue Strategic Acquisitions. We have grown significantly by acquiring and integrating related businesses over the last two years. Our four acquisitions have broadened our range of services, strengthened our management team and expanded our client base. Our industry is highly fragmented and includes a large number of small competitors that have expertise in different business segments. As part of our growth strategy, we monitor acquisition opportunities. We intend to selectively acquire other drug development services companies to enhance and improve the level and range of services we provide our clients. Our Services We believe our specialized drug development services assist our clients in managing their research and development programs efficiently and cost effectively through the drug development process. Phase I and Phase II Clinical Trials Services. We provide specialized drug development services for studies ranging from short-term Phase I trials to longer-term Phase II trials. Our services include developing study design, recruiting and screening study participants, conducting Phase I and II clinical trials, and collecting and reporting to our clients the clinical data collected during the course of our clinical trials. We conduct Phase I and II clinical trials at our Miami and Ft. Myers, Florida and Quebec City and Montreal, Quebec locations. We assist our clients in preparing the study protocol, designing case report forms and conducting any necessary clinical trial audit functions. Additionally, we collect data throughout a clinical trial and enter it onto case report forms according to good clinical practice guidelines, in order to meet our clients' needs and the FDA or other regulatory requirements identified in the study protocol. Our data management services also provide our clients with statistical analysis, medical report writing and assistance with regulatory submissions. Bioanalytical Laboratory Services. We provide bioanalytical laboratory services through good laboratory practice compliant facilities located in Quebec City, Quebec and North Wales, Pennsylvania. Our bioanalytical laboratories have or develop the scientific methods, or assays, necessary to analyze clinical trial -11- samples. Our bioanalytical laboratories provide bioanalytical support for preclinical studies, bioavailability and drug metabolism studies, processing clinical study samples and drug interaction studies. During the clinical trial process, we conduct laboratory analysis on various biological specimens, including blood, to determine the quantity of a drug present in each specimen. We format and present the data resulting from this process to our clients for their use and interpretation. Clinical Trials Management Services. Through our SFBC Charlotte, Inc. subsidiary, we provide specialized Phase II through IV clinical management services focused on ophthalmology, dermatology, respiratory, women's health, medical device, infectious disease and central nervous system clinical trials. We offer our clients the following integrated services: . project design; . study design; . data management; and . study monitoring. Study monitoring for Phase III clinical studies involves a high degree of logistical coordination as larger Phase III studies can involve hundreds of investigative sites, including hospitals, clinics and doctors' offices, located across the country. Our study monitoring services include: . investigative site selection; . qualified study participant recruitment; . investigator recruitment; and . auditing and quality assurance. Clients and Marketing Our clients are leading pharmaceutical and biotechnology companies. With our recent acquisition of Anapharm, we now serve many leading generic manufacturers. Since our inception, we have developed a strong reputation for customer service and have cultivated relationships with key decision makers within our clients' organizations. We focus on meeting or exceeding our clients' expectations and we believe that this has been a leading factor in generating repeat business from our clients. Each of our pharmaceutical and biotechnology company clients represents multiple sources of business for us since there are usually a number -12- of therapeutic specialty or other groups that contract separately for services within one client company. The decision by one group to award a contract to us generally is made independently of decisions made by other groups within the same client. We employ a team of sales and marketing professionals who market our services to pharmaceutical and biotechnology companies across the country. Additionally, members of our senior management play a very active role in managing our relationships with existing clients and in helping to generate business from new clients. The mix of our clients and revenues generated from individual clients varies from year-to-year. As is typical in our industry, various clients have comprised more than 10% of our revenues in prior years. In 2000, no client accounted for more than 10% of our revenues. For the 12 months ended December 31, 2001, one of the top 25 pharmaceutical companies in the United States accounted for more than 10% of our revenues. Our Competitors The drug development services industry is highly fragmented and is comprised of a number of large, full-service drug development services companies and many small companies and limited service providers. Our major competitors in this industry include the research departments of pharmaceutical and biotechnology companies, drug development services companies including, Quintiles Transnational, Covance, PPD and MDS Pharma, and the research departments of universities and teaching hospitals. We compete in the Phase I and Phase II portion of the business on the basis of our ability to recruit special populations and conduct large trials at one location, our experience in targeted therapeutic areas, and our high quality personalized service. Our Phase III clinical trials management business competes by specializing in ophthalmology, dermatology and central nervous system clinical trials. Our bioanalytical laboratories compete primarily through the development of validated assays. The availability of these assays represents the best tool to sell our services to manufacturers, especially generic manufacturers conducting bioequivalence studies. In order to better attract generic business these assays are often developed in a proactive way even before the generic clients need it. Our major competitors in this area are MDS Pharma and PPD. Many of our competitors are larger and have substantially greater financial, human, and other resources than we do. Generally, drug development services companies principally compete on the basis of following factors: . the ability to recruit doctors and special population participants for clinical trials; . medical and scientific expertise in specific therapeutic areas; . the quality of their services; . the range of services they provide; -13- . the ability to organize and manage large-scale trials; and . financial stability. The general trend toward consolidation in our industry has resulted in increased competition for clients. Consolidation within the pharmaceutical and biotechnology industries as well as the trend by the pharmaceutical and biotechnology industries to limit outsourcing to fewer rather than more drug development services companies has also heightened competition for contracts in our industry. Indemnification and Insurance We manage our risk of liability for personal injury or death to clinical trials participants by obtaining contractual indemnification provisions from our clients and maintaining insurance. The contractual indemnifications generally do not protect us against our own negligence. Our contractual arrangements are subject to negotiation with clients and the terms and scope of such indemnification vary by client and by clinical trial. Although most of our clients are large, well-capitalized companies, the financial performance of these indemnities is not secured. Therefore, we bear the risk that an indemnifying party may not have the financial ability to fulfill its indemnification obligations. We could be materially adversely affected if we were required to pay damages or incur defense costs in connection with a claim that is not covered by an indemnification provision or beyond the scope or level of insurance coverage maintained by a client or by us or where the indemnifying party does not fulfill its indemnification obligations. We cannot assure you that our insurance coverage will be adequate, or that insurance coverage will continue to be available on terms acceptable to us. Government Regulation All phases of a clinical trial are governed by extensive FDA regulations as well as other regulatory agencies including Health Canada and EMEA from Europe. Our clients are responsible for selecting qualified drug development services companies, providing those companies with study protocols, monitoring the clinical trials, reporting any changes or modification of the clinical trials to the FDA or other regulatory agency, and reporting any serious and unexpected adverse reaction to the new drug to the regulatory agency. In the course of providing our drug development services, we must comply with regulatory requirements. Our services are subject to various regulatory requirements designed to ensure the quality and integrity of the clinical trials process. The industry standard for conducting clinical research and development studies is contained in regulations established for good clinical practice. The FDA requires that the results submitted to it be based on studies conducted according to these regulations. The regulations address the following: . selecting qualified investigators and sites; -14- . obtaining specific written commitments from investigators; . verifying that informed consent is obtained from participants; . monitoring the validity and accuracy of data; . verifying that we account for the drugs provided to us by our clients; and . instructing investigators to maintain records and reports. Failure to comply with these regulations can result in the disqualification of all data collected during the clinical trials. We may be subject to regulatory action if we fail to comply with these rules. Additionally, because we frequently deal with contaminated or hazardous medical waste material, we must comply with environmental regulations of the federal, state, and local governments regarding disposal of these materials. We contract with an outside licensed company to handle our waste disposal and rely on their compliance with the rules for proper disposal. Because we use narcotic drugs and other controlled substances in some of our clinical trials, we are required to have a license from the United States Drug Enforcement Administration. We also must use special care and security procedures to safeguard and account for all controlled substances. We are in material compliance with all federal, state, and local regulations. Employees At March 29, 2002, we had approximately 583 full-time and 71 part-time employees including approximately 400 in Canada. None of our employees are subject to a collective bargaining agreement. We believe that our relations with our employees are good. Our History We are a Delaware corporation organized in 1999 when we acquired our predecessor that was a Florida corporation, which commenced providing drug development services in Miami, Florida in 1984. We have grown rapidly both internally and through strategic acquisitions of related businesses, which broaden our range of services. These acquisitions have been: . Our March 2000 acquisition of our Charlotte, North Carolina clinical trials management business; . Our February 2001 acquisition of our Ft. Myers, Florida Phase I and II clinical trials facility; -15- . Our August 2001 acquisition of our first bioanalytical laboratory located in North Wales, Pennsylvania; and . Our March 2002 acquisition of Anapharm, a Quebec City, Quebec based provider of Phase I clinical trials and bioanalytical laboratory services. Item 2. Description of Property. We operate a 73,000 square foot 500-bed inpatient/outpatient facility in Miami, Florida. We have a 10-year lease expiring in 2011 with a monthly base rent of $50,000 with built in annual escalation clauses. In December 2001 we opened a central clinical laboratory that occupies part of the first floor of the building. The metropolitan Miami region provides us with access to over 5,000,000 people from which we can recruit our testing participants. We are required to utilize substantial equipment and impose extensive controls upon our test subjects in order to conduct our operations properly. Our medical technology and equipment includes cardiac telemetry, bicycles, computerized electrocardiograms, holter monitors, intravenous infusion pumps, exercise treadmills, ambulatory blood pressure monitors, and synchronized digital clocks. Meals for our participants are under the supervision of a certified dietician and are prepared on-site. Our food service system allows us to offer special diets when required by the guidelines set by our clients and also to perform food effects studies. SFBC Charlotte leases approximately 4,575 square feet at a rate of approximately $6,600 per month. The lease expires January 31, 2004. SFBC Ft. Myers leases approximately 6,100 square feet, where it operates a 48-bed facility in Ft. Myers, Florida. The leases expire in November and December 2005. The base monthly rent for this facility is $6,955. SFBC, Ft. Myers plans to move to a larger facility in 2002, which will permit it to expand to 100 beds. SFBC Ft. Myers plans to then sublease the current facility. SFBC Ft. Myers also has a one year lease expiring in September 2002 for approximately 2,300 square feet of office space in Tampa, Florida, for which its pays $2,450 per month. In March 2002 we entered into a new five-year lease for approximately 8,000 square feet for our North Wales, Pennsylvania bioanalytical laboratory with a monthly base rent of $4,160. Previously this facility had leased approximately 4,000 square feet rented on a month-to-month basis. Our Quebec City, Canada Phase I facility and bioanalytical laboratory occupies 57,700 square feet. The lease expires in May 2006. Anapharm's monthly base rent is $42,850. Our Montreal, Canada Phase I facility leases approximately 24,500 square feet. The lease expires in March 2008. It plans to lease additional space this year. Anapharm's monthly base rent is $21,800 -16- Our Trois -Rivieres, Canada recruitment center occupies approximately 2,500 square feet. The lease expires in March 2003. Anapharm's monthly base rent is $989. Item 3. Legal Proceedings. We are not a party to any material litigation. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote for our security holders during the fourth quarter of the year ended December 31, 2001. PART II Item 5. Market for Common Equity and Related Stockholder Matters. Market Information The following table sets forth, for the periods indicated, the range of quarterly high and low closing representative market prices for our common stock which has traded on the Nasdaq National Market system under the symbol "SFCC" since June 19, 2001 and which previously traded on the American Stock Exchange under the symbol "SFC" since its original listing on October 11, 2000 through June 18, 2001.
High Low Common Stock - --------------------- First Quarter 2002 $25.60/1/ $16.54 Fourth Quarter 2001 $21.48 $15.00 Third Quarter 2001 $34.00 $12.99 Second Quarter 2001 $29.00 $ 9.00 First Quarter 2001 $ 9.15 $ 3.68 Fourth Quarter 2000 $ 7.68 $ 4.00
Holders As of March 23, 2002, there were approximately 66 registered holders of record of our common stock. We believe that there are more than 1,236 beneficial owners of our common stock. Dividend Policy We have never paid cash dividends on our common stock. Payment of dividends is within the discretion of board of directors and will depend upon our earnings, capital requirements and operating and financial condition. Currently, we intend to follow a policy of retaining future earnings in order to finance the growth and development of our business. ___________________________ /1/ As of March 26, 2002. -17- Sales of Unregistered Securities for the year ended December 31, 2001. During 2001, the following persons and entities acquired shares of stock and other securities from us as set forth in the table below. We issued shares of our common stock to the following individuals upon exercise of options or warrants, with the exception of the issuance to Nick P. Tootle as a bonus, in reliance on the exemption provided in Section 4(2) of the Securities Act of 1933:
Number of Date Name Shares Consideration - ----------------- ------------------------ ----------- --------------------- April 24, 2001 Nick P. Tootle 5,556 Signing Bonus May 11, 2001 Howard Fogelsong 1,772 $14,176 Warrant Exercise May 17, 2001 Edith Marion 3,476 Cashless Warrant Exercise May 24, 2001 George Gessner 4,166 $23,433.75 Stock Option Exercise June 1, 2001 Patrick Murphy, M.D. 6,929 Cashless Warrant Exercise June 8, 2001 Rudolph Dickson 2,667 Cashless Warrant Exercise June 11, 2001 Margaret Miller Trust 5,682 Cashless Warrant Exercise June 22, 2001 Dennis Hieronymus 1,935 Cashless Warrant Exercise June 22, 2001 Maurice and Mary 2,878 Cashless Baldwin, Trustees Warrant Exercise June 26, 2001 Philip and Linda Magyar 2,450 Cashless Warrant Exercise June 28, 2001 Norman Cloutier 1,178 Cashless Warrant Exercise July 2, 2001 James Williams 11,886 Cashless Warrant Exercise
-18-
Number of Date Name Shares Consideration - ----------------- ------------------------ ----------- -------------------- July 3, 2001 Roland Boone 4,252 Cashless Warrant Exercise July 3, 2001 Robert Dible 3,988 Cashless Warrant Exercise July 5, 2001 Margaret R. Greene 2,070 Cashless Warrant Exercise July 5, 2001 Jay L. Rentzel 15,947 Cashless Warrant Exercise July 5, 2001 William Havel 2,761 Cashless Warrant Exercise July 5, 2001 Hilda S. Davis 3,218 Cashless Warrant Exercise July 5, 2001 Robert Reynoldson 3,727 Cashless Warrant Exercise July 5, 2001 Robert Wawrousek 23,398 Cashless Warrant Exercise July 6, 2001 Kurt H. Knecht 10,833 Cashless Warrant Exercise July 6, 2001 Edmond W. Gardiner 1,191 Cashless Warrant Exercise July 23, 2001 Roscoe M. Smith 1,592 Cashless Warrant Exercise October 12, 2001 Raymond Zuczuski 1,770 Cashless Warrant Exercise December 17, 2001 Dr. Gregory B. Holmes 50,000 $62,500 Stock Option Exercise December 31, 2001 Dr. Gregory B. Holmes 20,000 $25,000 Stock Option Exercise
On August 20, 2001, we issued shares of our common stock to the following individuals in connection with the merger of KeyStone Analytical Laboratories, Inc. into SFBC Analytical Laboratories, Inc. As consideration for these shares of common stock, the persons below surrendered shares of common stock in KeyStone Analytical Laboratories. These shares were sold in reliance on the exemption provided in Section 4(2) of the Securities Act of 1933 and Rule 506 thereunder. -19-
Number of -------- Name Shares - ---- -------- Allan Xu, Ph.D.................. 132,986 Carl Kwan-Hsi Chiou............. 13,861 Shang-Jaw Chiou................. 13,861 Je-Min Charles Hsu.............. 6,931 Miao-Hsun L. Sheng.............. 6,931 Christine K. Chiou.............. 3,465
Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion of our financial condition and results of operations should be read together with the financial statements and related Notes included in this Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in those forward-looking statements as a result of certain factors, including but not limited to, those contained in the discussion on forward-looking statements that follows this section and those contained in "Special Factors Relating to Our Business and Common Stock". Critical Accounting Policies Our accounting policies are more fully described in Note A of the Notes to the Consolidated Financial Statements. As disclosed therein, the preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that effect the amounts the amounts reported in the financial statements and accompanying Notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results may differ from those estimates and such differences may be material to the financial statements. The most significant accounting estimate inherent in the preparation of SFBC's financial statements includes estimates associated with the percentage- of-completion method for revenue recognition, management's evaluation of the recoverability of goodwill as well as those used in the determination of reserves with respect to collectibility of accounts receivable and future contract changes. Various assumptions and other factors underlie the determination of these significant estimates. The process of determining significant estimates is fact specific and takes into account factors such as historical expenses, as well as current and expected economic conditions. We constantly re-evaluate these significant factors and make adjustments where facts and circumstances dictate. See the "New Accounting Pronouncements" included in this report for information regarding the effects of the adoption of SFAS 142 "Goodwill and Other Intangible Assets" which could be material. -20- Overview SFBC is a contract research organization that provides specialized drug development services primarily in the areas of Phase I and Phase II clinical trials and bioanalytical laboratory services. The Company has experienced significant internal growth due to expanding demand for our services, and it has also grown through significant acquisitions in 2000 and 2001. See Note K to the consolidated financial statements for further information on business combinations. Historically, a majority of the Company's net revenues have been earned under contracts, which range in duration from several months to two years. Operating expenses consist of direct costs and selling, general and administrative. Direct costs consist of labor and occupancy costs directly related to provide the contract services and can fluctuate from one period to another as a result of changes in labor utilization and mix of services. Selling, general and administrative costs include promotional costs, travel, professional fees, administrative occupancy costs and various items. Results of Operations Our net revenues were $31,470,528 for the year ended December 31, 2001, which is an increase of 59.8% from $19,694,428 for the prior year. The increase is due to a full year of sales for our Charlotte subsidiary as well as sales from SFBC Analytical Laboratories since August 20, 2001 and significant internal growth at SFBC's Miami facility. Our gross profit margins increased to 42.3% for 2001 from approximately 39.0% in 2000. The increase is attributable to our increase in revenues, a variance in our mix of contracts, and due to the gross margin contribution from SFBC Analytical Laboratories. Our selling, general, and administrative expenses increased from $4,252,033 in 2000 to $7,756,126 in 2001. The primary expense increases were due to the expansion of our business, our increased marketing and our public company status. As a percentage of net revenue, selling, general and administration expense increased from 21.6 % in 2000 to 24.0% in 2001. Due to the adoption of SFAS 142 on January 1, 2002 annual goodwill amortization of $135,000 per year will be discontinued. As the result of our growth in 2001, our net income before taxes increased to $6,095,582 from $3,392,837 in 2000. Our net income after provision for income taxes increased in 2001 to $3,819,468 from $2,050,837 in 2000. On a per share basis, our after tax net income in 2001 increased to $.94 (basic) and $.81 (diluted) from $.78 and $.76 in 2000 respectively. Under the terms of the employment agreements of SFBC's chairman, and SFBC's chief executive officer, they are entitled to annual bonuses of 5% and 3%, respectively, of SFBC's audited pre-tax income. This would have amounted to combined bonuses payable of $492,447 for 2001. Both the chairman and the chief executive officer voluntarily agreed to reduce their combined bonuses payable to a total of $60,000. -21- On March 18, 2002, we purchased 100% of Anapharm. For its fiscal year ended April 30, 2001, Anapharm recorded approximately $2.4 million of net income excluding foreign exchange gains, rebates and tax credits not available to a foreign acquirer. Effective March 18, 2002, SFBC began including Anapharm's operations in its consolidated net income. The weighted average number of outstanding shares increased substantially as the result of the October 2000 initial public offering, our December 2001 secondary offering, and an increase in our stock price and its impact on outstanding options and warrants. Almost all of our publicly traded warrants were exercised last summer. In December 2001, we sold 2,000,000 additional shares of common stock through Raymond James & Associates, Inc. Liquidity and Capital Resources For 2001, net cash provided by operating activities was $3,645,659 in contrast to $371,488 of net cash used in operations in 2000. The change is primarily due to the substantial increase in net income resulting from the growth of our business in 2001. For 2001 and 2000, net cash provided by financing activities was $35,994,570 and $7,675,223 respectively. The increase resulted primarily from our receipt of public offering proceeds of $29,590,291 in 2001. We also received $6,831,808 from the exercise of warrants and stock options in 2001. During 2001 and 2000, we used $7,324,693 and $804,417 respectively for investing activities. The increase was primarily due to our use of existing cash to acquire SFBC Ft. Myers and SFBC Analytical Laboratories. In addition, we incurred approximately $3,000,000 of capital expenditures in 2001. For its fiscal year ended April 30, 2002, Anapharm had cash flow of approximately $4 million. Anapharm expects to have significant capital needs during the next two years. As part of its plan to enhance its business potential, Anapharm intends to acquire at least $2 million of capital equipment. The Company believes that Anapharm's cash flows from operations will be sufficient to fund these capital requirements. On October 16, 2000, we completed our initial public offering and realized net proceeds of approximately $8,270,000. Of the net proceeds, we have used to date $385,000 to pay off our minority stockholders' notes and approximately $288,000 for working capital. We used $627,000 including transaction costs to complete the acquisition of SFBC Ft. Myers and $3,300,000 of cash to acquire SFBC Analytical Laboratories. On December 18, 2001, we closed our secondary offering referred to above and received $29,590,201 of net proceeds. On March 18, 2002, we used approximately $26.7 million of our cash balances (a portion of which came from our initial public offering thus completing the use of our initial public offering proceeds), excluding transaction costs to purchase Anapharm. At March 23, 2001, we had approximately $14,900,000 in cash on hand. Based upon our cash balances and our positive cash flows from operations, we believe we have more than -22- enough working capital to meet our operational needs within the next 12 months. We intend to obtain a line of credit to enable us to complete future acquisitions without using a majority of our on hand cash balances. Except for the possibility of issuing stock related to a potential accretive acquisition, should one arise, we do not anticipate selling any of our common stock during 2002. New Accounting Pronouncements In July 2001, the FASB issued Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141") and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 141 requires all business combinations to be accounted for using the purchase method of accounting and is effective for all business combinations initiated after June 30, 2001. SFAS 142 requires goodwill to be tested for impairment under certain circumstances, and written off when impaired, rather than being amortized as previous standards required. SFAS 142 is effective for fiscal years beginning after December 15, 2001. The Company applied SFAS 141 to its purchase of Keystone Analytical Laboratories, Inc. in August 2001 (See Note K). The Company adopted SFAS 142 effective January 1, 2002, as required. Annual goodwill amortization of approximately $135,000 will be discontinued, and amortization of newly recognized amortizable intangibles, if any, will commence on January 1, 2002. The Company will perform a transitional fair value based impairment test, and if the fair value is less than the recorded value at January 1, 2002, the impairment loss, if any, could be significant and will be reflected as a cumulative effect of a change in accounting principle in the first quarter of 2002. In August 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 144 retained substantially all of the requirements of SFAS No. 121 while resolving certain implementation issues. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. Management believes the impact of this pronouncement on its operations, if any, will not be material. Forward-Looking Statements The statements in this Report relating to our expectations about the possibility of consummation of acquisitions contemplated by us, the growing market for contract research organizations, the trend towards contract research organization consolidation and the industry requiring more trial data, the changing mix of client concentration as it relates to our lack of dependence on any one client, the growth of our Phase III business, the expansion of capacity at -23- several of our facilities, the increased usage of the new clinical laboratory in Miami, the growth of revenues from existing clients, the funding of potential future acquisitions without the selling of any of our common stock, the continuing cost advantages of our Miami facility, the adequacy of our working capital and liquidity to fund operations, new capital expenditures and future acquisitions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Additionally, words such as "expects", "anticipates", "intends", "believes", "will" and similar words are used to identify forward-looking statements within the meaning of the Act. The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include (1) an unanticipated decision to make an acquisition of a substantially larger competitor, which would require us to re-allocate our intended uses of our cash resources; (2) our ability to successfully implement our plans for operational and geographical expansion; (3) our ability to successfully achieve and manage the technical requirements of specialized clinical trial services, while maintaining compliance with applicable rules and regulations; (4) our ability to compete nationally in attracting pharmaceutical companies in order to develop additional business; (5) our continued ability to recruit participants for clinical studies; (6) the economic climate nationally and internationally as it affects drug development operations, (7) our ability to integrate and absorb any acquisitions into our current operational structure, (8) our ability to maintain our Miami subsidiary's cost structure proportional to revenues, and (9) our ability to obtain an acquisition line of credit with a financial institution to fund potential acquisitions. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. For more information regarding some of the ongoing risks and uncertainties of our business, see our other filings with the Securities and Exchange Commission. Special Factors Relating to Our Business and Common Stock Our business and common stock are subject to a number of risks including those disclosed below. We rely on a limited number of clients for a large percentage of our revenues, which means that we face a greater risk of loss of revenues if we lose a client, which provides a material amount of revenues. Historically, we have relied on a small number of clients to generate a large percentage of our revenues. Last year one client comprised more than 10% of our revenues. Companies that comprise our largest clients vary from year to year, and our revenues from individual clients fluctuate each year. If we lose one or more major clients, our business, prospects, financial condition and results of operations could be materially and adversely affected. -24- Our clients may cancel or delay our contracts, which could reduce our future revenues and result in operating losses. Our clients may cancel or delay our contracts at any time for no reason. They also may cancel a clinical trial for a variety of reasons, including: . manufacturing problems resulting in a shortage or unavailability of the drug we are testing; . a decision by a client to de-emphasize or cancel the development of a drug; . unexpected clinical trial results; . adverse participant reaction to a drug; . a request by the FDA; and . inadequate participant enrollment. The loss or delay of a large project or contract or the loss or delay of multiple small contracts could have a material adverse effect on our business and future results of operations. If we cannot manage our growth effectively, we may not continue to operate at the same levels of profitability, and our growth may slow and our profitability may decline. We have grown rapidly since 1998. Businesses, which grow rapidly often, have difficulty managing their growth. Although we have expanded our management, we will have to continue recruiting and employing experienced executives and key employees capable of providing the necessary support. We cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet these challenges could cause us to lose money. Because of our acquisition strategy, our future results of operations may be adversely affected. One important aspect of our growth strategy is to pursue strategic acquisitions of related companies that expand or compliment our business. We cannot assure you that: . we will identify suitable acquisition candidates; . we can consummate acquisitions on acceptable terms; . we can successfully integrate any acquired companies into our operations; or -25- . we will be able to retain an acquired company's significant client relationships and key personnel or otherwise realize the intended benefits of any acquisition. Any future acquisition could require significant capital resources and divert management's attention from our existing business. We may incur liabilities associated with acquisitions that may not have been known at the time of acquisition. Acquisitions may create unanticipated tax and accounting problems. Failure to successfully accomplish future acquisitions could limit our revenues and earnings potential. We depend on the drug development programs of our clients and a change in these programs, which are beyond our control, can adversely affect our business. Most of our contracts are short term. As a result, we must continually replace our existing contracts with new contracts to sustain our revenues. A client's drug development program is the driving force in our ability to initiate new contracts. In addition, a client may cancel or delay existing contracts if its drug is not ready for testing or if the test results are unsatisfactory. All of these factors are beyond our control. If we are unable to generate new contracts on a timely basis this would have a material adverse effect on our business, financial condition, and results of operations. In addition, since a large portion of our operating costs are relatively fixed, variations in the timing and progress of contracts can materially affect our results. If pharmaceutical and biotechnology companies reduce their expenditures, our future revenues may be reduced. Our business and continued expansion depend on the research and development expenditures of our clients. If these companies want to reduce costs, they may proceed with fewer clinical trials. An economic downturn or other factors may cause our clients to decrease their research and development expenditures, which would adversely affect our future revenues. We are subject to changes in outsourcing trends in the pharmaceutical and biotechnology industries, which could adversely affect our operating results. Economic factors and industry trends that affect our primary clients, pharmaceutical and biotechnology companies, also affect our business and operating results. If these industries reduce the outsourcing of their clinical research projects, our operations will be affected adversely. A continuing negative trend would have an ongoing adverse effect on our business. We cannot predict the likelihood of any of these events or the effects they would have on our business, results of operations or financial condition. If we lose the services of our key personnel or are unable to attract qualified staff, our business could be adversely affected. -26- Our success is substantially dependent upon the performance, contributions and expertise of our senior management team. In addition, we depend on our ability to attract and retain qualified management, professional and operating staff. The departure of any of the members of senior management, or any other key executive, or our inability to continue to attract and retain qualified personnel could have a material adverse effect on our business. Because we are significantly smaller than our largest competitors, we may lack the financial resources needed to compete effectively. There are a large number of drug development services companies ranging in size from one-person firms to full service, global drug development corporations. It is easy for a new company to enter our industry. Intense competition may lead to price pressure or other conditions that could adversely affect our business. Many of our competitors are substantially larger than us and have greater resources. We may lack the operating and financial resources needed to compete effectively. We risk potential liability when conducting clinical trials, which could cost us large amounts of money. Our clinical trials involve administering drugs to humans in order to determine the effects of the drugs. By doing so, we are subject to the general risks of liability to these persons, which include: . adverse side effects and reactions resulting from administering these drugs to a clinical trial participant; . improper administration of the new drug; or . potential professional malpractice of our employees, including physicians. To protect ourselves, our contracts have indemnification agreements requiring our clients to indemnify us in the event of adverse consequences to our participants caused by their drugs. We also carry liability insurance. However, if there is a damage claim not covered by insurance, the indemnification agreement is not enforceable or broad enough, or our client is insolvent, any resulting award against us could result in our experiencing large losses. If we do not continue to develop new scientific methods, or assays, for our bioanalytical applications, we may be unable to compete with other entities offering bioanalytical laboratory services. We continuously must develop scientific methods to test drug products in order to meet the needs of our clients and attract new clients. In order to substantially increase the business of our -27- bioanalytical laboratories, we must be able to provide solutions for our clients. This requires staying abreast of current regulatory requirements and identifying methods and applications that will assist our clients in obtaining approval for their products. If we are not successful in developing new methods and applications, we may lose our clients. We face a risk of liability from our handling and disposal of medical wastes, which could cause us to lose large amounts of money. Our clinical trial activities involve the controlled disposal of medical wastes, which are considered hazardous materials. However, we cannot completely eliminate the risk of accidental contamination or injury from these materials. If this occurs, we could be held liable for damages, face significant fines, and face the temporary or permanent shutdown of our operations. We are controlled by our management, which means that our management may stop a third party from acquiring us even if it is in the best interests of our stockholders. As of March 23, 2002 our management team beneficially owns approximately 28.3% of our outstanding common stock. As a result, they may be able to exercise control over all matters requiring stockholder approval including the election of directors and approval of significant corporate transactions. Their voting control could have the effect of delaying or preventing a change of control, which might benefit our stockholders. Additionally, management's voting control may depress the future market price of our common stock. We may issue preferred stock without the approval of our stockholders, which could make it more difficult for a third party to acquire us and could depress our stock price. In the future, our board of directors may issue, without a vote of our stockholders, one or more series of preferred stock that has more than one vote per share. This could permit our board of directors to issue preferred stock to investors who support our management and give effective control of our business to our management. Additionally, issuance of preferred stock could block an acquisition resulting in both a drop in the stock price and a decline in interest in the stock, which could make it more difficult for stockholders to sell their shares. This could cause the market price of our common stock to drop significantly, even if our business is performing well. Fluctuations in our operating results may cause our stock price to fall. Historically, our revenues have been higher in the second half of the year. These fluctuations are usually due to the level of new business authorizations in a particular quarter or year and the timing of the initiation, progress, or cancellation of significant projects. We anticipate that this will continue because of the way our clients' budget their research and development expenditures. In addition, we have had some volatility in our quarterly results. Our varying -28- quarterly results may result in the drop of our common stock price if investors react to our reporting operating results, which are less favorable than in a prior quarter. Our stock price can be extremely volatile, and it could suffer a decline in value. The trading price of our common stock has been, and is likely to be, volatile and could be subject to wide fluctuations in price in response to various factors, many of which are beyond our control, including: . actual or anticipated variations in quarterly operating results; . loss of a major client; . new service offerings introduced or announced by our competitors; . changes in financial estimates by securities analysts; . changes in market valuations of other similar companies; . our announcement of significant acquisitions, strategic partnerships, joint ventures or capital commitments; . additions or departures of key personnel; and . sales of our common stock, including short sales and sales by our officers and directors. As a result, investors could lose all or part of their investment. In addition, the stock market in general experiences extreme price and volume fluctuations that are often unrelated and disproportionate to the operating performance of companies. Item 7. Financial Statements. See pages F-1 through F-20 beginning after page 34. Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. On November 16, 2001 we retained Grant Thornton, LLP as our auditors to replace Kaufman, Rosin & Co. to our audit our books and accounts for the fiscal year ending December 31, 2001. Our board of directors and its Audit Committee approved the decision to change independent accountants. -29- The reports of Kaufman Rossin on our consolidated financial statements for the two fiscal years ended December 31, 2000 contain no adverse opinion or disclaimer of opinion and were not qualified or modified as to any uncertainty, audit scope or accounting principle. In connection with the audits for the past two fiscal years and through November 16, 2001, there were no disagreements with Kaufman Rossin on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Kaufman Rossin would have caused the firm to make reference thereto in their reports on the financial statements for such period. During the fiscal years ended December 31, 2000 and 1999 and during subsequent interim periods prior to engaging Grant Thornton, neither us nor any person on our behalf consulted with Grant Thornton regarding the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on SFBC's financial statements. Kaufman Rossin did not inform us of the existence of any reportable events as defined in Regulation S-B. SFBC has authorized Kaufman Rossin to respond fully to any inquiries of Grant Thornton relating to their engagement as the Company's independent accountant. Kaufman Rossin furnished a letter addressed to the Securities Exchange Commission dated November 16, 2001 agreeing with the above statements. A copy of the letter was filed as an Exhibit to our Report on Form 8-K dated November 16, 2001. There were no disagreements with Grant Thornton related to the audit for the year ended 2001. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act. The information required by this Item shall be contained in the proxy statement for the 2002 annual meeting, which shall be filed within 120 days of December 31, 2001. Item 10. Executive Compensation. The information required by this Item shall be contained in the proxy statement for the 2002 annual meeting, which shall be filed within 120 days of December 31, 2001. Item 11. Security Ownership of Certain Beneficial Owners and Management. The information required by this Item shall be contained in the proxy statement for the 2002 annual meeting, which shall be filed within 120 days of December 31, 2001. -30- Item 12. Certain Relationships and Related Transactions. The information required by this Item shall be contained in the proxy statement for the 2002 annual meeting, which shall be filed within 120 days of December 31, 2001. Item 13. Exhibits and Reports on Form 8-K. (a) EXHIBIT INDEX Exhibit Number Description - -------- --------------------------------------------------------------------- 2.1 Agreement and Plan of Merger (SFBC Analytical Laboratories, Inc.)/(6)/ 3.1 Certificate of Incorporation /(1)/ 3.2 First Amendment to Certificate of Incorporation /(1)/ 3.3 Certificate of Correction to Certificate of Incorporation /(2)/ 3.4 Bylaws /(1)/ 3.5 First Amendment to the Bylaws /(2)/ 4.1 Form of Common Stock Certificate /(1)/ 10.1 Employment Agreement of Arnold Hantman /(4)/ 10.2 Employment Agreement of Lisa Krinsky, M.D. /(4)/ 10.3 Employment Agreement of Dr. Gregory Holmes /(1)/ 10.4 Employment Agreement of D. Scott Davis /(4)/ 10.5 Employment Agreement of Dr. Barrie Phillips /(5)/ 10.6 Employment Agreement of David Natan 10.7 Form of Employment Agreement of Marc Lebel 10.8 Form of Employment Agreement of Allan Xu(7) 10.9 Form of Employment Agreement and Addendum thereto of Ray Carr 10.10 Form of Employment Agreement of Thomas Pillsworth 10.11 Second Amended and Restated 1999 Stock Option Plan 10.12 Asset Purchase Agreement (SFBC Charlotte, Inc.)* (2) 10.13 Share Purchase Agreement (Anapharm)** 10.14 Audit Committee Charter (2) 21 Subsidiaries 23.1 Consent of Grant Thornton LLP dated March 29, 2002 23.2 Consent of Kaufman, Rossin & Co dated March 27, 2002 - ---------------- * Confidential Portions have been omitted and filed separately under an application for Confidential Treatment. ** Confidential Portions of the Schedules have been omitted and filed separately under an application for Confidential Treatment. -31- (1) Contained in Form SB-2 filed on August 17, 1999 (2) Contained in Form SB-2 filed on October 5, 2000 (3) Contained in Form SB-2 filed on September 8, 2000 (4) Contained in Form SB-2 filed on July 21, 2000 (5) Contained in Form 10-KSB filed April 13, 2001 (6) Contained in Form 8-KA filed on August 29, 2001 (7) Contained in Exhibit C to the Agreement and Plan of Merger (SFBC Analytical Laboratories, Inc.) which is Exhibit 2.1 to this Form 10-KSB. (b) One Report on Form 8-K was filed during the last quarter of the period covered by this Report. That Report, filed on November 16, 2001, disclosed that we selected Grant Thornton LLP to replace Kauffman, Rossin & Co. as our independent auditors. -32- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 1st day of April, 2002. SFBC International, Inc. By: /s/ Arnold Hantman ------------------ Arnold Hantman, Chief Executive Officer In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Lisa Krinsky, M.D. Chairman of the Board of Directors April 1, 2002 - ---------------------- Lisa Krinsky, M.D. /s/ Arnold Hantman Director April 1, 2002 - ------------------ Arnold Hantman /s/ David Natan Vice President of Finance April 1, 2002 - ---------------- David Natan (Principal Financial Officer) - ----------- /s/ Ramiro Casanas Chief Accounting Officer April 1, 2002 - ------------------ Ramiro Casanas /s/ Jack Levine Director April 1, 2002 - --------------- Jack Levine /s/ Dr. Leonard Weinstein Director April 1, 2002 - ------------------------- Dr. Leonard Weinstein Director April 1, 2002 /s/ William C. Willis, Jr. - -------------------------- William C. Willis, Jr. -33- EXHIBIT INDEX Exhibit Number Description - ------- --------------------------------------------------------------------- 2.1 Agreement and Plan of Merger (SFBC Analytical Laboratories, Inc.)/(6)/ 3.1 Certificate of Incorporation /(1)/ 3.2 First Amendment to Certificate of Incorporation /(1)/ 3.3 Certificate of Correction to Certificate of Incorporation /(2)/ 3.4 Bylaws /(1)/ 3.5 First Amendment to the Bylaws /(2)/ 4.1 Form of Common Stock Certificate /(1)/ 10.1 Employment Agreement of Arnold Hantman /(4)/ 10.2 Employment Agreement of Lisa Krinsky, M.D. /(4)/ 10.3 Employment Agreement of Dr. Gregory Holmes /(1)/ 10.4 Employment Agreement of D. Scott Davis /(4)/ 10.5 Employment Agreement of Dr. Barrie Phillips /(5)/ 10.6 Employment Agreement of David Natan 10.7 Form of Employment Agreement of Marc Lebel 10.8 Form of Employment Agreement of Allan Xu(7) 10.9 Form of Employment Agreement and Addendum thereto of Ray Carr 10.10 Form of Employment Agreement of Thomas Pillsworth 10.11 Second Amended and Restated 1999 Stock Option Plan 10.12 Asset Purchase Agreement (SFBC Charlotte, Inc.)* (2) 10.13 Share Purchase Agreement (Anapharm)** 10.14 Audit Committee Charter (2) 21 Subsidiaries 23.1 Consent of Grant Thornton LLP dated March 29, 2002 23.2 Consent of Kaufman, Rossin & Co dated March 27, 2002 - ---------------- * Confidential Portions have been omitted and filed separately under an application for Confidential Treatment. ** Confidential Portions of the Schedules have been omitted and filed separately under an application for Confidential Treatment. (1) Contained in Form SB-2 filed on August 17, 1999 (2) Contained in Form SB-2 filed on October 5, 2000 (3) Contained in Form SB-2 filed on September 8, 2000 (4) Contained in Form SB-2 filed on July 21, 2000 (5) Contained in Form 10-KSB filed April 13, 2001 (6) Contained in Form 8-KA filed on August 29, 2001 (7) Contained in Exhibit C to the Agreement and Plan of Merger (SFBC Analytical Laboratories, Inc.) which is Exhibit 2.1 to this Form 10-KSB. -34- CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS SFBC INTERNATIONAL, INC. AND SUBSIDIARIES December 31, 2001 and 2000 CONTENTS
Page ---- REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS......................... F-2 INDEPENDENT AUDITORS REPORT................................................ F-3 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS.............................................. F-4 CONSOLIDATED STATEMENTS OF EARNINGS...................................... F-5 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY................ F-6 CONSOLIDATED STATEMENTS OF CASH FLOWS.................................... F-7 - F-8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................... F-9 - F-20
F-1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors SFBC International, Inc. We have audited the accompanying consolidated balance sheet of SFBC International, Inc. and Subsidiaries as of December 31, 2001, and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of SFBC International, Inc. and Subsidiaries as of December 31, 2001 and the consolidated results of their operations and their consolidated cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Grant Thornton LLP Miami, Florida February 15, 2002 (except for Note L, as to which the date is March 4, 2002) F-2 INDEPENDENT AUDITORS' REPORT - -------------------------------------------------------------------------------- To the Board of Directors and Stockholders SFBC International, Inc. Miami, Florida We have audited the accompanying consolidated balance sheet of SFBC International, Inc. and Subsidiaries as of December 31, 2000 and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SFBC International, Inc. and Subsidiaries as of December 31, 2000 and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States. /s/ KAUFMAN, ROSSIN & CO. Miami, Florida March 7, 2001 F-3 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31,
2001 2000 ----------- ----------- ASSETS Current assets Cash and cash equivalents............................ $39,103,139 $ 6,787,603 Accounts receivable, net............................. 10,453,729 7,059,419 Note Receivable...................................... -- 209,337 Loans receivable from officers/stockholders (Note D).......................................... 363,517 -- Prepaids and other current assets.................... 289,248 334,832 ----------- ----------- Total current assets.............................. 50,209,633 14,391,191 Loans receivable from officers (Note D)............... 800,000 102,206 Property and equipment, net........................... 3,928,584 568,880 Goodwill, net......................................... 4,483,690 671,471 Other assets (Note A)................................. 1,061,623 35,037 ----------- ----------- Total assets...................................... $60,483,530 $15,768,785 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable..................................... $ 1,538,903 $ 763,690 Accrued liabilities.................................. 1,318,730 1,090,202 Advance billings..................................... 1,483,216 1,590,520 Income taxes payable................................. 1,046,420 372,000 Deferred income taxes................................ 222,713 130,000 Notes payable, current portion ($0 and $136,779 to related parties in 2001 and 2000)................... 7,490 252,423 ----------- ----------- Total current liabilities......................... 5,617,472 4,198,835 Notes payable......................................... 1,248 158,312 Deferred income taxes................................. 233,602 109,000 Commitments........................................... -- -- Stockholders' equity Preferred stock, $0.10 par value, 5,000,000 shares authorized, none issued............................. -- -- Common stock, $0.001 par value; 20,000,000 shares authorized, 6,670,320 and 3,589,642 shares issued and outstanding as of December 31, 2001 and 2000, respectively........................................ 6,670 3,590 Additional paid-in capital........................... 49,913,845 10,345,323 Retained earnings.................................... 4,773,193 953,725 Note receivable--officer............................. (62,500) -- ----------- ----------- Total stockholders' equity........................ 54,631,208 11,302,638 ----------- ----------- Total liabilities and stockholders' equity........ $60,483,530 $15,768,785 =========== ===========
The accompanying notes are an integral part of these statements. F-4 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS For the Years Ended December 31,
2001 2000 ----------- ----------- Net revenue.......................................... $31,470,528 $19,694,428 Costs and expenses Direct costs........................................ 18,150,867 11,996,996 Selling, general and administrative expenses........ 7,556,126 4,252,033 ----------- ----------- Total costs and expenses......................... 25,706,993 16,249,029 Earnings from operations......................... 5,763,535 3,445,399 Other income (expense) Interest income..................................... 359,159 122,908 Interest expense ($12,691 and $142,281 to related parties in 2001 and 2000, respectively)............ (27,112) (175,470) ----------- ----------- Total other income (expense)..................... 332,047 (52,562) ----------- ----------- Earnings before income taxes..................... 6,095,582 3,392,837 Income tax expense................................... 2,276,114 1,342,000 ----------- ----------- Net earnings..................................... $ 3,819,468 $ 2,050,837 =========== =========== Earnings per share: Basic............................................... $ .94 $ 0.78 =========== =========== Diluted............................................. $ .81 $ 0.76 =========== =========== Shares used in computing earnings per share: Basic............................................... 4,073,292 2,614,000 =========== =========== Diluted............................................. 4,739,191 2,706,561 =========== ===========
The accompanying notes are an integral part of this statement. F-5 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For the Years Ended December 31, 2001 and 2000
Common Stock Additional Retained Note -------------------- Paid-In Earnings Receivable-- Shares Par Value Capital (Deficit) Officer Total --------- --------- ----------- ----------- ------------ ----------- Balances--January 1, 2000................... 2,335,736 $2,336 $ 1,880,756 $(1,097,112) $ -- $ 785,980 Common stock options issued as compensation........... -- -- 170,000 -- -- 170,000 Conversion of debt to common stock........... 3,906 4 24,999 -- -- 25,003 Proceeds from initial public offering........ 1,250,000 1,250 10,155,000 -- -- 10,156,250 Offering costs.......... -- -- (1,885,432) -- -- (1,885,432) Net earnings............ -- -- -- 2,050,837 -- 2,050,837 --------- ------ ----------- ----------- -------- ----------- Balances-- December 31, 2000...... 3,589,642 3,590 10,345,323 953,725 -- 11,302,638 Common stock options issued as compensation........... -- -- 170,000 -- -- 170,000 Exercise of stock options and warrants... 899,087 899 6,893,409 -- -- 6,894,308 Issuance of common stock for services..... 5,556 5 37,494 -- -- 37,499 Common stock issued-- Keystone acquisition... 178,035 178 2,574,264 -- -- 2,574,442 Repurchase of common stock.................. (2,000) (2) (25,530) -- -- (25,532) Proceeds from public offering............... 2,000,000 2,000 32,498,000 -- -- 32,500,000 Offering costs.......... -- -- (2,909,709) -- -- (2,909,709) Tax benefit resulting from exercise of stock options................ -- -- 330,594 -- -- 330,594 Note receivable-- officer................ -- -- -- -- (62,500) (62,500) Net earnings............ -- -- -- 3,819,468 -- 3,819,468 --------- ------ ----------- ----------- -------- ----------- Balances-- December 31, 2001...... 6,670,320 $6,670 $49,913,845 $ 4,773,193 $(62,500) $54,631,208 ========= ====== =========== =========== ======== ===========
The accompanying notes are an integral part of this statement. F-6 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31,
2001 2000 ----------- ---------- Cash flows from operating activities Net earnings......................................... $ 3,819,468 $2,050,837 Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: Depreciation and amortization...................... 593,502 175,453 Provisions for bad debt............................ 48,439 7,511 Common stock options issued as compensation........ 170,000 170,000 Issuance of common stock for services.............. 37,499 -- Tax benefit resulting from exercise of stock options........................................... 330,594 -- Changes in assets and liabilities Accounts receivable............................... (985,472) (4,140,049) Prepaid expenses.................................. 51,532 (272,442) Other assets...................................... (397,714) 57,029 Accounts payable.................................. 88,906 228,749 Accrued liabilities............................... (122,856) 863,889 Accrued interest.................................. -- (132,120) Advance billings.................................. (107,304) 418,655 Income taxes payable.............................. 600,348 372,000 Deferred income taxes............................. (481,283) (171,000) ----------- ---------- Total adjustments............................... (173,809) (2,422,325) ----------- ---------- Net cash provided by (used in) operating activities..................................... 3,645,659 (371,488) ----------- ---------- Cash flows from investing activities Cash consideration-acquisitions, net of cash acquired............................................ (3,378,552) (216,311) Purchase of property and equipment................... (3,002,338) (369,528) Loans to officers/stockholders....................... (1,000,000) (9,241) Repayment on loans to officers/stockholders.......... 56,197 -- Issuance of note receivable.......................... -- (209,337) ----------- ---------- Net cash used in investing activities........... (7,324,693) (804,417) ----------- ---------- Cash flows from financing activities Net proceeds of notes payable--insurance............. -- 56,242 Principal payments on notes payable--purchase of assets.............................................. (43,521) (456,479) Principal payments on notes payable.................. (358,476) (190,828) Payments on capital lease obligations................ -- (19,409) Net increase in notes payable--transportation equipment........................................... -- 14,879 Net proceeds from initial public offering............ -- 8,270,818 Repurchase of common stock........................... (25,532) -- Exercise of stock options and warrants, net.......... 6,831,808 -- Net proceeds from secondary public offering.......... 29,590,291 -- ----------- ---------- Net cash provided by financing activities....... 35,994,570 7,675,223 ----------- ---------- Net increase in cash and cash equivalents............. 32,315,536 6,499,318 Cash and cash equivalents at beginning of period...... 6,787,603 288,285 ----------- ---------- Cash and cash equivalents at end of period............ $39,103,139 $6,787,603 =========== ==========
(continued) F-7 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued) For the Years Ended December 31,
2001 2000 ---------- ---------- Supplemental disclosures: Interest paid........................................... $ 27,112 $ 300,840 Income taxes paid....................................... $1,388,275 $1,141,000 Supplemental disclosures of non-cash investing and financing activities: Fair value of net liabilities assumed in connection with acquisition of businesses.............................. $1,735,041 $ 154,260 178,035 shares of common stock issued in connections with acquisition of business........................... $2,574,442 $ -- Note payable issued in connection with acquisition of business............................................... $ -- $ 150,000 Professional fees accrued in connection with acquisition of business............................................ $ -- $ 125,913 Reduction of long-term debt in connection with the issuance of 3,906 shares of common stock............... $ -- $ 25,003 Common stock options issued as compensation............. $ 170,000 $ 170,000 Common stock issued for services........................ $ 37,499 $ -- Issuance of common stock for note receivable............ $ 62,500 $ -- Note receivable relieved in connection with acquisition of business............................................ $ 209,337 $ --
The accompanying notes are an integral part of these statements. F-8 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2001 and 2000 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company is a contract research organization with locations in Miami, Florida, Charlotte, North Carolina, Fort Myers, Florida and North Wales, Pennsylvania. The Company provides clinical research, bioanalytical laboratory services and drug development services to pharmaceutical and biotechnology companies and manages clinical trials at multiple sites involving ophthalmology, dermatology and generic drug testing. A majority of the Company's clients are companies based throughout the United States. A summary of the Company's significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows: Principles of Consolidation and Organization The consolidated financial statements include the accounts of SFBC International, Inc. and its wholly-owned subsidiaries South Florida Kinetics, Inc. SFBC Charlotte, Inc. f/k/a SFBC/Pharmaceutical Development Associates, Inc., SFBC Ft. Myers, Inc. and SFBC Analytical Laboratories (collectively "the Company"). All significant intercompany balances and transactions have been eliminated in consolidation. Revenue and Cost Recognition Revenues from contracts are generally recognized on the percentage-of- completion method of accounting. Contracts may contain provisions for renegotiation in the event of cost overruns due to changes in the level of work scope. Renegotiated amounts are included in revenue when earned and realization is assured. Provisions for losses to be incurred on contracts are recognized in full in the period in which it is determined that a loss will result from performance of the contractual arrangement. Direct costs include all direct costs related to contract performance. Selling, general and administrative costs are charged to expense as incurred. Changes in job performance and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Due to the inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change in the near term and the change could be material. F-9 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 Included in accounts receivable are unbilled amounts, which represent revenue recognized in excess of amounts billed. Advance billings represent amounts billed in excess of revenue recognized. Cash and Cash Equivalents The Company considers all highly liquid investments with a purchased maturity of three months or less to be cash equivalents. Property and Equipment Property and equipment is recorded at cost. Expenditures for major betterments and additions are charged to the asset accounts while replacements, maintenance and repairs which do not improve or extend the lives of the respective assets are charged to expense as incurred. Depreciation Depreciation is computed using the straight-line method based upon the estimated useful lives of the assets. The range of useful lives is as follows: Furniture and fixtures 7 years Machinery and equipment 5-7 years Leasehold improvements Shorter of remaining life of asset or remaining term of the lease
Goodwill Goodwill is stated at cost and is amortized on a straight-line basis over 10 years. Accumulated amortization of goodwill as of December 31, 2001 and 2000 is approximately $181,000 and $55,000, respectively. The Company evaluates its intangible assets in accordance with the provisions of Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and Assets to be Disposed Of. This statement requires assessment of impairment of long-lived assets whenever factors, events or changes in circumstances indicate the carrying amount of certain long-lived assets to be held and used may not be recoverable. Assessment of impairment is based on the expected undiscounted cash flows of the assets. If an asset is determined to be impaired, an impairment loss is recognized to the extent the carrying amount of the impaired asset exceeds fair value. In July 2001, the FASB issued Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141") and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 141 requires all business combinations to be accounted for using the purchase method of accounting and is effective for all business combinations initiated after June 30, 2001. SFAS 142 requires goodwill to be tested for impairment under certain circumstances, and written off when impaired, rather than being amortized as previous standards required. SFAS 142 is effective for fiscal years beginning after December 15, 2001. The Company applied SFAS 141 to its purchase of KeyStone Analytical Laboratories, Inc. in August 2001 (See Note K). The Company will adopt SFAS 142 effective January 1, 2002, as required. Annual goodwill amortization of approximately $135,000 will be discontinued, and amortization of newly recognized amortizable intangibles, if any, will commence on January 1, 2002. The Company will perform a transitional fair value based impairment F-10 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 test, and if the fair value is less than the recorded value at January 1, 2002, the impairment loss, if any, could be significant and will be reflected as a cumulative effect of a change in accounting principle in the first quarter of 2002. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the respective reporting period. Actual results could differ from those estimates. The allowance for changes in contracts is an estimate established through reductions to sales while the allowance for doubtful accounts is an estimate established through charges to selling, general and administrative expenses. Management's judgment in determining the adequacy of the allowances is based upon several factors which include, but are not limited to, analysis of subsequent changes to contracts, analysis of delinquent accounts, the nature and volume of the accounts, the payment histories of the accounts and management's judgment with respect to current economic conditions. Management believes that the allowances are set in an amount sufficient to respond to normal business conditions. Given the nature of accounts receivable, it is reasonably possible the Company's estimate of the allowances will change in the near term. Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and trade receivables. The Company, from time to time, maintains cash balances with financial institutions in amounts that exceed federally insured limits. The Company performs services and extends credit based on an evaluation of the customers' financial condition without requiring collateral. Exposure to losses on receivables is expected to vary by customer due to the financial condition of each customer. The Company monitors exposure to credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. Income Taxes The Company accounts for income taxes under the liability method according to Statement of Financial Accounting Standards No. 109. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides a valuation allowance against its deferred tax assets when it believes that it is more likely than not that the asset will not be realized. Reclassifications Certain prior year balances have been reclassified to conform with the current year presentation. Fair Value of Financial Instruments Financial instruments consist primarily of cash and cash equivalents, accounts receivable, notes receivable, accounts payable, and notes payable. At December 31, 2001, the fair value of these instruments approximates the carrying amount of these items due to the short-term maturities of these instruments. F-11 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 Earnings Per Share The Company applies Statement of Financial Accounting Standards No. 128, "Earnings Per Share" which requires dual presentation of net earnings per share; Basic and Diluted. Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period adjusted for the dilutive effect of common stock equivalents. Included in diluted shares are common stock equivalents relating to stock options with a dilutive effect of 665,899 and 92,561 shares of common stock for the years ended December 2001 and 2000, respectively. Common stock equivalents representing stock options to purchase 264,500 shares of the Company's common stock with exercise prices ranging from $15.40 to $17.05, outstanding as of December 31, 2001, were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the annual average market price of the Company's common stock and thus their inclusion would be anti-dilutive. Stock Compensation The Company accounts for stock options issued to non-employees, under Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation. The Company's issuance of employee stock options is accounted for using the intrinsic value method under APB 25. The Company provides disclosure of certain pro forma information as if the fair value-based method had been applied in measuring compensation expense (see Note J). Segment Reporting The Company applies Financial Accounting Standards Board Statement No. 131, "Disclosure about Segments of an Enterprise and Related Information." The Company has considered its operations and has determined that it operates in a single operating segment for purposes of presenting financial information and evaluating performance. As such, the accompanying financial statements present information in a format that is consistent with the financial information used by management for internal use. Advertising Expenses Advertising costs are expensed as incurred and are included in selling, general, and Administrative expenses. Total advertising costs in 2001 and 2000 were significant. Other Assets Other assets consists primarily of identifiable intangible assets of approximately $740,000 related to the acquisition of KeyStone Analytical Laboratories in August 2001. The identifiable intangible assets are being amortized on a straight-line basis over five years. Accumulated amortization as of December 31, 2001 was $55,538. New Accounting Pronouncements In August 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 144 retained substantially all of the requirements of SFAS No. 121 while resolving certain implementation issues. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. Management believes the impact of this pronouncement on its operations, if any, will not be material. F-12 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 NOTE B--MAJOR CUSTOMERS In 2001, one individual customer represented 17% of the Company's consolidated net revenues. There were no sales to individual customers that represented more than 10% of net revenue for the year ended December 31, 2000. Individual accounts receivable balances at December 31, 2001 and 2000 in excess of 10% of total accounts receivable are as follows:
2001 2000 -------------------------- -------------------------- % of Accounts % of Accounts Amount Receivable, Net Amount Receivable, Net ---------- --------------- ---------- --------------- Customer A............ $1,320,037 13% $1,223,770 17% Customer B............ $1,181,537 11% $ 741,739 11%
NOTE C--ACCOUNTS RECEIVABLE Accounts receivable consisted of the following at December 31, 2001 and 2000:
2001 2000 ----------- ---------- Accounts receivable--billed......................... $ 8,438,678 $5,787,336 Accounts receivable--unbilled....................... 2,403,678 1,617,236 Less allowance for changes in contracts............. (128,138) (218,603) Less allowance for doubtful accounts................ (260,489) (126,550) ----------- ---------- $10,453,729 $7,059,419 =========== ==========
The activity in the allowance for changes in contracts and allowance for doubtful accounts during the years ended December 31, 2001 and 2000 was as follows:
Allowance for Allowance for Changes in Doubtful Contracts Accounts ------------- ------------- Balance--January 1, 2000......................... $140,000 $ 57,838 Acquisition.................................... -- 61,201 2000 provision................................. 78,603 7,511 -------- -------- Balance--December 31, 2000....................... 218,603 126,550 Acquisitions................................... -- 85,500 2001 provision................................. 35,397 48,439 2001 reductions................................ (125,862) -- -------- -------- Balance--December 31, 2001....................... $128,138 $260,489 ======== ========
Accounts receivable are billed when certain milestones defined in customer contracts are achieved. All unbilled accounts receivable are expected to be billed and collected within one year. Advance billings at December 31, 2001 and 2000 amounted to $1,483,216 and $1,590,520, respectively. F-13 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 NOTE D--LOANS RECEIVABLE FROM OFFICERS/STOCKHOLDERS Loans receivable from officers/stockholders as of December 31, 2001 includes a loan for $108,509 loan related to certain expenses paid by the Company on behalf of its majority stockholder. The loan bears interest at 6% per annum and is due on July 31 2002. No interest payments were made on this loan as of December 31, 2001, however, all accrued interest as of December 31, 2001 was paid in full in March 2002. The balance on this loan as of December 31, 2000 was $102,206 which is reflected as a noncurrent asset in the consolidated balance sheet. In connection with the acquisition of KeyStone Analytical Laboratories, Inc. (KAL) (See Note K), the Company entered into a five-year employment agreement with the former president of KAL. The agreement provides for, among other things, a loan of $1,000,000 repayable in equal installments of $200,000 plus interest of 4.45% per annum on each August 20 commencing in 2002, which is secured by a portion of the common stock issued to him. Provided that the employee serves on a full-time basis, as defined, the Company will annually forgive $200,000 of the outstanding principal balance and accrued interest until the note is fully satisfied. In that regard, the Company is amortizing the note and accrued interest receivable to salaries expense over a five-year period. Accordingly, $200,000 of this loan balance is reflected as a current asset as of December 31, 2001. The remaining current portion of loans receivable from stockholders as of December 31, 2001 represents other loans totalling $55,088 for which there are no formal promissory notes. During 2001, one of the company's executive officers exercised employee stock options. In lieu of paying cash of $62,500, the employee issued the Company a promissory note for $62,500 which is unsecured, non interest bearing and due on demand. The $62,500 note receivable is classified as a component of stockholders equity in the December 31, 2001 balance sheet. NOTE E--PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31, 2001 and 2000:
2001 2000 ----------- -------- Furniture and fixtures................................. $ 306,911 $108,632 Leasehold improvements................................. 875,888 -- Machinery and equipment................................ 3,560,400 841,123 ----------- -------- 4,743,199 949,755 Less accumulated depreciation.......................... 814,615 380,875 ----------- -------- $ 3,928,584 $568,880 =========== ========
Depreciation of property and equipment for the years ended December 31, 2001 and 2000 amounted to $438,264 and $121,009, respectively. NOTE F--ACCRUED LIABILITIES Accrued liabilities consisted of the following at December 31, 2001 and 2000:
2001 2000 ----------- ---------- Salaries and benefits................................ $ 543,405 $ 719,795 Professional fees.................................... 102,609 109,549 Volume rebates....................................... 211,846 -- Other................................................ 460,870 260,858 ----------- ---------- $ 1,318,730 $1,090,202 =========== ==========
F-14 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 NOTE G--NOTES PAYABLE Notes payable consisted of the following at December 31, 2001 and 2000:
2001 2000 ------ -------- Notes payable--stockholders................................. $ -- $ 93,258 Notes payable--purchase of assets........................... -- 43,521 Notes payable--purchase of PDA (Note K)..................... -- 150,000 Notes payable--other........................................ 8,738 123,956 ------ -------- 8,738 410,735 Less current portion........................................ 7,490 252,423 ------ -------- Long-term portion........................................... $1,248 $158,312 ====== ========
Notes Payable--Stockholders In October 1999, approximately $1,150,800 of notes payable--stockholders and accrued interest were converted into 255,736 shares of common stock and warrants to purchase an additional 255,736 shares of common stock at $8.00 per share. As of December 31, 2001, warrants to purchase 89,631 shares of the Company common stock at $8.00 per share are outstanding. The warrants expire in June 2002. The balance at December 31, 2000, represents an unconverted note bearing interest at 10% per annum that was paid in early 2001. Notes Payable--Purchase of Assets Concurrent with a recapitalization in 1999, the Company issued three notes aggregating $500,000. These notes were paid in full in 2001. Notes Payable--Other Notes payable--other consists principally of a) a note payable for insurance coverage, bearing interest at approximately 9% per annum with a payment of approximately $16,000 per month, and b) obligations assumed in connection with the acquisition of PDA (see Note K) bearing interest at approximately 12% per annum with payments aggregating approximately $2,300 per month. These notes were paid in full in 2001. Interest expense on all indebtedness amounted to $27,112 and $175,470 for the years ended December 31, 2001 and 2000, respectively. NOTE H--COMMITMENTS LEASES The Company leases its office facilities and certain equipment under non- cancelable operating leases. The approximate future minimum annual lease payments under these leases for years subsequent to December 31, 2001 are as follows: 2002.................................. $ 911,000 2003.................................. 896,000 2004.................................. 844,000 2005.................................. 772,000 2006.................................. 706,000 Thereafter............................ 3,711,000 ----------- $ 7,840,000 ===========
Total rent expense for the years ended December 31, 2001 and 2000 was approximately $923,000 and $568,000, respectively. F-15 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 Employment Agreements The Company has entered into employment agreements with several of its executive officers for periods up to three years. The agreements provide the employees with an annual salary, bonus, and the grant of stock options. Additionally the agreements also provide the employees with an option to terminate their agreement and receive lump sum payments as defined in their respective agreements if there is a change in control of the Company. Change of control is defined in the employment agreements. NOTE I--INCOME TAXES Income taxes for the years ended December 31, 2001 and 2000 consisted of the following:
2001 2000 ---------- ---------- Current: Federal........................................... $2,449,466 $1,367,000 State............................................. 307,931 146,000 Deferred: Federal........................................... (424,147) (154,000) State............................................. (57,136) (17,000) ---------- ---------- $2,276,114 $1,342,000 ========== ========== The components of the net deferred income tax liability at December 31, 2001 are as follows: Deferred Tax Liability--Current 2001 2000 ---------- ---------- Accounts receivable................................ $ 183,095 $ -- Accrued expenses................................... 70,899 -- ---------- ---------- Total current assets............................. 253,994 -- Net temporary differences due to conversion to accrual basis from cash basis..................... (476,707) (130,000) ---------- ---------- Net current liability............................ $ (222,713) $ (130,000) ========== ========== Deferred Tax Liability--Long Term 2001 2000 ---------- ---------- Common Stock options issued as compensation........ $ 161,794 $ 178,000 Amortization....................................... -- 7,000 Deferred rent...................................... 17,806 -- ---------- ---------- Total noncurrent assets.......................... 179,600 185,000 Net temporary differences due to conversion to accrual basis from cash basis..................... (303,926) (258,000) Depreciation and amortization...................... (109,276) (36,000) ---------- ---------- Total noncurrent liabilities..................... (413,202) (294,000) ---------- ---------- Net noncurrent liability......................... $ (233,602) $ (109,000) ========== ========== The major elements contributing to the difference between income taxes and the amount computed by applying the federal statutory tax rate of 34% to earnings before income taxes for the years ended December 31, 2001 and 2000 are approximately as follows: 2001 2000 ---------- ---------- Income taxes statutory rate........................ $2,072,000 $1,154,000 State income taxes................................. 221,000 122,000 Permanent differences and other.................... (17,000) 66,000 ---------- ---------- $2,276,000 $1,342,000 ========== ==========
F-16 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 NOTE J--EQUITY Initial Public Offering ----------------------- In October 2000, the Company completed an initial public offering of 1,250,000 shares of common stock at $8.00 per share and warrants to purchase 709,950 shares of common stock at $0.25 per warrant. The warrants are exercisable at $9.60 per share, expire five years from the date of the offering and are redeemable by the Company under certain conditions, as defined. On July 20, 2001, the Company called for redemption of its publicly traded common stock purchase warrants. There were 709,950 warrants issued and outstanding, which were exercisable by paying the Company $9.60 per share of common stock. In connection therewith, the Company issued 709,321 shares of common stock upon exercise of warrants and redeemed the remaining 629 warrants. The net proceeds of approximately $6,770,000 represented new financing to the Company. Secondary Public Offering ------------------------- In December 2001, the Company completed a secondary public offering of 2,000,000 shares of common stock at $16.25 per share. As part of the offering, certain executive officers of the Company also sold 350,000 shares of their common stock. Total proceeds received by the Company net of offering expenses, (which includes $341,250 of commissions paid on behalf of the executive officers), were $29,590,291. Stock Based Compensation ------------------------ In June 1999, the Company established a Stock Option Plan (the "Plan") which provides for the Company to issue incentive stock options and non-qualified stock options to employees, directors and outside consultants of the Company. The total number of shares of the Company's common stock originally reserved under the Plan was 700,000, however, in 2001, the number of shares of common stock reserved under the Plan was increased to 1,200,000. In March 2002, the Company's Board of Directors approved and ratified an additional increase of 500,000 shares of common stock under the Plan (subject to shareholder approval), bringing the total number of shares reserved under the Plan to 1,700,000. The issuance and form of the options shall be at the discretion of the Company's board of directors, except that the exercise price may not be less than the fair market value at the time of grant. Generally, the options vest over a three year period and expire in ten years or three months after separation of service, whichever occurs earlier. The Company has elected to follow Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25") in accounting for its employee stock options. Under APB 25, because the exercise price of a certain employee's stock options issued prior to the establishment of the Plan was less than the market price of the underlying stock on the date of grant, compensation expense of $170,000 was recognized in both 2001 and 2000. The Company expects to recognize compensation expense of $35,417 in 2002 connection with these options. Statement of Financial Accounting Standards No. 123 "Accounting for Stock- based Compensation," ("SFAS No. 123") requires the Company to provide pro forma information regarding net earnings and earnings per common share as if compensation cost for the Company's Stock Option Plan had been determined in accordance with the fair value based method prescribed in SFAS No. 123. The fair value of the options granted in 2001 and 2000 were estimated by using the Black-Scholes pricing model with the following assumptions: (i) expected life of the options of 5 years, (ii) expected volatility in the market price of the Company's common stock of 60% (only for those options granted subsequent to the Company's initial public offering, otherwise no volatility), (iii) no expected dividends, and (iv) a risk free interest rate of 5% in 2001 and a risk free interest rate ranging from 6.00% to 6.50% in 2000. Under the accounting provisions of SFAS No. 123, the Company's net earnings, basic earnings per share and diluted earnings per share for the year ended December 31, 2001 would have been approximately $2,826,000, $.69 and $.60, respectively. Under the accounting provisions of SFAS No. 123, the Company's net earnings, basic earnings per share and diluted earnings per share for the year ended December 31, 2000 would have been approximately $1,969,000, $0.75 and $0.73, respectively. A summary of the Company's stock option activity, and related information for the years ended December 31, 2001 and 2000 is as follows:
2001 2000 -------------------------- ------------------------- Weighted - Weighted - Number of Average Number of Average Options Exercise Price Options Exercise Price ---------- -------------- ---------- -------------- Outstanding at January 1, 2000................ 605,000 $ 4.88 514,500 $4.70 Granted................ 544,500 15.02 125,000 6.00 Exercised.............. (74,166) 1.50 -- -- Forfeited.............. (11,000) 6.00 (34,500) 6.00 --------- ------- Outstanding at December 31, 2001............... 1,064,334 $10.29 605,000 $4.88 Exercisable at December 31, 2001............... 659,495 $ 9.03 277,489 $4.79
The weighted-average fair value of options granted during 2001 and 2000, using the fair value calculations discussed above was $8.69 per option and $1.88 per option, respectively. F-17 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 The following information applies to options outstanding at December 31, 2001:
Options Options Outstanding Exercisable ------------------------------- ----------------- Weighted- Average Weighted- Weighted- Remaining Average Average Range of Contractual Exercise Exercise Exercise Prices Shares Life Price Shares Price ------------------- --------- ----------- --------- ------- --------- $ 1.25-$ 1.25.............. 90,000 7.25 $ 1.25 50,000 $ 1.25 $ 4.56-$ 6.60.............. 567,334 6.79 $ 6.16 403,327 $ 6.21 $ 7.50-$ 9.15.............. 80,000 9.18 $ 8.53 16,666 $ 9.15 $12.80-$12.80.............. 125,000 3.78 $12.80 125,000 $12.80 $15.40-$17.05.............. 17,000 9.60 $16.86 2,832 $16.86 $25.80-$25.80.............. 185,000 9.50 $25.80 61,670 $25.80 --------- ------- 1,064,334 659,495 ========= =======
As part of the Company's initial public offering in October 2000, the Company issued to its underwriter warrants to purchase 62,500 shares of the Company's common stock at $15.76 per share. The warrants expire in October 2005. Stock Buyback Program - --------------------- In 2001, the Company's board of directors approved a plan for the Company to buyback 500,000 shares of its common stock. As of December 31, 2001, the Company repurchased 2,000 shares at a total cost of $25,532. NOTE K--BUSINESS COMBINATIONS KeyStone Analytical Laboratories On August 20, 2001, the Company acquired all of the outstanding stock of KeyStone Analytical Laboratories, Inc. (KAL), located in North Wales, Pennsylvania. KAL provides complete bioanalytical laboratory services for the testing and analysis of pharmaceutical products. The acquisition was strategically important as it enabled the Company to enter the analytical services market. KAL stockholders received approximately $2,906,000 in cash and 178,035 shares of the Company's common stock, valued at $2,575,000. In connection with this acquisition, the Company entered into a five-year employment agreement with the former president of KAL. The agreement provides for, among other things, a loan of $1,000,000 repayable in equal installments of $200,000 plus interest on each August 20 commencing in 2002, which is secured by a portion of the common stock issued to the employee. Provided that the employee serves on a full-time basis, as defined, the Company will annually forgive $200,000 of the outstanding principal balance and accrued interest until the note is fully satisfied. In that regard, the Company is amortizing the note and accrued interest receivable to salaries expense over a five-year period. The acquisition was accounted for as a purchase in accordance with SFAS 141 and accordingly, the purchase price was allocated based on the estimated fair market values of the assets and liabilities obtained. Goodwill of approximately $3,312,000 is attributable to the general reputation of the business in the communities it serves and the collective experience of the management and other employees, and was recorded as follows: Cash consideration paid to the sellers........................ $ 2,906,000 Common stock issued to the sellers, value at the stock's fair market value on the date of acquisition................. 2,575,000 Acquisition costs............................................. 424,000 ----------- Total consideration......................................... 5,905,000 Fair value of identifiable assets acquired Cash........................................................ (198,000) Accounts receivable, net.................................... (2,187,000) Other assetes............................................... (2,000) Property and equipment...................................... (724,000) ----------- (3,111,000) Fair value of liabilities assumed Accounts payable............................................ 560,000 Deferred tax liability...................................... 698,000 ----------- 1,258,000 Fair value of employment agreement(1)......................... (590,000) Fair value of methodologies purchased(1)...................... (150,000) ----------- Excess of cost over fair value of net assets acquired; goodwill................................................... $ 3,312,000 =========== (1) Identifiable intangible asset subject to amortization. The goodwill of $3,312,000 is not tax deductible for federal income tax purchases. F-18 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 In accordance with SFAS 142, goodwill will not be amortized in the future but will be tested for impairment in accordance with the provisions of the Statement. The results of operations of KAL are included in the accompanying consolidated statement of earnings since the date of the acquisition. ClinSites/LeeCoast Research Center In early 2001, the Company purchased substantially all the assets and certain liabilities of ClinSites/LeeCoast Research Center, Inc. The purchase price was $600,000, less the amount by which the operating liabilities exceeded the operating assets. The acquisition was accounted for as a purchase and accordingly, the purchase price was allocated to the net assets acquired based on their estimated fair market values. Goodwill of approximately $627,000 is attributable to the general reputation of the business in the communities it serves and the collective experience of the management and other employees, and was recorded as follows: Cash consideration paid to the seller........................... $ 302,000 Release of note receivable...................................... 209,000 Acquisition costs............................................... 27,000 --------- Total consideration........................................... 538,000 Fair value of identifiable assets acquired...................... (452,000) Fair value of liabilities assumed............................... 541,000 --------- Excess of cost over fair value of net assets acquired, Goodwill..................................................... $ 627,000 =========
The results of operations of ClinSites/LeeCoast Research Center, Inc. are included in the accompanying consolidated statement of earnings since the date of the acquisition. Pharmaceutical Development Associates On March 15, 2000, the Company acquired substantially all the assets and certain liabilities of Pharmaceutical Development Associates, Inc.(PDA), a clinical research organization located in North Carolina. The aggregate purchase price was $600,000 with possible contingent consideration of up to $1,200,000 based on the adjusted net income of the acquired entity, as defined, and additional possible contingent consideration based on a percentage of revenue from a specific customer. The acquisition was accounted for as a purchase and accordingly, the purchase price was allocated to the net assets acquired based on their estimated fair market values. Goodwill of approximately $726,000 is attributable to the general reputation of the business in the communities it serves and the collective experience of the management and other employees, and was recorded as follows: Cash consideration paid to the seller......................... $ 296,000 Note payable issued to the seller............................. 150,000 Acquisition costs............................................. 126,000 ----------- Total consideration......................................... 572,000 Fair value of assets acquired................................. (1,049,000) Fair value of liabilities assumed............................. 1,203,000 ----------- Excess of cost over fair value of net assets acquired, Goodwill................................................... $ 726,000 ===========
F-19 SFBC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) December 31, 2001 and 2000 Unaudited Pro Forma Results - --------------------------- Unaudited pro forma results of operations after giving effect to certain adjustments resulting from the 2001 acquisitions were as follows for the years ended December 31, 2001 and 2000 as if the business combinations had occurred at the beginning of each period presented:
2001 2000 ----------- ----------- (Unaudited) Net sales........................................... $34,373,165 $23,491,583 Net earnings........................................ 4,288,066 2,356,673 Earnings per share--basic........................... 1.02 .79 Earnings per share--diluted......................... .88 .77
The pro forma results do not include amortization expense related to $3,312,000 of goodwill from the KAL acquisition in accordance with SFAS 142. The pro forma data is provided for information purposes only and does not purport to be indicative of results which actually would have been obtained if the combinations had been effected at the beginning of each period presented, or of those results which may be obtained in the future. NOTE L--SUBSEQUENT EVENTS On March 4, 2002, the Company entered into a definitive agreement to purchase all of the outstanding stock of a Canadian contract research organization for approximately $30 million, of which $26.7 million was paid in cash and the remaining portion was paid via the issuance of 167,375 shares of the Company's common stock. In addition, in connection with the acquisition, the Company issued stock options to certain key employees of the acquired entity to purchase up to 110,000 shares of the Company's common stock at an exercise price of $23.97 per share. As part of the acquisition, the Company acquired approximately $3 million of cash held by the acquired entity. Due to the recent nature of this acquisition, it was not practicable to provide further disclosure under SFAS 141. F-20 EX-10.6 3 dex106.txt EMPLOYMENT AGREEMENT OF DAVID NATAN EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this 4/th/ day of March, 2002, between SFBC International, Inc., a Delaware corporation (the "Company") and David Natan (the "Employee"). WHEREAS, in its business, the Company has acquired and developed certain trade secrets, including but not limited to proprietary processes, sales methods and techniques, and other like confidential business and technical information including but not limited to technical information, design systems, methods of recruiting subjects, pricing methods, pricing rates or discounts, process, procedure, formula, design of computer software or improvement of any portion or phase thereof, whether patented or not, that is of any value whatsoever to the Company, as well as certain unpatented information relating to the Company's Services, as defined herein, information concerning proposed new Services, market feasibility studies, proposed or existing marketing techniques or plans (whether developed or produced by the Company or by any other entity for the Company), other Confidential Information, as defined by Section 8, and information about the Company's employees, officers, and directors, which necessarily will be communicated to the Employee by reason of his employment by the Company; and WHEREAS, the Company has strong and legitimate business interests in preserving and protecting its investment in the Employee, its trade secrets and Confidential Information, and its substantial relationships with suppliers, and Customers, as defined herein, actual and prospective; and WHEREAS, the Company desires to preserve and protect its legitimate business interests further by restricting competitive activities of the Employee during the term of employment and following (for a reasonable time) termination of employment; and WHEREAS, the Company initially retained the services of the Employee to provide assistance to the Company's Chief Executive Officer in finalizing the Company's financial statements for the fiscal quarter ending on December 31, 2001, and to perform such other duties as the Company's Chief Executive Officer requested. WHEREAS, the Company now desires to employ the Employee and to ensure the continued availability to the Company of the Employee's services, and the Employee is willing to accept such employment and render such services, all upon and subject to the terms and conditions contained in this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Employee agree as follows: 1. Representations and Warranties. The Employee hereby represents and ------------------------------- warrants to the Company that he (i) is not subject to any written nonsolicitation or noncompetition agreement affecting his employment with the Company (other than any prior agreement with the Company or any Affiliate), (ii) is not subject to any written confidentiality or nonuse/nondisclosure agreement affecting his employment with the Company (other than any prior agreement with the Company or or any Affiliate), and (iii) has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer. 2. Term of Employment. ------------------ (a) Term. The Company hereby employs the Employee, and the Employee ---- hereby accepts employment with the Company for a period commencing on the announcement date of the results of the Company's operations for the fiscal quarter ending December 31, 2001 and ending three years from the date of said announcement date (the "Term") subject to Section 6, automatically renewable for additional one year terms unless either party gives the other at least 90 days written notice. (b) Continuing Effect. Notwithstanding any termination of employment, ----------------- at the end of the term or otherwise, the provisions of Sections 7 and 8 shall remain in full force and effect and the provisions of Section 8 shall be binding upon the legal representatives, successors and assigns of the Employee. 3. Duties. ------ (a) General Duties. The Employee shall serve as Vice President of -------------- Finance and Chief Financial Officer of the Company, with duties and responsibilities that are customary for such position. The Employee shall report directly to the Company's Chief Executive Officer or as otherwise directed by the board of directors. The Employee shall use his best efforts to perform his duties and discharge his responsibilities pursuant to this Agreement competently, carefully and faithfully. (b) Devotion of Time. The Employee shall devote all of his time, ---------------- attention and energies during normal business hours (exclusive of periods of sickness and disability and of such normal holiday and vacation periods as have been established by the Company) to the affairs of the Company. The Employee shall not enter the employ of or serve as a consultant to, or in any way perform any services with or without compensation to, any other persons, business or organization without the prior consent of the board of directors of the Company. (c) Location of Office. The Employee's principal business office shall ------------------ be at the Company's Miami, Florida office. However, the Employee's job responsibilities shall include all business travel necessary to the performance of his job. (d) Adherence to Inside Information Policies. The Employee ---------------------------------------- acknowledges that the Company is publicly-held and, as a result, has implemented inside information policies designed to preclude its employees and those of its subsidiaries from violating the federal securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company or any third party. The Employee shall promptly execute any agreements generally distributed by the Company to its employees requiring such employees to abide by its inside information policies. 2 4. Compensation and Expenses. ------------------------- (a) Salary. For the services of the Employee to be rendered under this ------ Agreement, the Company shall pay the Employee an annual salary of $170,000 during the Term, payable in accordance with the Company's normal payroll practices. (b) Expenses. In addition to any compensation received pursuant to -------- Section 4(a) the Company shall reimburse or advance funds to the Employee for all reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of his duties under this Agreement. (c) Automobile. The Company shall pay the Employee a monthly ---------- automobile allowance of $600 per month. (d) Professional Dues. The Company shall reimburse the Employee for ----------------- reasonable costs of professional licenses and dues related to his employment. 5. Benefits. Except for accrued vacation under Section 5(a), and the -------- benefits described under Section 5(c), no other benefits are available during the first 90 days of this Agreement. (a) Vacation. The Employee shall be entitled to 15 days of vacation -------- per year without loss of compensation or other benefits to which he is entitled under this Agreement, to be taken at such times as the Employee may select and the affairs of the Company may permit. (b) Employee Benefit Programs. The Employee is entitled to participate ------------------------- in any pension, 401(k), insurance or other employee benefit plan that is maintained by the Company for its employees, including programs of life and medical insurance and reimbursement of membership fees in professional organizations. (c) Insurance. The Company shall pay the premiums on the Company's --------- medical insurance policy covering the Employee and on the Employee's $1,000,000 term life insurance policy. Also, the Company shall pay up to an amount of $7,500 per year for the Employee's uninsured medical expenses. 6. Termination. ----------- (a) General Provisions. Upon the Employee's termination from his ------------------- employment, the Employee shall have no right to compensation or reimbursement under Section 4 or to participate in any employee benefit programs under Section 5, except as provided for by law for any period subsequent to the effective date of termination. On or before the termination of his employment or prior to receiving any final compensation or expenses due him, the Employee shall (a) return to the Company's principal executive offices, (b) participate in an exit interview, and (c) execute a Certificate of Conclusion of Employment, certifying that he has complied with his obligations and acknowledging his continuing obligations under this Agreement. The Employee's failure to comply with the requirements of Section 6 of this Agreement shall constitute a material breach of this Agreement. 3 (b) Termination for Cause. The Company may terminate the Employee's ---------------------- employment pursuant to the terms of this Agreement at any time for Cause (as defined below) by giving written notice of termination. Such termination shall become effective upon the giving of such notice. Upon any such termination for Cause, the Employee shall have no right to compensation, or reimbursement under Section 4, or to participate in any Employee benefit programs under Section 5, except as provided by law, for any period subsequent to the effective date of termination. For purposes of this Section 6(b), "Cause" shall mean: (i) the Employee is convicted of a felony which is related to the Employee's employment or the business of the Company; (ii) the Employee, in carrying out his duties hereunder, has been found in a civil action to have committed gross negligence or intentional misconduct resulting, in either case, in material harm to the Company; (iii) the Employee has been found in a civil action to have materially breached any provision of Section 6 or Section 7 and to have caused material harm to the Company; or (iv) the Employee on more than one occasion fails to comply with the directives of the Company's board of directors. The term "found in a civil action" shall not apply until all appeals permissible under the applicable rules of procedure or statutes have been determined and no further appeals are permissible. (c) Special Termination. In the event that (i) the Employee, with or ------------------- without change in title or formal corporate action, shall no longer exercise all of the duties and responsibilities and shall no longer possess substantially all the authority set forth in Section 3; (ii) the Company materially breaches this Agreement or the performance of its duties and obligations hereunder; or (iii) any entity or person not now an executive officer or director of the Company becomes either individually or as part of a group the beneficial owner of 30% or more of the Company's common stock, the Employee, by written notice to the Company, may elect to deem the Employee's employment hereunder to have been terminated by the Company without cause, in which event the Employee shall be entitled at the time of termination to compensation equal to an amount of one years Base Salary under this Agreement and benefits payable pursuant to Section 5 herein for such one-year period and all of Employee's remaining unvested options, if any, shall vest immediately upon such termination. 7. Non-Competition Agreement. ------------------------- (a) Competition with the Company. Until termination of his employment and ---------------------------- for a period of 12 months commencing on the date of termination, the Employee, directly or indirectly or, in association with or as a stockholder, director, officer, consultant, employee, partner, joint venturer, member or otherwise of or through any person, firm, corporation, partnership, association or other entity ("any of the foregoing defined as an "Affiliated Entity") shall not compete with the Company or its Affiliates, within any metropolitan area in the United States or elsewhere in which the Company or its subsidiaries (collectively, the "Affiliates") is then engaged in the offer and sale of competitive Services. Provided, however, the foregoing provisions shall not -------- ------- prevent the Employee acting as a chief financial officer or from accepting employment with an enterprise engaged in two or more lines of business, one of which is the same or similar to the Company's business (the "Prohibited Business") if the Employee's employment is totally unrelated to the Prohibited Business; provided, further, the foregoing shall not prohibit Employee from -------- ------- owning up to 5% of the securities of any publicly-traded enterprise provided the Employee is not an employee, director, officer, consultant to such enterprise or otherwise reimbursed for services rendered to such enterprise. In addition, the Employee may not, directly or indirectly including through any Affiliated Entity, obtain employment with or perform 4 services for any Customer, as defined, of the Company during the period commencing on the date of termination and continuing for 12 months thereafter. (b) Solicitation of Customers. During the periods in which the ------------------------- provisions of Section 7(a) shall be in effect, the Employee, directly or indirectly including through any Affiliated Entity, shall not seek Prohibited Business from any Customer (as defined below) on behalf of any enterprise or business other than the Company, refer Prohibited Business from any Customer to any enterprise or business other than the Company or receive commissions based on sales or otherwise relating to the Prohibited Business from any Customer, or any enterprise or business other than the Company . For purposes of this Agreement, the term "Customer" means any person, firm, corporation, partnership, association or other entity to which the Company sold or provided goods or services during the 24-month period prior to the time at which any determination is required to be made as to whether any such person, firm, corporation, partnership, association or other entity is a Customer, or who or which has approached by or who or which has approached an employee of the Company for the purpose of soliciting business from the Company or the third party, as the case may be. (c) Solicitation of Employees. During the periods in which the ------------------------- provisions of Section 7(a) shall be in effect, the Employee, directly or indirectly including through any Affiliated Entity shall not solicit, hire or contact any employee of the Company for the purpose of hiring them or causing them to terminate their employment relationship with the Company . (d) No Payment. The Employee acknowledges and agrees that no separate ---------- or additional payment will be required to be made to him in consideration of his undertakings in this Section. (e) References to the Company in this Section 7 shall include the Company's Affiliates. 8. Non-Disclosure of Confidential Information. ------------------------------------------ (a) Confidential Information. Confidential Information includes, but ------------------------ is not limited to, trade secrets as defined by the common law and statute in Florida or any future Florida statute, processes, policies, procedures, techniques including recruiting techniques, designs, drawings, know-how, show- how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing and uses of the Services (as defined herein), the Company's budgets and strategic plans, and the identity and special needs of Customers, databases, data, all technology relating to the Company's businesses, systems, methods of operation, client or Customer lists, Customer information, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, names, home addresses and all telephone numbers and e-mail addresses of the Company's employees, former employees, clients and former clients. In addition, Confidential Information also includes the identity of Customers and the identity of and telephone numbers, e-mail addresses and other addresses of employees or agents of Customers who are the persons with whom the Company's employees and agents communicate in the ordinary course of business. For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is or subsequently becomes generally available to the public through no act of the Employee, (ii) information set forth in the written records of the Employee prior to disclosure to the Employee by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is 5 lawfully obtained by the Employee in writing from a third party (excluding any Affiliates of the Employee) who did not acquire such confidential information or trade secret, directly or indirectly, from the Employee or the Company. As used herein, the term "Services" shall include all clinical or pre-clinical research, testing, protocol design, data management, medical writing, clinical or analytical laboratory services or other services relating to proposed or actual formulations, foods, drugs and medical devices engaged in by the Company during the Term of the Employee's employment. (b) Legitimate Business Interests. The Employee recognizes that the ----------------------------- Company has legitimate business interests to protect and as a consequence, the Employee agrees to the restrictions contained in this Agreement because they further the Company's legitimate business interests. These legitimate business interests include, but are not limited to (i) trade secrets; (ii) valuable confidential business or professional information that otherwise does not qualify as trade secrets including all Confidential Information; (iii) substantial relationships with specific prospective or existing Customers or clients; (iv) Customer or client goodwill associated with the Company's business; and (v) specialized training relating to the Company's Services, technology, methods and procedures. (c) Confidentiality. For a period of two years following termination --------------- of employment, or as otherwise required by client privilege, the Confidential Information shall be held by the Employee in the strictest confidence and shall not, without the prior written consent of the Company, be disclosed to any person other than in connection with the Employee's employment by the Company. The Employee further acknowledges that such Confidential Information as is acquired and used by the Company is a special, valuable and unique asset. The Employee shall exercise all due and diligence precautions to protect the integrity of the Company's Confidential Information and to keep it confidential whether it is in written form, on electronic media or oral. The Employee shall not copy any Confidential Information except to the extent necessary to his employment nor remove any Confidential Information or copies thereof from the Company's premises except to the extent necessary to his employment and then only with the authorization of an officer of the Company. All records, files, materials and other Confidential Information obtained by the Employee in the course of his employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company or its Customers, as the case may be. The Employee shall not, except in connection with and as required by his performance of his duties under this Agreement, for any reason use for his own benefit or the benefit of any person or entity with which he may be associated or disclose any such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever without the prior written consent of an officer of the Company (excluding the Employee, if applicable). (d) References to the Company in this Section 8 shall include the Company's Affiliates. 6 9. Equitable Relief. ---------------- (a) The Company and the Employee recognize that the services to be rendered under this Agreement by the Employee are special, unique and of extraordinary character, and that in the event of the breach by the Employee of the terms and conditions of this Agreement or if the Employee, shall cease to be an employee of the Company for any reason and take any action in violation of Section 7 and/or Section 8, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 9(b) below, to enjoin the Employee from breaching the provisions of Section 7 or Section 8. In such action, the Company shall not be required to plead or prove irreparable harm or lack of an adequate remedy at law or post a bond or any security. (b) Any action must be commenced in Miami-Dade County, Florida. The Employee and the Company irrevocably and unconditionally submit to the exclusive jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of such courts. The Employee and the Company irrevocably waive any objection that they now have or hereafter irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against the Employee or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Employee or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise. 10. Conflicts of Interest. While employed by the Company, the Employee --------------------- shall not, directly or indirectly, unless approved in writing by the President: (a) participate as an individual in any way in the benefits of transactions with any of the Company's suppliers or Customers, including, without limitation, having a financial interest in the Company's suppliers or Customers, or making loans to, or receiving loans, from, the Company's suppliers or Customers; (b) realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Employee's employment with the Company for the Employee's personal advantage or gain; or (c) accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a technical capacity by, a person or entity which does business with the Company. (d) As used in Section 10(a), (b) or (c), the Company also includes its Affiliates. 11. Inventions, Ideas, Processes, and Designs. All inventions, ideas, ----------------------------------------- processes, programs, software, and designs (including all improvements) (i) conceived or made by the Employee during the course of his employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months subsequent to the termination or expiration of such employment with the Company and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company and shall be the sole and exclusive property of the Company. An invention, idea, 7 process, program, software, or design including an improvement) shall be deemed related to the business of the Company if (a) it was made with the Company's equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Employee for the Company, or (c) pertains to the current business or demonstrably anticipated research or development work of the Company. The Employee shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to the Company. The decision to file for patent or copyright protection or to maintain such development as a trade secret shall be in the sole discretion of the Company, and the Employee shall be bound by such decision. The Employee shall provide as a schedule to this Agreement, a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or non-copyrighted, including a brief description, which he made or conceived prior to his employment with the Company and which therefore are excluded from the scope of this Agreement. 12. Indebtedness. If, during the course of the Employee's employment under ------------ this Agreement, the Employee becomes indebted to the Company for any reason, the Company may, if it so elects, set off any sum due to the Company from the Employee and collect any remaining balance from the Employee. 13. Assignability. The rights and obligations of the Company under this ------------- Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, provided that such successor or assign shall acquire all or substantially all of the securities (via merger or otherwise) or assets and business of the Company. The Employee's obligations hereunder may not be assigned or alienated and any attempt to do so by the Employee will be void. 14. Severability. ------------ (a) The Employee expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement are reasonable in light of the circumstances as they exist on the date hereof. Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement of the Employee and the Company that this Agreement shall be construed by the court in such a manner as to impose only those restrictions on the Employee's conduct that are reasonable in the light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement. (b) If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other. The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provision were not included. 8 15. Notices and Addresses. All notices, offers, acceptance and any other --------------------- acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipted delivery, by facsimile delivery or, if mailed, postage prepaid, by certified mail, return receipt requested, as follows: To the Company: SFBC International, Inc. 11190 Biscayne Blvd. Miami, FL 33181 Facsimile: (305) 895-8616 Attention: Mr. Arnold Hantman Chief Executive Officer With a Copy to: Michael D. Harris, Esq. Harris & Gilbert, LLP 1645 Palm Beach Lakes Blvd. Suite 550 West Palm Beach, FL 33401 Facsimile (561) 478-1817 To the Employee: David Natan SFBC International, Inc. 11190 Biscayne Blvd. Miami, FL 33181 or to such other address as either of them, by notice to the other may designate from time to time. The transmission confirmation receipt from the sender's facsimile machine shall be evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing. 16. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature. 17. Attorney's Fees. In the event that there is any controversy or claim --------------- arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to a reasonable attorney's fee, costs and expenses. 18. Governing Law. This Agreement and any dispute, disagreement, or issue ------------- of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the State of Florida without regard to choice of law considerations. 19. Entire Agreement. This Agreement constitutes the entire agreement ---------------- between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be changed, waived, discharged or 9 terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought. 20. Additional Documents. The parties hereto shall execute such additional -------------------- instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder. 21. Section and Paragraph Headings. The section and paragraph headings in ------------------------------ this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as of the date and year first above written. SFBC INTERNATIONAL, INC. ____________________ By: /s/ Arnold Hantman --------------------------------- Arnold Hantman, Chief Executive Officer EMPLOYEE: ____________________ By: /s/ David Natan --------------------------------- David Natan 10 EX-10.7 4 dex107.txt FORM OF EMPLOYMENT AGREEMENT OF MARC LEBEL Exhibit 10.7 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this 18th day of March, 2002, between Anapharm Inc., a Quebec company (the "Company") and Marc LeBel (the "Employee"). WHEREAS, in its business, the Company has acquired and developed certain trade secrets, including but not limited to proprietary processes, sales methods and techniques, and other like confidential business and technical information including but not limited to technical information, design systems, methods of recruiting subjects, pricing methods, pricing rates or discounts, process, procedure, formula, design of computer software or improvement of any portion or phase thereof, whether patented or not, that is of any value whatsoever to the Company, as well as certain unpatented information relating to the Company's Services (as herein defined), information concerning proposed new Services, market feasibility studies, proposed or existing marketing techniques or plans (whether developed or produced by the Company or by any other entity for the Company), other Confidential Information (as herein defined) and information about the Company's employees, officers, and directors, which necessarily will be communicated to the Employee by reason of Employee's employment by the Company; and WHEREAS, the Company has strong and legitimate business interests in preserving and protecting its investment in the Employee, its trade secrets and Confidential Information, and its substantial relationships with suppliers, and Customers (as herein defined) actual and prospective; and WHEREAS, the Company desires to preserve and protect its legitimate business interests further by restricting competitive activities of the Employee during the term of employment and following (for a reasonable time) termination of employment for any reason; and WHEREAS, the Company desires to employ the Employee and to ensure the continued availability to the Company of the Employee's services, and the Employee is willing to accept such employment and render such services, all upon and subject to the terms and conditions contained in this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Employee agree as follows: 1. Representations and Warranties. The Employee hereby represents and ------------------------------- warrants to the Company that Employee (i) is not subject to any written nonsolicitation or noncompetition agreement affecting Employee's employment with the Company (other than any prior agreement with the Company), (ii) is not subject to any written confidentiality or nonuse/nondisclosure agreement affecting Employee's employment with the Company (other than any prior agreement with the Company), and (iii) has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer or any other person. 2. Term of Employment. The Company hereby employs the Employee, and the ------------------ Employee hereby accepts employment with the Company for an initial five year period commencing on the date of this Agreement (the "Initial Term"), and this Agreement will automatically renew thereafter, from year to year, for additional one (1) year periods, on the same terms and conditions as those set forth herein, unless a party provides notice of termination to the other party no later than thirty (30) days prior to the expiration of such Initial Term or one (1) year renewal period, as the case may be, the whole subject to termination as set forth herein (collectively, the "Term"). Board Membership. The Employee hereby agrees to serve as a member of the - ---------------- Company's Board of Directors for the term of this Agreement or until otherwise determined by Parent. 3. Duties. ------ (a) General Duties. The Employee shall serve as President of the -------------- Company, with duties and responsibilities that are customary for such position. The Employee shall report directly to the Company's Board of Directors or as otherwise directed by the Company's board of directors. The Employee shall use Employee's best efforts to perform Employee's duties and discharge Employee's responsibilities pursuant to this Agreement competently, carefully and faithfully. (b) Devotion of Time. The Employee shall devote all of Employee's ---------------- time, attention and energies during normal business hours to the business of the Company. During the Term, the Employee shall not enter the employ of or serve as a consultant to, or in any way perform any services with or without compensation to, any other persons, business or organization without the prior written consent of the board of directors of the Company, save and except, as director of TGN Biotech Inc., of BDI Inc. and of the Universite Laval". (c) Adherence to Inside Information Policies. The Employee ---------------------------------------- acknowledges that the Company's indirect parent, SFBC International, Inc. (the "Parent") is publicly-held and, as a result, has implemented inside information policies designed to preclude its employees and those of its subsidiaries from violating the applicable securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company, the Parent, or any third party. The Employee shall promptly execute any agreements generally distributed by the Company or the Parent to its employees requiring such employees to abide by its inside information policies. Parent shall provide copy of the inside information policies. 4. Compensation and Expenses. ------------------------- (a) Salary. For the services of the Employee to be rendered under this ------ Agreement, the Company shall pay the Employee an annual gross salary of $266,000 Canadian Dollars ($266,000) (the "Base Salary") during the Term, payable in accordance with the Company's normal payroll practices and subject to applicable deductions at source required by law or the Company's ordinary course payroll practices. The Base Salary shall be increased as and when the Company meets targeted financial results, subject to approval of the Board of Directors. 2 (b) Expenses. In addition to any compensation received pursuant to -------- Section 5(a) the Company shall reimburse funds to the Employee for all reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of Employee's duties under this Agreement and provided that the Employee properly provides a written accounting of such expenses to the Company in accordance with the Company's then current practices. Such reimbursement shall be made in accordance with policies and procedures of the Company in effect from time to time relating to reimbursement of Employees. 5. Benefits. All benefits are, subject to Sections 6 and 7, available to -------- Employee for the full Term of this Agreement. (a) Vacation. During the first year of employment, the Employee shall -------- be entitled to 20 days of vacation, and to any additional number of days as specified by the Company in its sole discretion or based on any applicable requirements of law, in each instance without loss of compensation or other benefits to which Employee is entitled under this Agreement, to be taken at such times as the Employee may select and the affairs of the Company may permit. (b) Employee Benefit Programs. The Employee is entitled to participate ------------------------- in any pension, retirement savings plan, insurance or other employee benefit plan that is maintained by the Company for its executive officer employees, including programs of life, disability and medical insurance and reimbursement of membership fees in professional organizations. (c) Bonus. For the Initial Term of this Agreement, the parties agree ----- that the Employee shall be entitled to a bonus determined in accordance with sales targets, profits and bonus rates as agreed to in writing by Employee and the Company from time to time and in accordance with Parent's policies and practices with respect to bonus payments to its executives. (d) Stock Options. The Parent shall grant the Employee 35,000 10-year ------------- stock options, all of which shall be subject to the terms of the Parent's Second Amended and Restated 1999 Stock Option Plan. Subject to any applicable requirements of law, such options will be exercisable at the closing price of the Parent's common stock on the Nasdaq Stock Market on the last trading day prior to the execution of this Agreement, and shall vest over a three year term each June 30 and December 31 in equal increments of 58,334 options commencing on December 31, 2002, subject to continued employment at each applicable vesting date. All options shall be subject to execution of the Parent's then standard stock option agreement. Except in the event of Employee's termination of employment by the Company without Cause, all unvested options expire at the Termination Date. In the event of the termination by the Company of Employee's employment without Cause, the vesting of those unvested options that would have vested during the Severance Period (herein defined) shall be accelerated and shall vest as of the Termination Date. In addition, as and when Parent has in place an executive stock option plan Employee shall have the right, subject to Board approval, to participate in that plan. All vested options (including those accelerated as provided above) must be exercised within three months of Employee's termination of employment (whatever the reason), failing which they expire. 3 (e): automobile: Company shall provide an automobile (leasing) for Marc LeBel ($1000 per month), excluding taxes), all licenses, insurances and maintenance costs to be paid by the Company. 6. Termination. ----------- (a) Notwithstanding anything contained herein to the contrary, it is agreed that the Employee's employment hereunder may be terminated with or without Cause (as defined below) at any time during the Term of the present Agreement and without any recourse, claim or cause of action by either party against the other with respect to such termination: (i) by the Company at any time, by giving to the Employee written notice of termination (the date of such notice being herein called the "Notice Date"), which notice shall set forth the date upon which the Employee's employment shall terminate as determined by the Company in its sole discretion (which may be the Notice Date or any later date selected by the Company), or (ii) by the Employee at the expiration of thirty (30) days after the giving of written notice of termination to the Company, or at the expiration of such shorter notice period as the Company in its sole discretion may require and notify the Employee following the Company's receipt of such notice from the Employee. (b) For the purposes of this Agreement, the term "Cause" shall include: (i) a willful failure or refusal by the Employee to perform Employee's customary duties or services for the Company, or its Affiliates (as herein defined), without lawful justification; (ii) the Employee's conviction for a criminal act or other offense pursuant to the provisions of the Criminal Code of Canada or any other criminal or penal statute of any jurisdiction which the Company reasonably determines may have an adverse effect upon the reputation or goodwill of the Company, or on the performance of the Employee's duties hereunder; (iii) a breach by the Employee of, or the Employee's failure or refusal to perform, in any material respect, any of Employee's obligations under any employment agreement, employee invention and confidentiality agreement or such other material written agreement between the Employee and the Company; (iv) the Employee's violation of any published employment policy or practice of the Company provided the Employee fails to adhere to such policy/practice within a reasonable period of time, but no later than thirty (30) days, after receipt of notice; (v) gross negligence or willful misconduct or fraud by the Employee in the performance of Employee's duties, (vi) breach by the Employee of any applicable securities laws; or (vii) any serious reason or just cause under Quebec law. (c) If the Employee becomes substantially incapacitated so as to be prevented from properly and continuously performing in full Employee's duties to the Company for a substantially continuous period of three (3) months or more in any consecutive twelve (12) month period, the Company will continue to pay the Employee's base salary for such three (3) month period. If the Employee is unable to return to work after such three (3) month period, the Company may, in its sole discretion, elect to terminate the Employee's employment at any time during the continuance of such incapacity by giving to the Employee written notice of termination or severance pay in lieu thereof and, if the Company gives such notice of termination or severance pay in lieu thereof, the Employee's employment with the Company shall terminate on the date set forth in such notice, without recourse by either party against the other with respect to such termination. (d) Upon termination of employment under paragraphs (a) or (c) above, the Employee shall have no right to compensation or reimbursement under Section 4 or to participate in 4 any employee benefits under Section 5, except as provided for by applicable law or Section 7, for any period subsequent to the Termination Date. (e) Notwithstanding any termination of employment, the provisions of Sections 9 and 10 shall remain in full force and effect. 7. Payments in the Event of Termination. ------------------------------------ (a) In this Agreement, the expression "Termination Date" means (i) in the case of termination by the Company pursuant to Section 7(a)(i) or 7(c) hereof, the date of termination of the Employee's employment set forth in the written notice of termination given by the Company pursuant to either of such sections (as the case may be); and (ii) in the case of termination by the Employee pursuant to Section 6(a)(ii) hereof, the date which is thirty (30) days following the date upon which the Employee has given notice of termination or, if the Company has required a shorter notice period, the last day of such shorter period. (b) In the event of termination of employment pursuant to Section 6 hereof, notwithstanding anything in this Agreement contained to the contrary, all payments and benefits to the Employee under this Agreement shall cease and terminate except that: (i) In the event of termination by the Employee pursuant to Section 7(a)(ii) hereof and in case of termination by the Company pursuant to Section 7(c) hereof or for Cause, the Employee's base salary shall be pro rated based on the number of days elapsed between the last date to which such salary was paid up to (but excluding) the Termination Date and shall be paid to the Employee up to the Termination Date; (ii) In the event of non-renewal of this Agreement by the Company pursuant to Section 2 hereof after the Initial Term or if Employee's employment is terminated by the Company without Cause, the Employee will be entitled to receive an amount equal to Employee's Base Salary for 12 months (such 12 month period is herein referred to as the "Severance Period" and the said amount payable is herein referred to as the "Severance Pay") as full and final settlement of all claims, including for any employment related benefits and severance and termination pay or indemnities, against the Company or any of its Affiliates. (c) Payment of Severance Pay. The Severance Pay shall be paid in ------------------------ equal instalments over the Severance Period at the times and in accordance with the Company's customary pay periods and payroll practices as may be established or modified from time to time and shall be subject to all applicable federal, provincial and/or local payroll and withholding taxes. Notwithstanding anything to the contrary herein contained, the Severance Pay shall terminate once Employee finds "Alternative Employment" or in the event of a breach of any terms of this Agreement by Employee, including Sections 8 and 9. "Alternative Employment" means any employment(s) or other relationship(s) (such as consultant or contractor) with any other Person which in the aggregate provide Employee, directly or indirectly, with compensation equal to at least 80% of Employee's then applicable Base Salary. (d) Termination of Benefits. Except for any right of continuation of ----------------------- benefits coverage to the extent provided by the terms and conditions of the benefit programs relating to life, 5 disability and medical insurance, by this Agreement or by applicable law, benefits shall terminate pursuant to the terms of the applicable benefit plans as of the Termination Date of the Employee's employment. (e) Release. Company's obligation to provide any of the amounts and ------- benefits hereunder shall be subject to, and conditioned upon, the Employee's execution of a full release of claims satisfactory to the Company releasing the Company, its Affiliates and their respective employees and agents from any claims arising from or related to the Employee's employment or severance from employment with the Company, including any claims arising from this Agreement (f) Cessation of Severance Pay and Benefits. If the Employee breaches --------------------------------------- Employee's obligations under this Agreement, the Company may immediately cease payment of all severance and benefits described in this Agreement. The cessation of these payments shall be in addition to, and not as an alternative to, any other remedies at law or in equity available to the Company, including the right to seek specific performance or an injunction. 8. Non-Competition Agreement. ------------------------- (a) Competition with the Company or the Parent. During the Term and ------------------------------------------ for a period of 12 months commencing on the Termination Date (whatever the reason of the termination of employment) (the "Restricted Period"), the Employee, directly or indirectly or, in association with or as a stockholder, director, officer, consultant, employee, partner, joint venturer, member or otherwise of or through any person, firm, corporation, partnership, association or other entity (any of the foregoing defined as an "Affiliated Entity") shall not become employed by, lend money to, advise, become a shareholder of or otherwise become associated with any entity which competes with the Company or the Parent within the United States or the Province of Quebec. Provided, -------- however, the foregoing provisions shall not prevent the Employee from accepting - ------- employment with an enterprise engaged in two or more lines of business, one of which is the same or similar to the Company's business (the "Prohibited Business") if the Employee's employment is totally unrelated to the Prohibited Business; provided, further, the foregoing shall not prohibit Employee from -------- ------- owning up to 5% of the securities of any publicly-traded enterprise provided the Employee is not an employee, director, officer, consultant to such enterprise or otherwise reimbursed for services rendered to such enterprise. In addition, the Employee may not, directly or indirectly including through any Affiliated Entity, obtain employment with or perform services for any Customer (as herein defined) of the Company or any affiliate of a Customer during the period commencing on the Termination Date and continuing for 12 months thereafter, except by prior written approval of the Company. This section 9(a) shall not apply where the Employee is terminated without Cause, unless the Company is satisfying its obligation to pay Severance Pay under Section 7. (b) Solicitation of Customers. During the Restricted Period, the ------------------------- Employee, directly or indirectly including through any Affiliated Entity, shall not seek Prohibited Business from any Customer (as defined below) on behalf of any enterprise or business other than the Company or any of its Affiliates, refer Prohibited Business from any Customer to any enterprise or business other than the Company or any of its Affiliates or receive commissions based on sales or otherwise relating to the Prohibited Business from any Customer, or any enterprise or business other than the Company or any of its Affiliates. For purposes of this Agreement, the term "Customer" means any person, firm, corporation, partnership, association or other entity to which the Company or, to the knowledge of the 6 Employee, any of its Affiliates sold or provided goods or services during the 24-month period prior to the time at which any determination is required to be made as to whether any such person, firm, corporation, partnership, association or other entity is a Customer, or who or which has been approached by or who or which has approached an employee or agent of the Company or, to the knowledge of the Employee, any of its Affiliates for the purpose of doing business with the Company or any of its Affiliates, as the case may be. (c) Solicitation of Employees. During the Restricted Period, the ------------------------- Employee, directly or indirectly including through any Affiliated Entity shall not solicit, hire or contact any employee or full-time consultant of the Company or any of its Affiliates for the purpose of hiring them or causing them to terminate their employment relationship with the Company or any of its Affiliates. This undertaking shall apply equally to any individual that was an employee or full-time consultant of the Company or any of its Affiliates at the time of the termination of Employee's employment with the Company. (d) No Payment. The Employee acknowledges and agrees that no ---------- separate or additional payment will be required to be made to Employee in consideration of Employee's undertakings in this Section. (e) No Effect on SPA. Employee further agrees that nothing herein ---------------- shall limit, lessen or otherwise affect Employee's obligations under Section 13 of the Share Purchase Agreement ("SPA") entered into between the Vendors and SFBC Canada, Inc. (as such term is defined in the SPA) (in consideration for the purchase of the shares therein described), and that you are bound concurrently to this Section 9 (in consideration of employment hereunder) and the said Section 13 of the SPA. (f) For greater certainty, references to the "Company" in this Section 8 shall include the Company's Affiliates. 9. Non-Disclosure of Confidential Information. ------------------------------------------ (a) Confidential Information. "Confidential Information" includes, but is not limited to, trade secrets, processes, policies, procedures, techniques including recruiting techniques, designs, drawings, know-how, show- how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing and uses of the Services (as defined herein), the Company's or its Affiliates' budgets and strategic plans, and the identity and special needs of Customers, databases, data, all technology relating to the Company's or its Affiliates' businesses, systems, methods of operation, client or Customer lists, Customer information, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, names, home addresses and all telephone numbers and e-mail addresses of the Company's or its Affiliates' employees, former employees, clients and former clients. In addition, Confidential Information also includes the identity of Customers and the identity of and telephone numbers, e-mail addresses and other addresses of employees or agents of Customers who are the persons with whom the Company's employees and agents communicate in the ordinary course of business. Confidential Information also includes, without limitation, Confidential Information received from the Company's Affiliates. For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is available to the public through no act of the Employee, (ii) information set forth in the written records 7 of the Employee prior to disclosure to the Employee by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is lawfully obtained by the Employee in writing from a third party (excluding any Affiliates) who did not acquire such confidential information or trade secret, directly or indirectly, from the Employee or the Company or the Company's Affiliates. As used herein, the term "Services" shall include all clinical or pre-clinical research, testing, protocol design, data management, medical writing or other Services relating to proposed or actual formulations, foods, drugs and medical devices engaged in by the Company or any Affiliate during the Term of the Employee's employment. (b) Legitimate Business Interests. The Employee recognizes that the ----------------------------- Company has legitimate business interests to protect and as a consequence, the Employee agrees to the restrictions contained in this Agreement because they further the Company's legitimate business interests. These legitimate business interests include, but are not limited to (i) trade secrets; (ii) valuable confidential business or professional information that otherwise does not qualify as trade secrets including all Confidential Information; (iii) substantial relationships with specific prospective or existing Customers or clients; (iv) Customer or client goodwill associated with the Company's business; and (v) specialized training relating to the Company's technology, methods and procedures. (c) Confidentiality. For a period of five years following --------------- termination of employment (for whatever reason), or as otherwise required by client privilege, the Confidential Information shall be held by the Employee in the strictest confidence and shall not, without the prior written consent of the Company, be disclosed for whatever reason or purpose to any person or entity other than in connection with the Employee's employment by the Company. The Employee further acknowledges that such Confidential Information as is acquired and used by the Company or its Affiliates is a special, valuable and unique asset. The Employee shall exercise all due and diligent precautions to protect the integrity and confidentiality of the Confidential Information and to keep it confidential whether it is in written form, on electronic media or oral. The Employee shall not copy any Confidential Information except to the extent necessary to Employee's employment nor remove any Confidential Information or copies thereof (in whatever form) from the Company's premises except to the extent necessary to Employee's employment and then only with the authorization of an officer of the Company. All records, files, materials and other Confidential Information obtained by the Employee in the course of Employee's employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company. The Employee shall not, except in connection with and as required by Employee's performance of Employee's duties under this Agreement, for any reason use for Employee's own benefit or the benefit of any other person or entity any Confidential Information. (d) Employee agrees that Employee shall not acquire any right, title or interest in or to the Confidential Information. (e) For greater certainty, references to the "Company" in this Section 10 shall include the Company's Affiliates. 10. Equitable Relief. ---------------- (a) The Company and the Employee recognize that the services to be rendered under this Agreement by the Employee are special, unique and of extraordinary character, and that in the event of the breach by the Employee of the terms and conditions of this Agreement or if the 8 Employee, shall cease to be an employee of the Company for any reason and take any action in violation of Section 9 and/or Section 10, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 11(b) below, to enjoin the Employee from breaching the provisions of Section 9 or Section 10. In such action, the Company shall not be required to plead or prove irreparable harm or lack of an adequate remedy at law or post a bond or any security. (b) The Employee irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of the Province of Quebec and agrees to take any and all future action necessary to submit to the jurisdiction of such courts. The Company irrevocably and unconditionally submits to the jurisdiction of those same courts. The Employee and the Company irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against the Employee or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Employee or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise. 11. Conflicts of Interest. While employed by the Company, the Employee --------------------- shall not, directly or indirectly, unless approved in writing by the President: (a) participate as an individual in any way in the benefits of transactions with any of the Company's suppliers or Customers, including, without limitation, having a financial interest in the Company's suppliers or Customers, or making loans to, or receiving loans, from, the Company's suppliers or Customers; (b) realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Employee's employment with the Company for the Employee's personal advantage or gain; or (c) accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a technical capacity by, a person or entity which does business with the Company. (d) As used in Section 12(a), (b) or (c), the Company also includes its Affiliates. 12. Inventions, Ideas, Processes, and Designs. All inventions, ideas, ----------------------------------------- processes, programs, software, and designs (including all improvements) (i) conceived or made by the Employee during the course of Employee's employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months subsequent to the termination or expiration of such employment with the Company and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company, are hereby assigned by the Employee to the Company and shall be the sole and exclusive property of the Company. An invention, idea, process, program, software, or design (including an improvement) shall be deemed related to the business of the Company if (a) it was made with the Company's equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Employee for the Company, or (c) pertains to the current business or 9 demonstrably anticipated research or development work of the Company. The Employee shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly sign all instruments and agreements to further ensure the assignment of all such inventions, ideas, processes, and designs to the Company. The decision to file for patent or copyright protection or to maintain such development as a trade secret shall be in the sole discretion of the Company, and the Employee shall be bound by such decision. The Employee shall provide as a schedule to this Agreement, a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or non- copyrighted, including a brief description, which Employee made or conceived prior to Employee's employment with the Company and which therefore are excluded from the scope of this Agreement. 13. Indebtedness. If, during the course of the Employee's employment ------------ under this Agreement, the Employee becomes indebted to the Company for any reason, the Company may, if it so elects, set off any sum due to the Company from the Employee and collect any remaining balance from the Employee. 14. Assignability. The rights and obligations of the Company under this ------------- Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, provided that such successor or assign shall acquire all or substantially all of the securities (via merger or otherwise) or assets and business of the Company. The Employee's obligations hereunder may not be assigned or alienated and any attempt to do so by the Employee will be void. 15. Severability. ------------- (a) The Employee expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement are reasonable in light of the circumstances as they exist on the date hereof. Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement of the Employee and the Company that this Agreement shall be construed by the court in such a manner as to impose only those restrictions on the Employee's conduct that are reasonable in the light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement. (b) If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other. The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provision were not included. 16. Notices and Addresses. All notices, offers, acceptance and any other --------------------- acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the 10 addressees in person, by Federal Express or similar receipted delivery, by facsimile delivery or, if mailed, postage prepaid, by certified mail, return receipt requested, as follows: To the Company: Anapharm, Inc. 2050 Rene-Levesque Blvd. West Quebec, Quebec G1V 2K8 Facsimile: (418) 527-3456 Attention: Marc LeBel, President and CEO With a Copy to: SFBC International, Inc. 11190 Biscayne Boulevard Miami, Florida 33181. Facsimile: (305) 895-8616 Email: ahantman@sfbci.com To the Employee: At the address contained in the Company's records. or to such other address as either of them, by notice to the other may designate from time to time. The transmission confirmation receipt from the sender's facsimile machine shall be evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing. 17. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature. 18. Governing Law. This Agreement and any dispute, disagreement, or issue ------------- of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the laws of the Province of Quebec and the laws of Canada applicable therein without regard to choice of law considerations. 19. Entire Agreement. This Agreement constitutes the entire agreement ---------------- between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. 20. Modifications, Waivers. This Agreement may be amended, modified, ---------------------- superseded, cancelled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument executed by both parties hereto, or in the case of a waiver, by the party waiving compliance. The failure by either party at any time or times to require performance of any provisions hereof shall in no way affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement whether by conduct or otherwise or in respect of any one or more instances, shall be deemed to be, or be construed as, a further or continuing waiver of any breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 11 21. Additional Documents. The parties hereto shall execute such -------------------- additional instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder. 22. Section and Paragraph Headings. The section and paragraph headings in ------------------------------ this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 23. Language. The Parties confirm that it is their wish that this -------- Employment Agreement, as well as any other documents relating to this Employment Agreement, including notices, schedules and authorizations, have been and shall be drawn up in the English language only. Les signataires confirment leur volonte que la presente convention d'emploi, de meme que tous les documents s'y rattachant, y compris tout avis, annexe et autorisation, soient rediges en anglais seulement. IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as of the date and year first above written. SFBC By: /s/ Gregory B. Holmes By: /s/ Marc LeBel ---------------------------- ------------------------- Gregory B. Holmes Marc LeBel Executive Vice President Employee 12 SCHEDULEA Bonus (Section 6(c)) Up to 35% of base salary based upon performance. 13 EX-10.9 5 dex109.txt FORM OF EMPLOYMENT AGREEMENT OF RAY CARR EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this 1st day of April, 2001, between SFBC Charlotte, Inc., a Florida corporation (the "Company") and Raymond R. Carr (the "Employee"). WHEREAS, in its business, the Company has acquired and developed certain trade secrets, including but not limited to proprietary processes, sales methods and techniques, and other like confidential business and technical information including but not limited to technical information, design systems, methods of recruiting subjects, pricing methods, pricing rates or discounts, process, procedure, formula, design of computer software or improvement of any portion or phase thereof, whether patented or not, that is of any value whatsoever to the Company, as well as certain unpatented information relating to the Company's Services, as defined, information concerning proposed new Services, market feasibility studies, proposed or existing marketing techniques or plans (whether developed or produced by the Company or by any other entity for the Company), other Confidential Information, as defined by Section 8, and information about the Company's employees, officers, and directors, which necessarily will be communicated to the Employee by reason of his employment by the Company; and WHEREAS, the Company has strong and legitimate business interests in preserving and protecting its investment in the Employee, its trade secrets and Confidential Information, and its substantial relationships with suppliers, and Customers, as defined, actual and prospective; and WHEREAS, the Company desires to preserve and protect its legitimate business interests further by restricting competitive activities of the Employee during the term of employment and following (for a reasonable time) termination of employment; and WHEREAS, the Company desires to employ the Employee and to ensure the continued availability to the Company of the Employee's services, and the Employee is willing to accept such employment and render such services, all upon and subject to the terms and conditions contained in this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Employee agree as follows: 1. Representations and Warranties. The Employee hereby represents and ------------------------------- warrants to the Company that he (i) is not subject to any written nonsolicitation or noncompetition agreement affecting his employment with the Company (other than any prior agreement with the Company or any Affiliate), (ii) is not subject to any written confidentiality or nonuse/nondisclosure agreement affecting his employment with the Company (other than any prior agreement with the Company or or any Affiliate), and (iii) has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer. 2. Term of Employment. ------------------ (a) Term. The Company hereby employs the Employee, and the Employee ---- hereby accepts employment with the Company for a period commencing on the date of this Agreement and ending one year from the date of this Agreement (the "Term"), automatically renewable for additional one year terms unless either party gives the other at least 90 days written notice. (b) Continuing Effect. Notwithstanding any termination of employment, ----------------- at the end of the term or otherwise, the provisions of Sections 7 and 8 shall remain in full force and effect and the provisions of Section 8 shall be binding upon the legal representatives, successors and assigns of the Employee. 3. Duties. ------ (a) General Duties. The Employee shall serve as Corporate Vice -------------- President and Chief Operating Officer of the Company, with duties and responsibilities that are customary for such position. The Employee shall report directly to Dr. Gregory B. Holmes, or as otherwise directed by the board of directors. The Employee shall use his best efforts to perform his duties and discharge his responsibilities pursuant to this Agreement competently, carefully and faithfully. (b) Devotion of Time. The Employee shall devote all of his time, ---------------- attention and energies during normal business hours (exclusive of periods of sickness and disability and of such normal holiday and vacation periods as have been established by the Company) to the affairs of the Company. The Employee shall not enter the employ of or serve as a consultant to, or in any way perform any services with or without compensation to, any other persons, business or organization without the prior consent of the board of directors of the Company, except for his limited commitments to SCI-COM. (c) Location of Office. The Employee's business offices shall be at ------------------ the Company's offices in Miami, Florida, Charlotte, North Carolina, and Austin, Texas. However, the Employee's job responsibilities shall include all business travel necessary to the performance of his job. In any event, the Employee's services shall be supervised by Dr. Gregory B. Holmes and the board of directors of the Company located in Miami, Florida. As such, Employee shall regularly and primarily transact business with or in Miami-Dade County, Florida in furtherance of his duties. (d) Adherence to Inside Information Policies. The Employee ---------------------------------------- acknowledges that the Company's parent, SFBC International, Inc. ("Parent") is publicly-held and, as a result, has implemented inside information policies designed to preclude its employees and those of its subsidiaries from violating the federal securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company, the Parent or any third party. The Employee shall promptly execute any agreements generally distributed by the Company or the Parent to its employees requiring such employees to abide by its inside information policies. 4. Compensation and Expenses. ------------------------- (a) Salary. For the services of the Employee to be rendered under ------ this Agreement, the Company shall pay the Employee an annual salary of $100,000 during the Term, payable in accordance with the Company's normal payroll practices. 2 (b) Expenses. In addition to any compensation received pursuant to -------- Section 4(a) the Company shall reimburse or advance funds to the Employee for all reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of his duties under this Agreement, provided that the Employee properly provides a written accounting of such expenses to the Company in accordance with the Company's practices. Such reimbursement or advances shall be made in accordance with policies and procedures of the Company in effect from time to time relating to reimbursement of or advances to Employees. (c) Car Rental. The Company shall provide rental car for the Employee ----------- at locations described in this Agreement or any other job assignment. (d) Housing Expenses. The Company shall continue to provide temporary ----------------- housing through December 2001. In addition, the Company requires the Employee to maintain a home office for the Company's convenience. (e) Discretionary Bonus. The Employee shall be eligible to receive an ------------------- annual bonus in an amount to be determined by the compensation committee of the Company based on any criteria or factors the compensation committee deems appropriate. 5. Benefits. Except for accrued vacation under Section 5(a) and the -------- benefits described under Section 5(c), no other benefits are available during the fist 90 days of this Agreement. (a) Vacation. During the first year of employment, the Employee shall -------- be entitled to 10 days of vacation, and thereafter up to 15 days of vacation, in each instance without loss of compensation or other benefits to which he is entitled under this Agreement, to be taken at such times as the Employee may select and the affairs of the Company may permit. (b) Employee Benefit Programs. The Employee is entitled to ------------------------- participate in any pension, 401(k), insurance or other employee benefit plan that is maintained by the Company for its non-executive officer employees, including programs of life and medical insurance and reimbursement of membership fees in professional organizations. (c) Insurance. The Company shall pay the premiums on the Company's --------- medical insurance policy covering Employee, unless the Employee elects to continue his current medical insurance program with "Trustmark" in which event, the cost for "Trustmark" shall be reimbursed to the Employee in an amount not to exceed $344/month. (d) Stock Options. The Parent shall grant the Employee 50,000 10-year ------------- stock options as exercisable at $9.15 per share as provided in the Parent's Stock Option Agreement with the Employee. 6. Termination. ----------- (a) General Provisions. Either the Company or the Employee, in his or ------------------- its sole discretion, may terminate the Employee's employment without cause at any time upon 90 days written 3 notice. Upon effectiveness of such termination, the Employee shall have no right to compensation or reimbursement under Section 4 or to participate in any employee benefit programs under Section 5, except as provided for by law for any period subsequent to the effective date of termination. On or before the termination of his employment or prior to receiving any final compensation or expenses due him, the Employee shall (a) return to the Company's principal executive offices, (b) participate in an exit interview, and (c) execute a Certificate of Conclusion of Employment, certifying that he has complied with his obligations and acknowledging his continuing obligations under this Agreement. The Employee's failure to comply with the requirements of Section 6 of this Agreement shall constitute a material breach of this Agreement. If the Employee is terminated for any reason other than Cause (defined below), he shall be entitled to 90 days severance pay from the effective date of such termination. (b) Termination for Cause. The Company may terminate the Employee's ---------------------- employment pursuant to the terms of this Agreement at any time for Cause by giving written notice of termination. The Employee shall have 10 days from the date of the notice to provide the Company with evidence that the Company is mistaken as to "Cause" and that the Employee's behavior does not meet the criteria for "cause" as defined herein. During such 10 day period the Employee shall be suspended without pay; if employment is reinstated the Employee shall be paid for the 10 day period and if the termination is upheld such termination shall be effective upon the giving of written notice of termination. Upon any such termination for Cause, the Employee shall have no right to compensation or reimbursement under Section 4, or to participate in any employee benefit programs under Section 5, except as provided by law, for any period subsequent to the effective date of termination. For purposes of this Section 6(b), "Cause" shall mean: (i) the Employee is convicted of a felony involving any subject matter (ii) is charged with a felony; (iii) is convicted of a misdemeanor directly involving the Employee's employment which directly effects the business of the Company; (iv) is found after an internal investigation to have engaged in sexual misconduct which is related to the Employee's employment or the business of the Company; (v) the Employee, in carrying out his duties hereunder, has acted with gross negligence or intentional misconduct resulting, in either case, in harm to the Company; (vi) the Employee misappropriates Company funds or otherwise defrauds the Company; (vii) the Employee breaches his fiduciary duty to the Company resulting in profit to him, directly or indirectly; (viii) the Employee has been found to have committed any act or failed to take any action which results in the Parent's common stock being delisted for trading on the American Stock Exchange or any other principal trading market or exchange; (ix) the Employee is convicted of illegal possession or use of a controlled substance; (x) the Employee engages in chronic absenteeism or drinking to excess; (xi) the Employee fails or refuses to cooperate in any official investigation conducted by or on behalf of the Company; or (xii) the Employee materially breaches any provision of this Agreement including Section 3(d). 7. Non-Competition Agreement. ------------------------- (a) Competition with the Company. Until termination of his employment ---------------------------- and for a period of 12 months commencing on the date of termination, the Employee, directly or indirectly or, in association with or as a stockholder, director, officer, consultant, employee, partner, joint venturer, 4 member or otherwise of or through any person, firm, corporation, partnership, association or other entity ("any of the foregoing defined as an "Affiliated Entity") shall not provide services as a chief operating officer to an entity which competes with the Company or its Affiliates, within any metropolitan area in the United States or elsewhere in which the Company, its subsidiaries or its controlling stockholder, if applicable (collectively, the "Affiliates") is then engaged in the offer and sale of competitive products or Services. Provided, -------- however, the foregoing provisions shall not prevent the Employee from accepting - ------- employment with an enterprise engaged in two or more lines of business, one of which is the same or similar to the Company's business (the "Prohibited Business") if the Employee's employment is totally unrelated to the Prohibited Business; provided, further, the foregoing shall not prohibit Employee from owning up to 5% of the securities of any publicly-traded enterprise provided the Employee is not an employee, director, officer, consultant to such enterprise or otherwise reimbursed for services rendered to such enterprise. In addition, the Employee may not, directly or indirectly including through any Affiliated Entity, obtain employment with or perform services for any Customer, as defined, of the Company or any Affiliate during the period commencing on the date of termination and continuing for 12 months thereafter. The Employee may perform services for SCI-COM, a general partnership owned by the Employee and Mary Ruwart and engaged in the business of teaching communications skills to research scientists. (b) Solicitation of Customers. During the periods in which the ------------------------- provisions of Section 7(a) shall be in effect, the Employee, directly or indirectly including through any Affiliated Entity, shall not seek Prohibited Business from any Customer (as defined below) on behalf of any enterprise or business other than the Company or any Affiliate, refer Prohibited Business from any Customer to any enterprise or business other than the Company or any Affiliate or receive commissions based on sales or otherwise relating to the Prohibited Business from any Customer, or any enterprise or business other than the Company or any Affiliate. For purposes of this Agreement, the term "Customer" means any person, firm, corporation, partnership, association or other entity to which the Company or any of its Affiliates sold or provided goods or services during the 24-month period prior to the time at which any determination is required to be made as to whether any such person, firm, corporation, partnership, association or other entity is a Customer, or who or which has approached by or who or which has approached an employee of the Company or any Affiliate for the purpose of soliciting business from the Company or any Affiliate or the third party, as the case may be. (c) Solicitation of Employees. During the periods in which the ------------------------- provisions of Section 7(a) shall be in effect, the Employee, directly or indirectly including through any Affiliated Entity shall not solicit, hire or contact any employee of the Company or any Affiliate for the purpose of hiring them or causing them to terminate their employment relationship with the Company or any Affiliate. (d) No Payment. The Employee acknowledges and agrees that no separate ---------- or additional payment will be required to be made to him in consideration of his undertakings in this Section. (e) References to the Company in this Section 7 shall include the Company's Affiliates. 8. Non-Disclosure of Confidential Information. ------------------------------------------ (a) Confidential Information. Confidential Information includes, but ------------------------ is not limited to, trade secrets as defined by the common law and statute in Florida or any future Florida statute, processes, 5 policies, procedures, techniques including recruiting techniques, designs, drawings, know-how, show-how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing and uses of the Services (as defined herein), the Company's budgets and strategic plans, and the identity and special needs of Customers, databases, data, all technology relating to the Company's businesses, systems, methods of operation, client or Customer lists, Customer information, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, names, home addresses and all telephone numbers and e-mail addresses of the Company's employees, former employees, clients and former clients. In addition, Confidential Information also includes the identity of Customers and the identity of and telephone numbers, e-mail addresses and other addresses of employees or agents of Customers who are the persons with whom the Company's employees and agents communicate in the ordinary course of business. Confidential Information also includes, without limitation, Confidential Information received from the Company's Affiliates. For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is or subsequently becomes generally available to the public through no act of the Employee, (ii) information set forth in the written records of the Employee prior to disclosure to the Employee by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is lawfully obtained by the Employee in writing from a third party (excluding any Affiliates (which includes the Parent) of the Employee) who did not acquire such confidential information or trade secret, directly or indirectly, from the Employee or the Company. As used herein, the term "Services" shall include all clinical or pre- clinical research, testing, protocol design, data management, medical writing or other Services relating to proposed or actual formulations, foods, drugs and medical devices engaged in by the Company or any Affiliate during the Term of the Employee's employment. (b) Legitimate Business Interests. The Employee recognizes that the ----------------------------- Company has legitimate business interests to protect and as a consequence, the Employee agrees to the restrictions contained in this Agreement because they further the Company's legitimate business interests. These legitimate business interests include, but are not limited to (i) trade secrets; (ii) valuable confidential business or professional information that otherwise does not qualify as trade secrets including all Confidential Information; (iii) substantial relationships with specific prospective or existing Customers or clients; (iv) Customer or client goodwill associated with the Company's business; and (v) specialized training relating to the Company's technology, methods and procedures. (c) Confidentiality. For a period of two years following termination --------------- of employment, or as otherwise required by client privilege, the Confidential Information shall be held by the Employee in the strictest confidence and shall not, without the prior written consent of the Company, be disclosed to any person other than in connection with the Employee's employment by the Company. The Employee further acknowledges that such Confidential Information as is acquired and used by the Company or its Affiliates is a special, valuable and unique asset. The Employee shall exercise all due and diligence precautions to protect the integrity of the Company's Confidential Information and to keep it confidential whether it is in written form, on electronic media or oral. The Employee shall not copy any Confidential Information except to the extent necessary to his employment nor remove any Confidential Information or copies thereof from the Company's premises except to the extent necessary to his employment and then only with the authorization of an officer of the Company. All records, files, materials and other Confidential Information obtained by the Employee in the course of his employment with the Company 6 are confidential and proprietary and shall remain the exclusive property of the Company or its Customers, as the case may be. The Employee shall not, except in connection with and as required by his performance of his duties under this Agreement, for any reason use for his own benefit or the benefit of any person or entity with which he may be associated or disclose any such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever without the prior written consent of an officer of the Company (excluding the Employee, if applicable). (d) References to the Company in this Section 8 shall include the Company's Affiliates. 9. Equitable Relief. ---------------- (a) The Company and the Employee recognize that the services to be rendered under this Agreement by the Employee are special, unique and of extraordinary character, and that in the event of the breach by the Employee of the terms and conditions of this Agreement or if the Employee, shall cease to be an employee of the Company for any reason and take any action in violation of Section 7 and/or Section 8, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 9(b) below, to enjoin the Employee from breaching the provisions of Section 7 or Section 8. In such action, the Company shall not be required to plead or prove irreparable harm or lack of an adequate remedy at law or post a bond or any security. (b) Any action for equitable relief must be commenced in Miami-Dade County, Florida. The Employee and the Company irrevocably and unconditionally submit to the exclusive jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of such courts. The Employee and the Company irrevocably waive any objection that they now have or hereafter irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or arbitration proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against the Employee or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Employee or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise. 10. Conflicts of Interest. While employed by the Company, the Employee --------------------- shall not, directly or indirectly, unless approved in writing by the President: (a) participate as an individual in any way in the benefits of transactions with any of the Company's suppliers or Customers, including, without limitation, having a financial interest in the Company's suppliers or Customers, or making loans to, or receiving loans, from, the Company's suppliers or Customers; (b) realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Employee's employment with the Company for the Employee's personal advantage or gain; or 7 (c) accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a technical capacity by, a person or entity which does business with the Company. (d) As used in Section 10(a), (b) or (c), the Company also includes its Affiliates. 11. Inventions, Ideas, Processes, and Designs. All inventions, ideas, ----------------------------------------- processes, programs, software, and designs (including all improvements) (i) conceived or made by the Employee during the course of his employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months subsequent to the termination or expiration of such employment with the Company and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company and shall be the sole and exclusive property of the Company. An invention, idea, process, program, software, or design including an improvement) shall be deemed related to the business of the Company if (a) it was made with the Company's equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Employee for the Company, or (c) pertains to the current business or demonstrably anticipated research or development work of the Company. The Employee shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to the Company. The decision to file for patent or copyright protection or to maintain such development as a trade secret shall be in the sole discretion of the Company, and the Employee shall be bound by such decision. The Employee shall provide as a schedule to this Agreement, a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or non-copyrighted, including a brief description, which he made or conceived prior to his employment with the Company and which therefore are excluded from the scope of this Agreement. This Section does not apply to any inventions, ideas, processes, programs, software, or designs conceived or made by the Employee in connection with the business SCI-COM which relates in any way to the business of teaching communication skills to research scientists. 12. Indebtedness. If, during the course of the Employee's employment ------------ under this Agreement, the Employee becomes indebted to the Company for any reason, the Company may, if it so elects, set off any sum due to the Company from the Employee and collect any remaining balance from the Employee. 13. Assignability. The rights and obligations of the Company under this ------------- Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, provided that such successor or assign shall acquire all or substantially all of the securities (via merger or otherwise) or assets and business of the Company. The Employee's obligations hereunder may not be assigned or alienated and any attempt to do so by the Employee will be void. 14. Severability. ------------ (a) The Employee expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement are reasonable in light of the circumstances as they exist on the date hereof. Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement of the Employee and the Company that this Agreement shall be construed by the court in such a manner as to impose only those restrictions on the Employee's conduct that are reasonable in the light of the circumstances and as are necessary to assure to 8 the Company the benefits of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement. (b) If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other. The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provision were not included. 15. Notices and Addresses. All notices, offers, acceptance and any other --------------------- acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipted delivery, by facsimile delivery or, if mailed, postage prepaid, by certified mail, return receipt requested, as follows: To the Company: SFBC Charlotte, Inc. 11190 Biscayne Blvd. North Miami, FL 33181 Facsimile: (305) 895-8616 Attention: Dr. Gregory B. Holmes With a Copy to: Michael D. Harris, Esq. Michael Harris, P.A. 1645 Palm Beach Lakes Blvd. Suite 550 West Palm Beach, FL 33401 Facsimile (561) 478-1817 To the Employee: Raymond R. Carr 408 County Road 138-C Barnet, TX 78611 Facsimile (704) 593-1805 or to such other address as either of them, by notice to the other may designate from time to time. The transmission confirmation receipt from the sender's facsimile machine shall be evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing. 16. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature. 9 17. Attorney's Fees. In the event that there is any controversy or claim --------------- arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to a reasonable attorney's fee, costs and expenses. 18. Governing Law. This Agreement and any dispute, disagreement, or issue ------------- of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the State of Florida without regard to choice of law considerations. 19. Arbitration. Except for an action seeking equitable relief, any ----------- controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in Miami-Dade County, Florida (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. In any such arbitration proceeding the parties agree to provide all discovery deemed necessary by the arbitrator. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof. 20. Entire Agreement. This Agreement and the Parent's Non-Qualified Stock ---------------- Option Agreement with the Employee of even date constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought. 21. Additional Documents. The parties hereto shall execute such -------------------- additional instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder. 22. Section and Paragraph Headings. The section and paragraph headings in ------------------------------ this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 10 IN WITNESS WHEREOF, the Company and the Employee have executed this agreement as of the date and year first above written. SFBC CHARLOTTE, INC. __________________________________ By:________________________________________ Gregory B. Holmes, Executive Vice-President EMPLOYEE: __________________________________ By:________________________________________ Raymond R. Carr 11 EX-10.10 6 dex1010.txt FORM OF EMPLOYMENT AGREEMENT OF THOMAS PILLSWORTH EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this __ day of March, 2002, between SFBC Charlotte, Inc., a Florida corporation (the "Company") and Thomas J. Pillsworth, Jr. (the "Employee"). WHEREAS, in its business, the Company has acquired and developed certain trade secrets, including but not limited to proprietary processes, sales methods and techniques, and other like confidential business and technical information including but not limited to technical information, design systems, methods of recruiting subjects, pricing methods, pricing rates or discounts, process, procedure, formula, design of computer software or improvement of any portion or phase thereof, whether patented or not, that is of any value whatsoever to the Company, as well as certain unpatented information relating to the Company's Services, as defined, information concerning proposed new Services, market feasibility studies, proposed or existing marketing techniques or plans (whether developed or produced by the Company or by any other entity for the Company), other Confidential Information, as defined by Section 8, and information about the Company's employees, officers, and directors, which necessarily will be communicated to the Employee by reason of his employment by the Company; and WHEREAS, the Company has strong and legitimate business interests in preserving and protecting its investment in the Employee, its trade secrets and Confidential Information, and its substantial relationships with suppliers, and Customers, as defined, actual and prospective; and WHEREAS, the Company desires to preserve and protect its legitimate business interests further by restricting competitive activities of the Employee during the term of employment and following (for a reasonable time) termination of employment; and WHEREAS, the Company desires to employ the Employee and to ensure the continued availability to the Company of the Employee's services, and the Employee is willing to accept such employment and render such services, all upon and subject to the terms and conditions contained in this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Employee agree as follows: 1. Representations and Warranties. The Employee hereby represents and ------------------------------- warrants to the Company that he (i) is not subject to any written nonsolicitation or noncompetition agreement affecting his employment with the Company (other than any prior agreement with the Company or any Affiliate), (ii) is not subject to any written confidentiality or nonuse/nondisclosure agreement affecting his employment with the Company (other than any prior agreement with the Company or or any Affiliate), and (iii) has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer. 2. Term of Employment. ------------------ (a) Term. The Company hereby employs the Employee, and the Employee ---- hereby accepts employment with the Company for a period commencing no later than April 1, 2002 and ending one year from the date employment commences (the "Term") subject to Section 6, automatically renewable for additional one year terms unless either party gives the other at least 30 days written notice. (b) Continuing Effect. Notwithstanding any termination of employment, ----------------- at the end of the term or otherwise, the provisions of Sections 7 and 8 shall remain in full force and effect and the provisions of Section 8 shall be binding upon the legal representatives, successors and assigns of the Employee. 3. Duties. ------ (a) General Duties. The Employee shall serve as Vice President of -------------- Business Development of the Company, with duties and responsibilities that are customary for such position. The Employee shall report directly to the Company's Chief Operating Officer or as otherwise directed by the board of directors. The Employee shall use his best efforts to perform his duties and discharge his responsibilities pursuant to this Agreement competently, carefully and faithfully. (b) Devotion of Time. The Employee shall devote all of his time, ---------------- attention and energies during normal business hours (exclusive of periods of sickness and disability and of such normal holiday and vacation periods as have been established by the Company) to the affairs of the Company. The Employee shall not enter the employ of or serve as a consultant to, or in any way perform any services with or without compensation to, any other persons, business or organization without the prior consent of the board of directors of the Company. (c) Location of Office. The Employee's principal business office ------------------- shall be his home office located in Morrisville, North Carolina, except that the Employee shall report to the Company's management located in Charlotte, North Carolina. However, the Employee's job responsibilities shall include all business travel necessary to the performance of his job. In any event, the Employee's services shall be supervised by the Chief Operating Officer of the Company who performs his duties under the direction of the board of directors of the Company located in Miami, Florida. As such, Employee shall regularly transact business with or in Miami-Dade County, Florida in furtherance of his duties. (d) Adherence to Inside Information Policies. The Employee ---------------------------------------- acknowledges that the Company's parent, SFBC International, Inc. (the "Parent"), is publicly-held and, as a result, has implemented inside information policies designed to preclude its employees and those of its subsidiaries from violating the federal securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company, the Parent, or any third party. The Employee shall promptly execute any agreements generally distributed by the Company or the Parent to its employees requiring such employees to abide by its inside information policies. 2 4. Compensation and Expenses. ------------------------- (a) Salary. For the services of the Employee to be rendered under ------ this Agreement, the Company shall pay the Employee an annual salary of $150,000 during the Term, payable in accordance with the Company's normal payroll practices. (b) One-Time Signing Bonus. In addition to any compensation received ---------------------- pursuant to Section 4(a), you shall receive upon acceptance of this Agreement by you and the Company, a one-time signing bonus payment of $5,000, grossed up. (c) Expenses. In addition to any compensation received pursuant to -------- Section 4(a) the Company shall (i) reimburse or advance funds to the Employee for all reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of his duties under this Agreement. (d) Office Expenses. The Company shall pay the Employee reasonable --------------- and customary home office expenses in Morrisville, N.C. including, but not limited to, two phone lines, DSL Internet connection, fax machine, and copy machine. In addition, the Company shall pay the Employee a $400 per month home office allowance. (e) Automobile. The Company shall pay the Employee a monthly ---------- automobile allowance of $500. (f) Commissions. The Company shall pay the Employee the commissions ----------- reflected on Addendum A. 5. Benefits. Except for accrued vacation under Section 5(a), and the -------- benefits described under Section 5(c), no other benefits are available during the first 90 days of this Agreement. (a) Vacation. During the first year of employment, the Employee shall -------- be entitled to 10 days of vacation, and thereafter up to 15 days of vacation, in each instance without loss of compensation or other benefits to which he is entitled under this Agreement, to be taken at such times as the Employee may select and the affairs of the Company may permit. (b) Employee Benefit Programs. The Employee is entitled to ------------------------- participate in any pension, 401(k), insurance or other employee benefit plan that is maintained by the Company for its employees, including programs of life and medical insurance and reimbursement of membership fees in professional organizations. (c) Insurance. The Company shall pay the premiums on the Company's --------- medical insurance policy covering the Employee. The Company shall pay the premiums on a term life insurance policy insuring the Employee with the beneficiary chosen by the Employee and a face value equal to 1.5 times the Employee's base annual salary. 3 (d) Stock Options. The Parent shall grant the Employee 25,000 10-year ------------- non-qualified stock options pursuant to and subject to the terms of the Parent's Second Amended and Restated Stock Option Plan. The options will be exercisable at the closing price of the Parent's common stock on the Nasdaq Stock Market on the last trading day prior to the date on which this Agreement is executed by the Employee, and shall vest in equal increments over a three year term each June 30 and December 31 commencing December 31, 2002, subject to continued employment at each applicable vesting date. All options shall be subject to execution of the Parent's standard stock option agreement. In addition, the Employee will be eligible to participate in the Company's executive stock option plan when it is implemented. 6. Termination. ----------- (a) General Provisions. Either the Company or the Employee, in his or its ------------------ sole discretion, may terminate the Employee's employment without cause at any time upon 90 days written notice. Upon effectiveness of such termination, the Employee shall have no right to compensation or reimbursement under Section 4 or to participate in any employee benefit programs under Section 5, except as provided for by law for any period subsequent to the effective date of termination. On or before the termination of his employment or prior to receiving any final compensation or expenses due him, the Employee shall (a) return to the Company's principal executive offices, (b) participate in an exit interview, and (c) execute a Certificate of Conclusion of Employment, certifying that he has complied with his obligations and acknowledging his continuing obligations under this Agreement. The Employee's failure to comply with the requirements of Section 6 of this Agreement shall constitute a material breach of this Agreement. If the Employee is terminated for any reason other than Cause (defined below), he shall be entitled to 90 days severance pay from the effective date of such termination. (b) Termination for Cause. The Company may terminate the Employee's --------------------- employment pursuant to the terms of this Agreement at any time for Cause by giving written notice of termination. The Employee shall have 10 days from the date of the notice to provide the Company with evidence that the Company is mistaken as to "Cause" and that the Employee's behavior does not meet the criteria for "Cause" as defined herein. During such 10 day period the Employee shall be suspended without pay; if employment is reinstated the Employee shall be paid for the 10 day period and if the termination is upheld such termination shall be effective upon the giving of written notice of termination. Upon any such termination for Cause, the Employee shall have no right to compensation or reimbursement under Section 4, or to participate in any employee benefit programs under Section 5, except as provided by law, for any period subsequent to the effective date of termination. For purposes of this Section 6(b), "Cause" shall mean: (i) the Employee is convicted of a felony involving any subject matter (ii) is charged with a felony relating to the business of the Company or any Affiliate; (iii) is convicted of a misdemeanor directly involving the Employee's employment which directly affects the business of the Company; (iv) is found after an internal investigation to have engaged in sexual misconduct which is related to the Employee's employment or the business of the Company; (v) the Employee, in carrying out his duties hereunder, has acted with gross negligence or intentional misconduct resulting, in either case, in harm to the Company; (vi) the Employee misappropriates Company funds or otherwise defrauds the Company; (vii) the Employee breaches his fiduciary duty to the Company resulting in profit to him, directly or indirectly; (viii) the Employee has been found to have committed any act or failed to take any action which results in the Parent's common stock being delisted for trading on the principal trading market or exchange; (ix) the 4 Employee is convicted of illegal possession or use of a controlled substance; (x) the Employee engages in chronic absenteeism or drinking to excess; (xi) the Employee fails or refuses to cooperate in any official investigation conducted by or on behalf of the Company; (xii) the Employee materially breaches any provision of this Agreement including Section 3(d); or (xiii) the Employee on more than one occasion fails to comply with the directives of the Company's board of directors. (c) Special Termination. In the event that (i) the Employee, with or ------------------- without change in title or formal corporate action, shall no longer exercise all of the duties and responsibilities and shall no longer possess substantially all the authority set forth in Section 3, or (ii) any entity or person not now an Employee officer or director of the Company becomes either individually or as part of a group the beneficial owner of 30% or more of the Company's common stock, the Employee, by written notice to the Company, may elect to deem the Employee's employment hereunder to have been terminated by the Company without cause, in which event all of Employee's remaining unvested options, if any, shall vest immediately upon such termination and the Company shall release the Employee from the provisions of Section 7 (a) and (b). 7. Non-Competition Agreement. ------------------------- (a) Competition with the Company. Until termination of his employment ---------------------------- and for a period of 12 months commencing on the date of termination, the Employee, directly or indirectly or, in association with or as a stockholder, director, officer, consultant, employee, partner, joint venturer, member or otherwise of or through any person, firm, corporation, partnership, association or other entity ("any of the foregoing defined as an "Affiliated Entity") shall not provide sales, marketing or business development services to any entity which competes with the Company or its Affiliates, within any metropolitan area in the United States or elsewhere in which the Company, its subsidiaries or its controlling stockholder, if applicable (collectively, the "Affiliates") is then engaged in the offer and sale of competitive products or Services. Provided, -------- however, the foregoing provisions shall not prevent the Employee from accepting - ------- employment with an enterprise engaged in two or more lines of business, one of which is the same or similar to the Company's business (the "Prohibited Business") if the Employee's employment is totally unrelated to the Prohibited Business; provided, further, the foregoing shall not prohibit Employee from -------- ------- owning up to 5% of the securities of any publicly-traded enterprise provided the Employee is not an employee, director, officer, consultant to such enterprise or otherwise reimbursed for services rendered to such enterprise. In addition, the Employee may not, directly or indirectly including through any Affiliated Entity, obtain employment with or perform services for any Customer, as defined, of the Company during the period commencing on the date of termination and continuing for 12 months thereafter. (b) Solicitation of Customers. During the periods in which the ------------------------- provisions of Section 7(a) shall be in effect, the Employee, directly or indirectly including through any Affiliated Entity, shall not seek Prohibited Business from any Customer (as defined below) on behalf of any enterprise or business other than the Company , refer Prohibited Business from any Customer to any enterprise or business other than the Company or receive commissions based on sales or otherwise relating to the Prohibited Business from any Customer, or any enterprise or business other than the Company. For 5 purposes of this Agreement, the term "Customer" means any person, firm, corporation, partnership, association or other entity to which the Company sold or provided goods or services during the 24-month period prior to the time at which any determination is required to be made as to whether any such person, firm, corporation, partnership, association or other entity is a Customer, or who or which has approached by or who or which has approached an employee of the Company for the purpose of soliciting business from the Company or the third party, as the case may be. (c) Solicitation of Employees. During the periods in which the ------------------------- provisions of Section 7(a) shall be in effect, the Employee, directly or indirectly including through any Affiliated Entity shall not solicit, hire or contact any employee of the Company for the purpose of hiring them or causing them to terminate their employment relationship with the Company . (d) No Payment. The Employee acknowledges and agrees that no separate ---------- or additional payment will be required to be made to his in consideration of his undertakings in this Section. (e) References to the Company in this Section 7 shall include the Company's Affiliates. 8. Non-Disclosure of Confidential Information. ------------------------------------------ (a) Confidential Information. Confidential Information includes, but ------------------------ is not limited to, trade secrets as defined by the common law and statute in Florida or any future Florida statute, processes, policies, procedures, techniques including recruiting techniques, designs, drawings, know-how, show- how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing and uses of the Services (as defined herein), the Company's budgets and strategic plans, and the identity and special needs of Customers, databases, data, all technology relating to the Company's businesses, systems, methods of operation, client or Customer lists, Customer information, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, names, home addresses and all telephone numbers and e-mail addresses of the Company's employees, former employees, clients and former clients. In addition, Confidential Information also includes the identity of Customers and the identity of and telephone numbers, e-mail addresses and other addresses of employees or agents of Customers who are the persons with whom the Company's employees and agents communicate in the ordinary course of business. . For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is or subsequently becomes generally available to the public through no act of the Employee, (ii) information set forth in the written records of the Employee prior to disclosure to the Employee by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is lawfully obtained by the Employee in writing from a third party (excluding any Affiliates of the Employee) who did not acquire such confidential information or trade secret, directly or indirectly, from the Employee or the Company. As used herein, the term "Services" shall include all clinical or pre-clinical research, testing, protocol design, data management, medical writing, clinical or analytical laboratory services or other services relating to proposed or actual formulations, foods, drugs and medical devices engaged in by the Company during the Term of the Employee's employment. (b) Legitimate Business Interests. The Employee recognizes that the ----------------------------- Company has legitimate business interests to protect and as a consequence, the Employee agrees to the restrictions 6 contained in this Agreement because they further the Company's legitimate business interests. These legitimate business interests include, but are not limited to (i) trade secrets; (ii) valuable confidential business or professional information that otherwise does not qualify as trade secrets including all Confidential Information; (iii) substantial relationships with specific prospective or existing Customers or clients; (iv) Customer or client goodwill associated with the Company's business; and (v) specialized training relating to the Company's Services, technology, methods and procedures. (c) Confidentiality. For a period of two years following termination --------------- of employment, or as otherwise required by client privilege, the Confidential Information shall be held by the Employee in the strictest confidence and shall not, without the prior written consent of the Company, be disclosed to any person other than in connection with the Employee's employment by the Company. The Employee further acknowledges that such Confidential Information as is acquired and used by the Company is a special, valuable and unique asset. The Employee shall exercise all due and diligence precautions to protect the integrity of the Company's Confidential Information and to keep it confidential whether it is in written form, on electronic media or oral. The Employee shall not copy any Confidential Information except to the extent necessary to his employment nor remove any Confidential Information or copies thereof from the Company's premises except to the extent necessary to his employment and then only with the authorization of an officer of the Company. All records, files, materials and other Confidential Information obtained by the Employee in the course of his employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company or its Customers, as the case may be. The Employee shall not, except in connection with and as required by his performance of his duties under this Agreement, for any reason use for his own benefit or the benefit of any person or entity with which he may be associated or disclose any such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever without the prior written consent of an officer of the Company (excluding the Employee, if applicable). (d) References to the Company in this Section 8 shall include the Company's Affiliates. 9. Equitable Relief. ---------------- (a) The Company and the Employee recognize that the services to be rendered under this Agreement by the Employee are special, unique and of extraordinary character, and that in the event of the breach by the Employee of the terms and conditions of this Agreement or if the Employee, shall cease to be an employee of the Company for any reason and take any action in violation of Section 7 and/or Section 8, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 9(b) below, to enjoin the Employee from breaching the provisions of Section 7 or Section 8. In such action, the Company shall not be required to plead or prove irreparable harm or lack of an adequate remedy at law or post a bond or any security. (b) Any action must be commenced in Miami-Dade County, Florida. The Employee and the Company irrevocably and unconditionally submit to the exclusive jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of such courts. The Employee and the Company irrevocably waive any objection that they now have or hereafter irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or 7 proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against the Employee or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Employee or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise. 10. Conflicts of Interest. While employed by the Company, the Employee --------------------- shall not, directly or indirectly, unless approved in writing by the President: (a) participate as an individual in any way in the benefits of transactions with any of the Company's suppliers or Customers, including, without limitation, having a financial interest in the Company's suppliers or Customers, or making loans to, or receiving loans, from, the Company's suppliers or Customers; (b) realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Employee's employment with the Company for the Employee's personal advantage or gain; or (c) accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a technical capacity by, a person or entity which does business with the Company. (d) As used in Section 10(a), (b) or (c), the Company also includes its Affiliates. 11. Inventions, Ideas, Processes, and Designs. All inventions, ideas, ----------------------------------------- processes, programs, software, and designs (including all improvements) (i) conceived or made by the Employee during the course of his employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months subsequent to the termination or expiration of such employment with the Company and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company and shall be the sole and exclusive property of the Company. An invention, idea, process, program, software, or design including an improvement) shall be deemed related to the business of the Company if (a) it was made with the Company's equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Employee for the Company, or (c) pertains to the current business or demonstrably anticipated research or development work of the Company. The Employee shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to the Company. The decision to file for patent or copyright protection or to maintain such development as a trade secret shall be in the sole discretion of the Company, and the Employee shall be bound by such decision. The Employee shall provide as a schedule to this Agreement, a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or non-copyrighted, including a brief description, which he made or conceived prior to his employment with the Company and which therefore are excluded from the scope of this Agreement. 12. Indebtedness. If, during the course of the Employee's employment ------------ under this Agreement, the Employee becomes indebted to the Company for any reason, the Company may, if it so elects, set off any sum due to the Company from the Employee and collect any remaining balance from the Employee. 8 13. Assignability. The rights and obligations of the Company under this ------------- Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, provided that such successor or assign shall acquire all or substantially all of the securities (via merger or otherwise) or assets and business of the Company. The Employee's obligations hereunder may not be assigned or alienated and any attempt to do so by the Employee will be void. 14. Severability. ------------ (a) The Employee expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement are reasonable in light of the circumstances as they exist on the date hereof. Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement of the Employee and the Company that this Agreement shall be construed by the court in such a manner as to impose only those restrictions on the Employee's conduct that are reasonable in the light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement. (b) If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other. The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provision were not included. 15. Notices and Addresses. All notices, offers, acceptance and any other --------------------- acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipted delivery, by facsimile delivery or, if mailed, postage prepaid, by certified mail, return receipt requested, as follows: To the Company: SFBC Charlotte, Inc. 11190 Biscayne Blvd. North Miami, FL 33181 Facsimile: (305) 895-8616 Attention: Dr. Gregory B. Holmes 9 With a Copy to: Michael D. Harris, Esq. Michael Harris, P.A. 1645 Palm Beach Lakes Blvd. Suite 550 West Palm Beach, FL 33401 Facsimile (561) 478-1817 To the Employee: Thomas J. Pillsworth, Jr. 203 Hardenbrook Court Morrisville, North Carolina 27560 or to such other address as either of them, by notice to the other may designate from time to time. The transmission confirmation receipt from the sender's facsimile machine shall be evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing. 16. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature. 17. Attorney's Fees. In the event that there is any controversy or claim --------------- arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to a reasonable attorney's fee, costs and expenses. 18. Governing Law. This Agreement and any dispute, disagreement, or issue ------------- of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the State of Florida without regard to choice of law considerations. 19. Entire Agreement. This Agreement constitutes the entire agreement ---------------- between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought. 20. Additional Documents. The parties hereto shall execute such -------------------- additional instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder. 10 21. Section and Paragraph Headings. The section and paragraph headings in ------------------------------ this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as of the date and year first above written. SFBC CHARLOTTE, INC. _____________________________ By:_____________________________________ Ray R. Carr, Chief Operating Officer EMPLOYEE: _____________________________ By:_____________________________________ Thomas J. Pillsworth, Jr. 11 March 15, 2002 Thomas J. Pillsworth, Jr. 203 Hardenbrook Court Morrisville, N.C. 27560 ADDENDUM A RE: EMPLOYEE CONTRACT FOR THOMAS J. PILLSWORTH, JR. In addition to the salary in section 4 (a) of the attached contract, the Employee shall be paid a commission consisting of the following: 1. Contracts signed that are initiated by Dr. Pillsworth will be paid at a rate of 0.25% of the revenue including pass throughs as collected. Commissions shall be payable on the 20th day of the quarter after the Company receives payment from the sponsor/client for services. 2. In addition, contracts signed that are initiated by Dr. Pillsworth and referred to Mike Bullinger will be paid at a rate of 0.25% of the revenue including pass throughs as collected. Commissions shall be payable on the 20th day of the quarter after the Company receives payment from the sponsor/client for services. All commissions will be authorized for payment by Ray R. Carr, or a person appointed by the Company's board of directors, that acknowledges the Employee's efforts in generating the sales. The commission structure will be reviewed from time to time as the responsibilities of Dr. Pillsworth increase, decrease, or change scope. IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as of the date and year first above written. SFBC CHARLOTTE, INC. __________________________________ By:_____________________________________ Ray R. Carr, Chief Operating Officer EMPLOYEE: __________________________________ By:_____________________________________ Thomas J. Pillsworth, Jr. EX-10.11 7 dex1011.txt SECOND AMENDED & RESTATED STOCK OPTION PLAN Exhibit 10.11 SFBC INTERNATIONAL, INC. SECOND AMENDED AND RESTATED 1999 STOCK OPTION PLAN 1. Purpose and Eligibility. This Stock Option Plan (the "Plan") is ----------------------- intended to advance the interests of SFBC International, Inc. (the "Company"), and its Related Corporations, as defined below, by enhancing the ability of the Company to attract and retain qualified employees, consultants, officers and directors by creating incentives and rewards for their contributions to the success of the Company. This Plan will provide to: (a) officers and other employees of the Company and its Related Corporations opportunities to purchase stock in the Company pursuant to options granted hereunder which qualify as incentive stock options ("ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code") and (b) directors, officers, employees and consultants of the Company and Related Corporations opportunities to purchase stock in the Company pursuant to options granted hereunder which do not qualify as ISOs ("Non-Qualified Options"). ISOs and Non-Qualified Options are referred to hereafter as "Options". For purposes of the Plan, the term "Related Corporations" shall mean a corporation which is a subsidiary corporation with respect to the Company within the meaning of Section 424(f) of the Code. This Plan is intended to comply in all respects with Rule 16b-3 and its successor rules as promulgated under Section 16(b) of the Securities Exchange Act of 1934 ("Rule 16b-3") for participants who are subject to Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"). To the extent any provision of the Plan or action by the Plan administrators fails to so comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by the Plan administrators. Provided, however, such exercise of discretion by the Plan administrators shall not interfere with the contract rights of any participant. In the event that any interpretation or construction of this Plan is required, it shall be interpreted and construed in order to insure, to the maximum extent permissible by law, that such participant does not violate the short-swing profit provisions of Section 16(b) of the Exchange Act and that any exemption available under Rule 16b-3 is available. 2. Stock. The stock subject to Options shall be authorized but unissued ----- shares of common stock (the "Common Stock"), or shares of Common Stock reacquired by the Company in any manner. The aggregate number of shares of Common Stock which may be issued pursuant to the Plan is 1,700,000, subject to adjustment as provided in Section 14. Any such shares may be issued as ISOs or Non-Qualified Options so long as the number of shares so issued does not exceed the limitations in this Section. If any Options granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part the unexercised shares subject to such Options shall again be available for grants of Options under the Plan. The common stock shall be unregistered unless the Company voluntarily elects to file a registration statement. 1 3. Administration of the Plan. -------------------------- (a) The Plan may be administered by the entire board of directors of the Company (the "Board") or by a committee composed solely of two or more Non- Employee Directors as that term is defined by Rule 16b-3(b)(3) of the Exchange Act, or the Company shall otherwise act in accordance with the permissible interpretations of Rule 16b-3 (the "Committee"). Once appointed, such Committee shall continue to serve until otherwise directed by the Board. A majority of the members of any such Committee shall constitute a quorum, and all determinations of the Committee shall be made by the majority of its members present at a meeting. Any determination of the Committee under the Plan may be made without notice or meeting of the Committee by a writing signed by all of the Committee members. Subject to ratification of the grant by the Board (but only if so required by applicable state law), and subject to the terms of the Plan, the Committee shall have the authority to (i) determine the employees of the Company and Related Corporations (from among the class of employees eligible under Section 3 to receive ISOs) to whom ISOs may be granted, and to determine (from among the class of individuals and entities eligible under Section 3 to receive Non-Qualified Options) to whom Non-Qualified Options may be granted; (ii) determine the time or times at which Options may be granted; (iii) determine the exercise price of shares subject to each Option which price for any ISO shall not be less than the minimum price specified in Section 7; (iv) determine whether each Option granted shall be an ISO or a Non-Qualified Option; (v) determine (subject to Section 8) the time or times when each Option, except for non-discretionary Options, shall become exercisable, the duration of the exercise period and when each Option shall vest; (vi) determine whether restrictions such as repurchase options are to be imposed on shares subject to Options and the nature of such restrictions, if any, and (vii) interpret the Plan and promulgate and rescind rules and regulations relating to it. Such determination, whether made by the Committee or the Board shall be made in advance of a grant and may be ratified after the fact only by the Company's stockholders at or before the next annual meeting of stockholders held subsequent to the grant. The interpretation and construction by the Committee of any provisions of the Plan or of any Options granted under it shall be final, binding and conclusive unless otherwise determined by the Board. The Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may deem appropriate. No members of the Committee or the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Options granted under it. No member of the Committee or the Board shall be liable for any act or omission of any other member of the Committee or the Board or for any act or omission on his own part, including but not limited to the exercise of any power and discretion given to him under the Plan, except those resulting from his own gross negligence or willful misconduct. (b) The Committee may select one of its members as its chairman and shall hold meetings at such time and places as it may determine. All references in this Plan to the Committee shall mean the Board if no Committee has been appointed. From time to time the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused or remove all members of the Committee and thereafter directly administer the Plan. 2 (c) Options may be granted to members of the Board, whether such grants are in their capacity as directors, employees or consultants. Members of the Board who are either (i) eligible for Options pursuant to the Plan or (ii) have been granted Options may vote on any matters affecting the administration of the Plan or the grant of any Options pursuant to the Plan. (d) Notwithstanding any other provision of Section 2, any discretionary grants to a person who is a member of the Board shall be made only by the Committee. The requirements imposed by this Section 2(d) shall also apply with respect to grants to officers who are also directors. (e) In addition to such other rights of indemnification as he may have as a member of the Board, and with respect to administration of the Plan and the granting of Options under it, each member of the Board and of the Committee (the "Indemnitee") shall be entitled without further act on the Indemnitees part to indemnification from the Company for all expenses (including advances of litigation expenses, the amount of judgment and the amount of approved settlements made with a view to the curtailment of costs of litigation) reasonably incurred by the Indemnitee in connection with or arising out of any action, suit or proceeding, including any appeal thereof, with respect to the administration of the Plan or the granting of Options under it in which the Indemnitee may be involved by reason of the Indemnitee being or having been a member of the Board or the Committee, whether or not the Indemnitee continues to be such member of the Board or the Committee at the time of the incurring of such expenses; provided, however, that such indemnity shall not include any expenses incurred by the Indemnitee (i) in respect of matters as to which the Indemnitee shall be finally adjudged in such action, suit or proceeding to have been guilty of or liable for gross negligence or willful misconduct in the performance of his duties as a member of the Board or the Committee; (ii) in respect of any matter in which any settlement is effected to an amount in excess of the amount approved by the Company on the advice of its legal counsel or (iii) arising from any action in which the Indemnitee asserts a claim against the Company whether such claim is termed a complaint, counterclaim, crossclaim, third party complaint or otherwise and, provided further, that no right of indemnification under the provisions set forth herein shall be available to any such member of the Board or the Committee unless within 10 days after institution of any such action, suit or proceeding the Indemnitee shall have offered the Company in writing the opportunity to handle and defend such action, suit or proceeding at its own expense. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such Indemnitee and shall be in addition to all other rights to which such Indemnitee would be entitled to as a matter of law, contract or otherwise. Provided, however, the exception in Section 3 (e) (iii) shall not apply to an action for indemnification under circumstances where the Company has failed to provide indemnification to the Indemnitee which indemnification is required by this Plan. (f) Notwithstanding the indemnification provided for by this Section 3, the Company's bylaws, or any written agreement, such indemnity shall not include any expenses, liabilities or losses incurred by such Indemnitees relating to or arising from any Proceeding in which the Company asserts a direct claim (as opposed to a stockholders' derivative action) against the Indemnitees, whether such claim by the Company is termed a complaint, counterclaim, 3 crossclaim, third-party complaint or otherwise. 4. Eligible Employees and Others. ----------------------------- (a) ISOs may be granted to any employee of the Company or any Related Corporation. Those officers and directors of the Company who are not employees may not be granted ISOs under the Plan unless they are employees of the Company or any Related Corporation. Subject to compliance with Rule 16b-3 and other applicable securities laws, Non-Qualified Options may be granted to any director (whether or not an employee), officer, employee or consultant of the Company or any Related Corporation. The Committee may take into consideration a recipient's individual circumstances in determining whether to grant an ISO or a Non- Qualified Option. Granting of any Option to any individual or entity shall neither entitle that individual or entity to, nor disqualify him from participation in any other grant. (b) All directors of the Company who are not employees of the Company or Related Corporations shall automatically receive grants of 30,000 Non- Qualified Options (i) upon election or appointment to the Board if not a member of the Board at the time this Plan is adopted by the Board; (ii) after all Options previously granted have vested. In addition, existing non-employee directors, as of January 11, 2001 shall receive an additional grant of 15,000 Non-Qualified Options in order to equalize treatment of non-employee directors. (1) The exercise price of all Options shall be fair market value on the date of grant as defined by Section 7. (2) The Options shall vest in six equal increments of 5,000 Options per director on June 30 and December 31 of each year, provided that the director is still serving as a director of the Company. Provided, however, that 7,500 Non-Qualified Options issued to existing non-employee directors as of January 11, 2001 shall immediately vest. To the extent that any Options which have not been exercised do not vest, the Options shall lapse. (c) All Options shall be exercisable for a period of 10 years from the date of grant, except where a shorter period is required by the Code for certain ISOs or where the board or committee selects a shorter period at the time of any discretionary grant. 5. Granting of Options. ------------------- (a) Options may be granted under the Plan at any time on and after June 3, 1999, provided, however, that no ISO shall be granted more than 10 years after the effective date of this Plan. The date of grant of Options under the Plan will be the date specified by the Committee at the time it grants the Options; provided, however, that such date shall not be prior to the date on which the Committee acts to approve the grant. The Committee shall have the right, with the consent of the optionee, to convert ISOs granted under the Plan to Non-Qualified Options pursuant to Section 15. 4 (b) The Board or Committee shall grant Options to participants that it, in its sole discretion, selects. Options shall be granted on such terms as the Board or Committee shall determine except that ISOs shall be granted on terms that comply with the Code and regulations thereunder. (c) Notwithstanding any provision of this Plan, the Board or the Committee may impose conditions and restrictions on any grant of Options including forfeiture of vested Options, cancellation of Common Stock acquired upon exercise of Options and forfeiture of profits from the sale of Common Stock. 6. Sale of Shares Acquired Upon Exercise of Options. Any shares of the ------------------------------------------------ Company's Common Stock acquired pursuant to Options granted hereunder as set forth herein, cannot be sold by any officer, director , employee or consultant until at least six months elapse from the date of grant of the Options. Nothing in this Section 6 shall be deemed to reduce the holding period set forth under the applicable securities laws. 7. ISO Minimum Option Price and Other Limitations. ---------------------------------------------- (a) The exercise price per share of all Options granted under the Plan shall not be less than the fair market value per share of Common Stock on the date of such grant. For purposes of determining the exercise price grants of ISOs, the date of the grant shall be the later of (i) the date of approval by the Committee or the Board or (ii) the date the recipient becomes an employee of the Company. In the case of ISOs to be granted to an employee owning stock which represents more than 10 percent of the total combined voting power of all classes of stock of the Company or any Related Corporation, the price per share shall not be less than 110 percent of the fair market value per share of Common Stock on the date of grant and such ISOs shall not be exercisable after the expiration of five years from the date of grant. (b) In no event shall the aggregate fair market value (determined at the time any ISOs are granted) of Common Stock for which ISOs granted to any employee are exercisable for the first time by such employee during any calendar year (under all stock option plans of the Company and any Related Corporation) exceed $100,000. (c) If, at the time Options are granted under the Plan, the Company's Common Stock is publicly traded, "fair market value" shall be determined as of the last trading day prior to the date such Options are granted and shall mean: (1) the closing price of the Company's Common Stock appearing on a national securities exchange if the principal market for the common stock is such an exchange, or, if not listed or not the principal market, the closing price on the Nasdaq Stock Market ("Nasdaq"). (2) if the Company's shares are not listed on Nasdaq, then the closing price for its Common Stock as listed on the National Association of Securities Dealers, Inc.'s electronic bulletin board; or 5 (3) if the Company's Common Stock is not listed on the electronic bulletin board, then the average bid and asked price for the Company's shares as listed in the National Quotation Bureau's "pink sheets"; or (4) if there are no listed bid and asked prices published in the pink sheets, then the fair market value shall be based upon the average closing bid and asked price as determined following a polling of all dealers making a market in the Company's Common Stock. 8. Duration of Options. Subject to earlier termination as provided in ------------------- Sections 5, 9 and 10, all Options shall expire on the date specified in the original grant of such Options (except with respect to any ISOs that are converted into Non-Qualified Options pursuant to Section 17) provided, however, that such grant must comply with Section 422 of the Code with regard to ISOs and Rule 16b-3 with regard to all Options granted pursuant to this Plan to officers, directors and 10% stockholders of the Company. For the purpose of this Plan, the term "officer" shall have the same meaning as defined in Rule 16a-1(f) promulgated under the Exchange Act. 9. Exercise of Options. Subject to the provisions of Sections 4(b) and 9 ------------------- through 13, all Options granted under the Plan shall be exercisable as follows: (a) The Options shall either be fully vested and exercisable from the date of grant or shall become vested and exercisable in such installments as the Committee may specify. (b) Once an installment becomes exercisable, it shall remain exercisable until expiration or termination of the Options, unless otherwise specified by the Committee. (c) All Options, once exercisable and vested, may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares with respect to which they are then exercisable. (d) The Committee shall have the right to accelerate the vesting date to allow exercise of any installment of any Options; provided that the Committee shall not accelerate the vesting and exercisability date of any installment of any Options granted to any employee as an ISO (and not previously converted into Non-Qualified Options pursuant to Section 17) if such acceleration would violate the annual vesting limitation contained in Section 422 of the Code as described in Section 6(b). (e) The vesting date of all Options shall accelerate in the event of any of the following: (i) the Company is to merge or consolidate with or into any other corporation or entity except a transaction where the Company is the surviving corporation or a change of domicile merger or similar transaction exempt from registration under the Securities Act of 1933, (ii) the sale of all or substantially all of the Company's assets, (iii) the sale of at least 90% of the outstanding Common Stock of the Company to a third party (subsections (i), (ii) and (iii) collectively referred to as an "Acquisition"); or (iv) the Company is dissolved. Upon a minimum of 20 days prior written notice to the optionees, the exercisability of such Options shall commence two business days prior to the earlier of (A) the scheduled closing of an Acquisition or proposed dissolution or (B) the 6 actual closing of an Acquisition or proposed dissolution. 10. Termination of Employment. Subject to any greater restrictions or ------------------------- limitations as may be imposed by the Committee upon the granting of any ISOs, if an ISO optionee ceases to be employed by the Company and all Related Corporations other than by reason of death or disability as defined in Section 11, no further installments of such ISOs shall become exercisable, and such ISOs shall terminate on the day three months after the day of the termination of employment, but in no event later than on their specified expiration dates, except to the extent that such ISOs (or unexercised installments thereof) have been converted into Non-Qualified Options pursuant to Section 17. Employment shall be considered as continuing uninterrupted during any bona fide leave of absence (such as those attributable to illness, military obligations or governmental service) provided that the period of such leave does not exceed three months or, if longer, any period during which such optionee's right to re- employment is guaranteed by statute. A leave of absence with the written approval of the Company's Board shall not be considered an interruption of employment under the Plan, provided that such written approval contractually obligates the Company or any Related Corporation to continue the employment of the optionee after the approved period of absence. ISOs granted under the Plan shall not be affected by any change of employment within or among the Company and Related Corporations so long as the optionee continues to be an employee of the Company or any Related Corporation. 11. Death; Disability. Subject to any greater restrictions or limitations ----------------- as may be imposed by the Committee upon the granting of any ISOs: (a) If an ISO optionee ceases to be employed by the Company and all Related Corporations by reason of death, such person's ISOs may be exercised to the extent of the number of shares with respect to which he could have exercised it on the date of his death, by his estate, personal representative or beneficiary who has acquired the ISO by will or by the laws of descent and distribution, at any time prior to the earlier of the ISO's specified expiration date or three months from the date of the optionee's death. (b) If an ISO optionee ceases to be employed by the Company and all Related Corporations by reason of his disability, he shall have the right to exercise any ISOs held by him on the date of termination of employment until the earlier of (i) the ISOs' specified expiration date or (ii) one year from the date of the termination of the optionee's employment. For the purposes of the Plan, the term "disability" shall mean "permanent and total disability" as defined in Section 22(e)(3) of the Code, as amended, or successor statute. 12. Assignment, Transfer or Sale. ---------------------------- (a) No ISOs and no Options granted to an employee who is an officer, director or beneficial owner of 10% or more of the Company's Common Stock ("10% Owner") shall be assignable or transferable by the grantee except as provided below or by will or by the laws of descent and distribution, and during the lifetime of the grantee, each Option shall be exercisable only by him, his guardian or legal representative. The shares underlying the ISOs cannot be assigned, transferred or sold until at least two years from the date of the granting of the ISOs and 7 one year after the transfer of such shares to the optionee. (b) No ISOs shall be assignable or transferable by the grantee. (c) Provided however, any officer, director or 10% Owner may transfer Non-Qualified Options to members of his or her immediate family (i.e. children, grandchildren or spouse), to trusts for the immediate benefit of such family members and to partnerships in which such family members are the only partners, upon approval of the Committee so long as no consideration is received for the transfer. (d) Notwithstanding the terms of this Section 12, subject to approval by the Committee, any executive officer, director or 10% Owner may transfer Non- Qualified Options, granted under circumstances where the exemption provided by Rule 16b-3 promulgated under the Exchange Act is not applicable, to a spouse or former spouse if such transfer is made in connection with a divorce proceeding and the specific terms of the transfer are incorporated into a final divorce decree. The shares of Common Stock underlying such Options may not be sold prior to the entry of the divorce decree. 13. Terms and Conditions of Options. Options shall be evidenced by ------------------------------- instruments (which need not be identical) in such forms as the Committee may from time to time approve. Such instruments shall conform to the terms and conditions set forth in Sections 7 through 12 hereof and may contain such other provisions as the Committee deems advisable which are not inconsistent with the Plan, including restrictions applicable to shares of Common Stock issuable upon exercise of Options and forfeiture provisions. In granting any Non-Qualified Options, the Committee may specify that such Non-Qualified Options shall be subject to the restrictions set forth herein with respect to ISOs, or to such other termination and cancellation provisions as the Committee may determine. The Committee may from time to time confer authority and responsibility on one or more of its own members and/or one or more officers of the Company to execute and deliver such instruments. The proper officers of the Company are authorized and directed to take any and all action necessary or advisable from time to time to carry out the terms of such instruments. 14. Adjustments. Upon the occurrence of any of the following events, an ----------- optionee's rights with respect to Options granted to him hereunder shall be adjusted as hereinafter provided unless otherwise specifically provided in the written agreement between the optionee and the Company relating to such Options: (a) If the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of its Common Stock as a stock dividend on its outstanding Common Stock, the number of shares of Common Stock deliverable upon the exercise of Options shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or stock dividend. (b) If the Company is to be consolidated with or acquired by another entity 8 pursuant to an Acquisition, the Committee or the board of directors of any entity assuming the obligations of the Company hereunder (the "Successor Board") shall, as to outstanding Options not exercised pursuant to Section 10, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the shares then subject to such Options the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition; or (ii) terminate all Options in exchange for a cash payment equal to the excess of the fair market value of the shares subject to such Options over the exercise price thereof. (c) In the event of a recapitalization or reorganization of the Company (other than a transaction described in Section 14(b) above) pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, an optionee upon exercising Options shall be entitled to receive for the purchase price paid upon such exercise the securities he would have received if he had exercised his Options prior to such recapitalization or reorganization. (d) Notwithstanding the foregoing, any adjustments made pursuant to Section 14(a), (b) or (c) with respect to ISOs shall be made only after the Committee, after consulting with counsel for the Company, determines whether such adjustments would constitute a "modification" of such ISOs (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holders of such ISOs. If the Committee determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs it may refrain from making such adjustments. (e) Except as expressly provided herein, no issuance by the Company of shares of Common Stock of any class or securities convertible into shares of Common Stock of any class shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Options. No adjustments shall be made for dividends or other distributions paid in cash or in property other than securities of the Company. (f) No fractional shares shall be issued under the Plan and the optionees shall receive from the Company cash in lieu of such fractional shares. (g) Upon the happening of any of the foregoing events described in Section 14(a), (b) or (c) above, the class and aggregate number of shares set forth in Section 14 hereof that are subject to Options which previously have been or subsequently may be granted under the Plan shall also be appropriately adjusted to reflect the events described therein. The Committee or the Successor Board shall determine the specific adjustments to be made under this Section 14 and, subject to Section 3, its determination shall be conclusive. If any person or entity owning restricted Common Stock obtained by exercise of Options made hereunder receives securities or cash in connection with a corporate transaction described in Section 14(a), (b) or (c) above as a result of owning such restricted Common Stock, such securities or cash shall be subject to all of the conditions and restrictions applicable to the restricted Common Stock with respect to which such securities or cash were issued, unless otherwise determined by the Committee or the Successor Board. 9 15. Means of Exercising Options. --------------------------- (a) An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office address. Such notice shall identify the Option being exercised and specify the number of shares as to which such Option is being exercised, accompanied by full payment of the purchase or exercise price therefor either (i) in United States dollars in cash or by check; (ii) at the discretion of the Committee, through delivery of shares of Common Stock having a fair market value equal as of the date of the exercise to the cash exercise price of the Option; (iii) at the discretion of the Committee, by delivery of the grantee's personal recourse note bearing interest payable not less than annually at no less than 100% of the lowest applicable federal rate, as defined in Section 1274(d) of the Code; (iv) at the discretion of the Committee, by delivery of a letter from the grantee to his broker and the Company directing his broker to send all proceeds of the sale of his securities to the Company so the Company can deduct the exercise price and withholding taxes prior to disbursement of the remaining proceeds to grantee; or (v) at the discretion of the Committee, by any combination of (i), (ii), (iii) and (iv) above. If the Committee exercises its discretion to permit payment of the exercise price of an ISO by means of the methods set forth in clauses (ii), (iii), (iv) or (v) of the preceding sentence, such discretion shall be exercised in writing anytime prior to exercise of the ISO in question. The holder of an Option shall not have the rights of a stockholder with respect to the shares covered by his Option until the date of issuance of a stock certificate to him for such shares. Except as expressly provided above in Section 14 with respect to changes in capitalization and stock dividends, no adjustment shall be made for dividends or similar rights for which the record date is before the date such stock certificate is issued. (b) Each notice of exercise shall, unless the Common Stock underlying the Options (the "Option Shares") are covered by a then current registration statement under the Securities Act of 1933, as amended (the "Act"), contain the optionee's acknowledgment in form and substance satisfactory to the Company that (i) such Option Shares are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel to the Company, may be made without violating the registration provisions of the Act), (ii) the optionee has been advised and understands that (1) the Option Shares have not been registered under the Act and are "restricted securities" within the meaning of Rule 144 under the Act and are subject to restrictions on transfer, and (2) the Company is under no obligation to register the Option Shares under the Act or to take any action which would make available to the optionee any exemption from such registration, and (iii) such Option Shares may not be transferred without compliance with all applicable federal and state securities laws. Notwithstanding the above, should the Company be advised by counsel that issuance of Option Shares should be delayed pending registration under federal or state securities laws or the receipt of an opinion that an appropriate exemption therefrom is available, the Company may defer exercise of any Options granted hereunder until either such event has occurred. 16. Term and Amendment of Plan. This Plan was adopted by the Board and the -------------------------- sole stockholder on June 3, 1999, and an amendment was approved by a vote of the stockholders on June 29, 2001. This Plan shall have no expiration date, provided however that no ISOs shall be granted more than 10 years after June 3, 1999. The Board may terminate or amend the Plan in any 10 respect at any time. If stockholder approval is required by any national securities exchange or Nasdaq, such approval must be obtained in accordance with the appropriate rules requiring approval which may include: (a) increase of the total number of shares that may be issued under the Plan (except by adjustment pursuant to Section 14); and (b) modification of the provisions of Section 3 regarding eligibility for grants of ISOs. Except as provided herein or as specified in the original instrument granting such Options, no action of the Board or stockholders may alter or impair the rights of a grantee, without his consent, under any Options previously granted to him. 17. Conversion of ISOs into Non-Qualified Options; Termination of ISOs. The ------------------------------------------------------------------ Committee, at the written request of any optionee, may in its discretion take such actions as may be necessary to convert such optionee's ISOs (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the optionee is an employee of the Company or a Related Corporation at the time of such conversion. Such actions may include, but not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such Options. At the time of such conversion, the Committee (with the consent of the optionee) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Committee in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any optionee the right to have such optionee's ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Committee takes appropriate action. The Committee, with the consent of the optionee, may also terminate any portion of any ISOs that have not been exercised at the time of such termination. 18. Application of Funds. The proceeds received by the Company from the -------------------- exercise of Options granted under the Plan shall be used for general corporate purposes. 19. Governmental Regulations. The Company's obligation to sell and deliver ------------------------ shares of Common Stock under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such shares. 20. Withholding of Additional Income Taxes. Upon the exercise of Non- -------------------------------------- Qualified Options or the making of a Disqualifying Disposition (as defined in Section 21) the Company, in accordance with Section 3402(a) of the Code may require the optionee to pay additional withholding taxes in respect of the amount that is considered compensation includable in such person's gross income. The Committee in its discretion may condition the exercise of Options on the payment of such withholding taxes. To the extent that the Company is required to withhold taxes for federal income tax purposes in connection with the exercise of any Options, the Company shall have the discretion to determine if any optionee may elect to satisfy such withholding requirement by (i) paying the amount of the required withholding tax to the Company; (ii) delivering to the Company shares of its Common Stock previously owned by the optionee; or (iii) having the Company retain a portion of the Option Shares. If permitted by the Company, the number of shares to be delivered to or withheld by the Company times the fair market value of such shares shall equal the cash required to 11 be withheld. To the extent that the participant is authorized to either deliver or have withheld shares of the Company's Common Stock, the Board, or the Committee, may require him to make such election only during a certain period of time as may be necessary to comply with appropriate exemptive procedures regarding the "short-swing" profit provisions of Section 16(b) of the Exchange Act or to meet certain Code requirements. 21. Notice to Company of Disqualifying Disposition. Each employee who ---------------------------------------------- receives ISOs must agree to notify the Company in writing immediately after the employee makes a Disqualifying Disposition of any Common Stock acquired pursuant to the exercise of such ISOs. A Disqualifying Disposition is any disposition (including any sale) of such Common Stock before the later of (i) two years after the date of employee was granted the ISOs, or (ii) one year after the date the employee acquired Common Stock by exercising the ISO. If the employee has died before such Common Stock is sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter. 22. Continued Employment. The grant of Options pursuant to the Plan shall -------------------- not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of the Company or any Related Corporation to retain the optionee as an employee of the Company or a Related Corporation, as a member of the Company's Board or in any other capacity, whichever the case may be. 23. Bonuses or Loans to Exercise Options. If requested by any person to ------------------------------------ whom a grant of Options has been made, the Company or any Related Corporation may, upon full Board approval, loan such person, guarantee a bank loan, or pay such person additional compensation of the amount of money necessary to pay the federal income taxes incurred as a result of the exercise of any Non-Qualified Options, assuming that such person is in the maximum federal income tax bracket and assuming that such person has no deductions which would reduce the amount of such tax owed. The tax loan shall be made or tax offset bonus paid on or after April 15th of the year following the year in which the tax is incurred and any loan shall be made on such terms as the Company or lending bank determines. 24. Governing Law; Construction. The validity and construction of the Plan --------------------------- and the instruments evidencing Options shall be governed by the laws of the State of Delaware. In construing this Plan, the singular shall include the plural and the masculine gender shall include the feminine and neuter, unless the context otherwise requires. 25. Forfeiture of Options. Notwithstanding any other provision of this ---------------------- Plan, all vested Options shall be immediately forfeited in the event of: (a) Termination of the relationship with the grantee for cause including, but not limited to, fraud, theft, dishonesty and violation of Company policy; (b) Purchasing or selling securities of the Company without written authorization in accordance with the Company's inside information guidelines then in effect; 12 (c) Breaching any duty of confidentiality including that required by the Company's inside information guidelines then in effect; (d) Competing with the Company; (e) Failure to execute the Company's standard option agreement or any lock-up agreement in conjunction with a grant under the Plan, provided that such lock-up agreement is also required to be executed by the Company's officers and directors; or (f) A finding by the Company's board of directors that grantee has acted against the interests of the Company. 13 EX-10.13 8 dex1013.txt STOCK OPTION AGREEMENT Exhibit 10.13 TABLE OF CONTENTS
Page ARTICLE 1 DEFINITIONS AND PRINCIPLES OF INTERPRETATION............................................................3 1.1 Definitions....................................................................................3 1.2 Certain Rules of Interpretation...............................................................17 1.3 Knowledge.....................................................................................19 1.4 Entire Agreement..............................................................................19 1.5 Schedules.....................................................................................19 ARTICLE 2 PURCHASE AND SALE......................................................................................21 2.1 Action by Vendor and Purchaser................................................................21 2.2 Place of Closing..............................................................................22 ARTICLE 3 PURCHASE PRICE.........................................................................................22 3.1 Purchase Price................................................................................22 3.2 Satisfaction of Purchase Price................................................................22 3.3 Delivery of Closing Date Financial Statements.................................................24 3.4 Net Working Capital Adjustment................................................................24 3.5 Objection to Closing Date Financial Statement.................................................25 3.6 Interest......................................................................................27 3.7 Allocation of Purchase Price..................................................................27 3.8 Allocation of Payments........................................................................27 3.9 Escrow........................................................................................27 3.10 SFBC Options..................................................................................28 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE VENDORS..........................................................28 4.1 Incorporation and Registration................................................................28 4.2 Residence of the Vendors......................................................................29 4.3 Subsidiaries..................................................................................29 4.4 Right to Sell.................................................................................30 4.5 Capitalization................................................................................30 4.6 Title to the Assets...........................................................................31 4.7 Due Authorization.............................................................................31 4.8 Enforceability of Obligations.................................................................32 4.9 Absence of Conflicting Agreements.............................................................32 4.10 Regulatory Approvals..........................................................................33 4.11 Competition Act Assets and Revenues...........................................................33 4.12 Financial Statements..........................................................................33 4.13 Absence of Undisclosed Liabilities............................................................34 4.14 Absence of Changes and Unusual Transactions...................................................34 4.15 Reserves and Accruals.........................................................................36 4.16 Non-Arm's Length Transactions.................................................................36 4.17 No Joint Venture Interests, etc...............................................................37 4.18 Absence of Guarantees.........................................................................37 4.19 Major Suppliers and Customers.................................................................37
TABLE OF CONTENTS (continued)
Page 4.20 Condition of Assets...........................................................................38 4.21 Inventories...................................................................................38 4.22 Collectibility of Accounts Receivable.........................................................38 4.23 Government Grants.............................................................................38 4.24 Business in Compliance with Law...............................................................38 4.25 Governmental Authorizations...................................................................39 4.26 Restrictive Covenants.........................................................................39 4.27 Intellectual Property.........................................................................40 4.28 Equipment Contracts...........................................................................41 4.29 Owned Real Property...........................................................................41 4.30 Leased Real Property..........................................................................41 4.31 Real Property Generally.......................................................................42 4.32 Environmental Matters.........................................................................44 4.33 Employment Matters............................................................................46 4.34 Collective Agreements.........................................................................48 4.35 Pension and Other Benefit Plans...............................................................48 4.36 Personal Information..........................................................................51 4.37 Insurance.....................................................................................51 4.38 Material Contracts............................................................................52 4.39 Copies of Agreements, etc.....................................................................52 4.40 Litigation....................................................................................52 4.41 Tax Matters...................................................................................53 4.42 Tax Data......................................................................................56 4.43 Books and Records and Validated Assays........................................................58 4.44 Corporate Records.............................................................................58 4.45 Management Recommendation Letters.............................................................58 4.46 Trade Allowances..............................................................................58 4.47 Third Party Consents..........................................................................59 4.48 Location of the Assets........................................................................59 4.49 Bank Accounts, etc............................................................................59 4.50 Powers of Attorney............................................................................59 4.51 Absence of Questionable Payments..............................................................60 4.52 No Broker.....................................................................................60 4.53 Trials........................................................................................60 4.54 Full Disclosure...............................................................................61 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER........................................................62 5.1 Incorporation.................................................................................62 5.2 Due Authorization.............................................................................62 5.3 Enforceability of Obligations.................................................................62 5.4 Absence of Conflicting Agreements.............................................................62 5.5 Litigation....................................................................................63 5.6 No Broker.....................................................................................63 5.7 SFBC Shares and SFBC Options.................................................................64 5.8 Prospectus; SEC Documents; SFBC Financial Statements..........................................64
TABLE OF CONTENTS (continued)
Page ARTICLE 6 NON-WAIVER; SURVIVAL...................................................................................65 6.1 Non-Waiver....................................................................................65 6.2 Nature and Survival...........................................................................66 ARTICLE 7 PURCHASER'S CONDITIONS PRECEDENT.......................................................................67 7.1 Truth and Accuracy of Representations of Vendors at the Closing Time..........................67 7.2 No Material Adverse Change....................................................................68 7.3 No Litigation.................................................................................68 7.4 Performance of Obligations....................................................................68 7.5 Receipt of Closing Documentation..............................................................68 7.6 Investment Letter.............................................................................69 7.7 Opinion of Counsel for Vendors................................................................69 7.8 Consents, Authorizations and Registrations....................................................69 7.9 No Proceedings................................................................................69 7.10 Encumbrances..................................................................................70 7.11 Bonus Waiver..................................................................................70 7.12 Releases......................................................................................70 7.13 Key Employees.................................................................................70 7.14 Liabilities...................................................................................70 7.15 Corporate Actions.............................................................................70 7.16 Anapharm Options..............................................................................71 7.17 Share Certificates............................................................................71 7.18 Directors and Officers of the Company.........................................................71 7.19 Securities Law Compliance.....................................................................71 7.20 Escrow........................................................................................72 7.21 Employees' Covenants..........................................................................72 7.22 Repayment of Advances.........................................................................72 7.23 Termination...................................................................................72 ARTICLE 8 VENDORS' CONDITIONS PRECEDENT..........................................................................73 8.1 Truth and Accuracy of Representations of the Purchaser and SFBC at Closing Time...............73 8.2 Performance of Obligations....................................................................73 8.3 Opinion of Counsel for Purchaser..............................................................73 8.4 SFBC Shares, SFBC Plan and SFBC Options Approvals.............................................73 8.5 Receipt of Closing Certificate................................................................74 8.6 No Proceedings................................................................................74 ARTICLE 9 COVENANTS AND AGREEMENTS...............................................................................74 9.1 General.......................................................................................74 9.2 Conduct of Business Prior to Closing..........................................................75 9.3 Specific Transactions.........................................................................75 9.4 Status of Contracts...........................................................................77
TABLE OF CONTENTS (continued)
Page 9.5 Maintenance of Assets.........................................................................78 9.6 Preservation of Business Relationships........................................................78 9.7 Litigation....................................................................................78 9.8 Compliance....................................................................................78 9.9 Consents......................................................................................78 9.10 Notice of Defaults............................................................................79 9.11 Access for Investigation......................................................................79 9.12 Actions to Satisfy Closing Conditions.........................................................79 9.13 Consent to Jurisdiction.......................................................................79 9.14 Covenants Relating to Intellectual Property...................................................80 ARTICLE 10 INDEMNIFICATION........................................................................................81 10.1 Indemnifications for Breaches of Covenants and Warranty, etc..................................81 10.2 Indemnification Procedures for Third Party Claims.............................................83 10.3 Other Indemnification Provisions..............................................................85 10.4 Losses Defined................................................................................85 ARTICLE 11 ADDITIONAL COVENANTS OF THE PARTIES....................................................................86 11.1 Outstanding Anapharm Options..................................................................86 11.2 Preparation of Filings........................................................................86 11.3 Covenants of Purchaser Regarding SFBC Securities..............................................87 11.4 Restriction on Future Sales by Vendors........................................................87 11.5 SFBC Share Legends............................................................................87 11.6 Stub Period Returns...........................................................................88 ARTICLE 12 TERMINATION............................................................................................88 12.1 Termination of Agreement......................................................................88 12.2 Effect of Termination.........................................................................89 12.3 Exclusive Dealing.............................................................................89 12.4 Termination Fee...............................................................................90 ARTICLE 13 POST-CLOSING COVENANTS.................................................................................91 13.1 Post-Closing Covenants........................................................................91 ARTICLE 14 GENERAL................................................................................................93 14.1 Public Notices................................................................................93 14.2 Expenses......................................................................................93 14.3 Vendors' Representatives......................................................................93 14.4 Notices.......................................................................................94 14.5 Assignment....................................................................................96 14.6 Amendment.....................................................................................96 14.7 Further Assurances............................................................................96
TABLE OF CONTENTS (continued)
Page 14.8 Language......................................................................................97 14.9 Execution and Counterparts....................................................................97
THIS SHARE PURCHASE AGREEMENT is made on March 4, 2002 at Montreal, Province of Quebec. among: Sofinov Societe Financiere d'Innovation Inc., a corporation governed by the laws of Quebec, and Gestion M&D Provencher Inc., a corporation governed by the laws of Canada, and Fregico Inc., a corporation governed by the laws of Quebec, and Gestion Marc LeBel Inc., a corporation governed by the laws of Quebec, and Marc LeBel, of Quebec City (Quebec), and Francois Vallee, of Quebec City (Quebec), and Jean Marier, of Quebec City (Quebec), and Robert Goyer, of Montreal (Quebec) and Serge Carriere, of Montreal (Quebec), and Guylaine Perron, of Quebec City (Quebec), and Johane B. Champagne, of St.Raymond (Quebec), and Stephane Marin, of Quebec City (Quebec), and Eric Masson, of Quebec City (Quebec), and Nicola Stephan D'Ulisse, of St.Lazare (Quebec), (each, individually, a "Shareholder" and, collectively, the "Shareholders") AND: - 2 - The Option Holders enumerated on Annex A hereto (the Option Holders and Shareholders are herein each referred to as, individually a "Vendor" and, collectively, the "Vendors") AND: SFBC Canada, Inc., a corporation governed by the laws of Canada, (the "Purchaser") AND: SFBC International, Inc., a corporation governed by the laws of Delaware, ("SFBC") AND: Anapharm Inc., a corporation governed by the laws of Quebec; (the "Company") RECITALS: A. The Shareholders beneficially own and control all of the issued and outstanding shares of the Company. B. The Option Holders beneficially own all of the outstanding Anapharm Options. C. The Vendors have agreed to sell to the Purchaser and the Purchaser has agreed to purchase from the Vendors all of the issued and outstanding shares of the Company as of the Closing Date (including those to be issued by the Company as a result of the exercise of all of the outstanding Anapharm Options), on the terms and conditions of this Agreement. THEREFORE, the parties agree as follows: - 3 - ARTICLE 1 DEFINITIONS AND PRINCIPLES OF INTERPRETATION 1.1 Definitions Whenever used in this Agreement, the following words and terms have the meanings set out below: "Accounts Payable" means amounts due and owing by the Company to traders, suppliers and other Persons in the ordinary course of business; "Accounts Receivable" means accounts receivable, bills receivable, trade accounts, book debts and insurance claims recorded as receivable in the Books and Records and any other amount due to the Company including any refunds and rebates, and the benefit of all security (including cash deposits), guarantees and other collateral held by the Company; "Accrued Liabilities" means accrued liabilities of the Company, including accruals for vacation pay and customer rebates; "Affiliate" has the meaning given in the Canada Business Corporations Act, as amended from time to time; "Agreement" means this Share Purchase Agreement, including all schedules, and all amendments or restatements, as permitted, and references to "Article" or "Section" mean the specified Article or Section of this Agreement; "Anapharm Options" means options to purchase Class A and Class D shares of Anapharm issued under the Anapharm Plan as set forth at Schedule 4.5; "Anapharm Plan" means the Anapharm Stock Option Plan dated February 18, 1999, as amended; "arm's length" has the meaning that it has for purposes of the Income Tax Act (Canada); "Auditor" means Ernst & Young, Chartered Accountants; - 4 - "Balance Sheet" means the balance sheet of the Company as at April 30, 2001, forming part of the Financial Statements; "Base Amount" has the meaning set forth in Section 3.1; "Benefit Plans" means plans, arrangements, agreements, programs, policies, practices or undertakings, whether oral or written, formal or informal, funded or unfunded, registered or unregistered to which the Company is a party or by which the Company is bound or under which the Company has, or will have, any liability or contingent liability, relating to: (a) Pension Plans; (b) plans in the nature of insurance plans, providing for employment benefits relating to disability or wage or benefits continuation during periods of absence from work (including, short term disability, long term disability, workers compensation and maternity and parental leave), and any and all employment benefits relating to hospitalization, healthcare, medical or dental treatments or expenses, life insurance, accidental death and dismemberment insurance, death or survivor's benefits and supplementary employment insurance, in each case regardless of whether or not such benefits are insured or self-insured; or (c) plans in the nature of compensation plans, which means all employment benefits relating to bonuses, incentive pay or compensation, performance compensation, deferred compensation, profit sharing or deferred profit sharing, share purchase, share option, stock appreciation, phantom stock, vacation or vacation pay, sick pay, severance or termination pay, employee loans or separation from service benefits, or any other type of arrangement providing for compensation or benefits additional to base pay or salary; with respect to any of its Employees or former employees (or any spouses, dependants, survivors or beneficiaries of any such Employees or former employees), directors or officers, individuals working on contract with the Company or other individuals - 5 - providing services to any of them of a kind normally provided by employees or eligible dependants of such Person excluding Statutory Plans; "Books and Records" means books and records of the Company, including financial, corporate, operations and sales books, records, books of account, sales and purchase records, lists of suppliers and customers, formulae, business reports, plans and projections and all other documents, surveys, plans, files, records, correspondence, and other data and information, financial or otherwise, including all data and information stored on computer-related or other electronic media; "Business Day" means any day, other than a Saturday or Sunday, on which banks in Montreal, Quebec are generally open for commercial banking business during normal banking hours; "Claims" includes claims, demands, actions, suits, causes of action, assessments or reassessments, charges, judgments, debts, Liabilities, expenses, costs, damages or losses, including loss of value, professional fees and all costs incurred in investigating or pursuing any of the foregoing or any proceeding relating to any of the foregoing; "Closing" means the completion of the sale to and purchase by the Purchaser of the Purchased Shares under this Agreement; "Closing Date" means March 14, 2002, or such other date as the Parties may agree in writing as the date upon which the Closing shall take place; "Closing Date Financial Statements" means the audited balance sheet of the Company as at the Closing Date, showing all of the assets and liabilities of the Company, and shall also include a statement of the Closing Net Working Capital, together with an unqualified opinion of the Auditor to the effect that the Closing Date Financial Statements have been prepared in accordance with GAAP consistently applied with those used in the Financial Statements and presents fairly in all material respects the assets and liabilities of the Company; - 6 - "Closing Time" means 3:00 o'clock p.m. Montreal time, on the Closing Date or such other time on such date as the Parties may agree in writing as the time at which the Closing shall take place; "Closing Net Working Capital" shall mean the Company's Net Working Capital as of the Closing Date; "Collective Agreements" means collective agreements and related documents including benefit agreements, letters of understanding, letters of intent and other written communications with bargaining agents or trade unions by which the Company or any of the Subsidiaries is bound or which impose any obligations upon the Company or any of the Subsidiaries or set out the understanding of the parties with respect to the meaning of any provisions of such collective agreements; "Confidential Information" includes, but is not limited to, trade secrets, processes, policies, procedures, techniques including recruiting techniques, designs, drawings, know-how, show-how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing and uses of the Services (as defined herein), the Company's or its Affiliates' budgets and strategic plans, and the identity and special needs of Customers, databases, data, all technology relating to the Company's or its Affiliates' businesses, systems, methods of operation, client or Customer lists, Customer information, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, names, home addresses and all telephone numbers and e-mail addresses of the Company's or its Affiliates' employees, former employees and full-time consultants. In addition, Confidential Information also includes the identity of Customers and the identity of and telephone numbers, e-mail addresses and other addresses of employees or agents of Customers who are the persons with whom the Company's employees and agents communicate in the ordinary course of business. Confidential Information also includes, without limitation, Confidential Information received from the Company's Affiliates. As used herein, the term "Services" shall include all clinical or pre-clinical research, testing, protocol design, data management, medical writing or other services relating to proposed or actual - 7 - formulations, foods, drugs and medical devices engaged in by the Company or any Affiliate prior to Closing. For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is available to the public through no act of the Vendors, and (ii) information which is lawfully obtained by the Vendors in writing from a third party who did not acquire such confidential information or trade secret, directly or indirectly, from the Company or the Company's Affiliates; "Contract" means any oral or written contract, licence, lease, agreement, commitment, entitlement or engagement to which the Company is a party or by which it is bound or under which the Company has, or will have, any liability or contingent liability, and includes any quotation, order or tender for any contract which remains open for acceptance and any warranty, guarantee or commitment (express or implied); "Control" has the meaning given in the Canada Business Corporations Act and "Controlling" has a similar meaning; "Conversion Rate" means the noon spot rate for the exchange of Canadian Dollars into U.S. Dollars as published by the Bank of Canada on the Business Day prior to the date of the signing hereof, namely 0.6269; "Converted" means the amount or price in question expressed in United States Dollars after conversion at the Conversion Rate; "Customer" means Persons that are customers (past or existing) or known prospective customers of the Company at Closing; "Danapharm" means Danapharm Clinical Research Inc., a company governed by the laws of Ontario; "Danapharm Financials" means the audited financial statements of Danapharm for the period ended April 30, 2001, consisting of a balance sheet and a statement of earnings and retained earnings; - 8 - "Employees" means those individuals employed or retained by the Company on a full-time, part-time or temporary basis, including those employees on disability leave, parental leave or other absence; "Employee Vendors" has the meaning set forth in Section 3.2 and includes Gestion Marc LeBel Inc.; "Employment Contract" means any Contract, whether oral or written, relating to an Employee, including any communication or practice relating to an Employee which imposes any obligation on the Company; "Employment Legislation" means all federal and provincial legislation, including the regulations promulgated thereunder, applicable to or governing employment related matters, including without limitation, the Civil Code of Quebec, the Act Respecting Labour Standards (Quebec), the Charter of Human Rights and Freedoms (Quebec), the Pay Equity Act (Quebec), the Act Respecting Occupational Health and Safety (Quebec), the Act Respecting Industrial Accidents and Occupational Diseases (Quebec), the Act Respecting the Quebec Pension Plan (Quebec and the Unemployment Insurance Act (Canada) and similar laws of other jurisdictions; "Employment Standards Legislation" means, collectively, the Act Respecting Labour Standards (Quebec) and the Charter of Human Rights and Freedoms (Quebec) and similar laws of other jurisdictions; "Encumbrance" means any pledge, lien, charge, security interest, lease, title retention agreement, mortgage, hypothec, prior claim, restriction, development or similar agreement, easement, servitude, right-of-way, title defect, option or adverse claim, or encumbrance of any kind or character whatsoever; "Environment" means the environment or natural environment as defined in any Environmental Laws and includes air, surface water, ground water, land surface, soil, subsurface strata, any sewer system and the environment in the workplace; "Environmental Approval" means any approval, permit, certificate, licence, authorization, consent, agreement, instruction, direction, registration, or approval issued, - 9 - granted, conferred or required by a Governmental Authority pursuant to an Environmental Law with respect to the operations, business or assets of the Company; "Environmental Laws" means those Laws relating to the Environment, product liability, or employee or public health and safety, and includes any Laws relating to the storage, generation, use, handling, manufacture, processing, labelling, advertising, sale, display, transportation, treatment, reuse, recycling, Release and disposal of Hazardous Substances; "Equipment Contracts" means motor vehicle leases, equipment leases, conditional sales contracts, "credit-bail", title retention agreements, sale - lease back agreements and other similar agreements relating to equipment used by the Company; "Escrow Agent" means The Trust Company of Bank of Montreal; "Escrow Agreement" means the Escrow Agreement in substantially the form attached at Schedule 1.1(a); "Estimated Net Working Capital" shall mean the Net Working Capital of the Company as of January 31st, 2002, being $9,862,330; "Financial Statements" means the audited financial statements of the Company for the fiscal year ended April 30, 2001, consisting of the Balance Sheet and the statements of earnings and retained earnings and changes in financial position and all notes thereto as reported upon by Ernst & Young, Chartered Accountants, and the Interim Financial Statements, copies of which are annexed as Schedule 4.12; "Fixed Assets" means fixed assets, machinery, equipment, fixtures, furniture, furnishings, vehicles, material handling equipment, implements, parts, tools, patterns and tooling, spare parts owned or used or held by the Company, including any which are in storage or in transit, and other tangible property and facilities used by the Company whether located in or on the premises of the Company or elsewhere, including assets (excluding leasehold improvements) having an acquisition cost of more than $50,000 that are listed and described in Schedule 4.48; - 10 - "GAAP" means the accounting principles recommended, from time to time, in the Handbook of the Canadian Institute of Chartered Accountants; "Governmental Authority" means any government, regulatory authority, governmental department, agency, commission, board, tribunal, dispute settlement panel or body, bureau, official, minister, Crown corporation, court or other law, rule or regulation-making entity having or purporting to have jurisdiction on behalf of any nation, or province or state or other geographic or political subdivision thereof and includes the Quebec Securities Commission, the United States Food and Drug Agency and the United States Drug Enforcement Agency, Health Canada and similar organizations and agencies in the United States, Canada and Europe; "Governmental Authorization" means any authorization, approval, including Environmental Approval, franchise, certificate or certification, order, consent, directive, notice, licence, permit, variance, registration or similar right issued to or required by the Company by or from any Governmental Authority; "Hazardous Substance" means any pollutant, contaminant, waste of any nature, hazardous substance, hazardous material, toxic substance, prohibited substance, dangerous substance or dangerous good as defined, judicially interpreted or identified in any Environmental Laws including any asbestos or asbestos-containing materials; "Independent Auditor" means Deloitte Touche, Chartered Accountants or such other independent auditing firm as the parties may otherwise agree; "Individual Base Amount" has the meaning set forth in Section 3.2; "Individual Escrow Amount" has the meaning set forth in Section 3.2; "Individual Share Allocation" has the meaning set forth in Section 3.2; "Intellectual Property" means intellectual property rights, including all patents, copyright, Trade-marks, industrial designs and integrated circuit topographies, owned or used by the Company and all Technical Information, including the intellectual property rights listed and described in Schedule 4.27; - 11 - "Interim Financial Statements" means the unaudited financial statements of the Company for the period ended January 31, 2002 consisting of a balance sheet and a statement of earnings and retained earnings; "Inventories" means inventories of every kind and nature and wheresoever situate of the Company including inventories of raw materials, work-in-progress, finished goods and by-products, spare parts, operating supplies and packaging materials; "Investment Option" means that certain Option Agreement dated October 22, 1999 between Deadal Management & Investment Inc., the Company and Danapharm, as amended by a Letter of Agreement between the Company, the Bank of Montreal, Deadal Management & Investment Inc. and Danapharm, pursuant to which the Company has the right, upon payment of the price stipulated therein to acquire an additional 5% of the issued and outstanding voting shares, on a fully diluted basis, of Danapharm; "Key Employees" means those Employees listed on Schedule 3.10; "Laws" means applicable laws (including common law), statutes, by-laws, rules, regulations, orders, ordinances, protocols, codes, guidelines, treaties, policies, notices, directions and judicial, arbitral, administrative, ministerial or departmental judgements, awards or other requirements of any Governmental Authority, including Occupational Health and Safety Laws, Employment Legislation, Employment Standards Legislation and laws relating to the development, trials or commercialization of food, drugs, medical devices or other controlled substances or materials; "Leased Real Property" or "Leased Property" mean premises which are used by the Company which are leased, subleased, licensed or otherwise occupied by the Company and the interest of the Company in all plants, buildings, structures, fixtures, erections, improvements, easements, servitudes, rights-of-way, spur tracks and other appurtenances situate on or forming part of such premises; "Liability" or "Liabilities" means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, - 12 - whether liquidated or unliquidated, and whether due or to become due), including any customer rebates and Liability for Taxes; "Material Contract" means any Contract (i) involving payments to or by the Company in excess of $30,000, (ii) involving rights or obligations of the Company that may reasonably extend beyond twelve (12) months, (iii) which is outside the ordinary course of business, (iv) which does not or cannot be terminated without penalty on less than one month notice, or (v) which restricts in any way the business or activities of the Company. All Contracts with Material Suppliers or Customers shall be deemed to be included within "Material Contracts"; "Material Suppliers or Customers" has the meaning set forth in Section 4.19; "Net Working Capital" shall mean current assets of the Company (including cash and cash equivalents) less current liabilities (including current portion of long term debt), all of which shall be determined from the Interim Financial Statements and the Closing Date Financial Statements; "Notice" has the meaning given in Section 14.4; "Occupational Health and Safety Laws" means all Laws relating in full or in part to the protection of employee or worker health and safety, including the Act Respecting Industrial Accidents and Occupational Diseases (Quebec) and the Act Respecting Occupation Health and Safety (Quebec) and any successor legislation and similar laws, including the regulations promulgated thereunder, of other jurisdictions; "Option Holders" means all Persons to whom Anapharm Options have been issued and are outstanding on the date of this Agreement and that are listed on Annex A hereto; "Option Receipts" means an amount equal to those cash proceeds actually received by the Company in consideration for the exercise of Anapharm Options between February 8, 2002 and two Business Days prior to the Closing Date and which shall be communicated by Vendors to Purchaser (with backup and justification satisfactory to Purchaser) at least one Business Day prior to the Closing Date. - 13 - "Owned Real Property" means real (immovable) property, owned or purported to be owned, by the Company, or real (immovable) property, other than Leased Real Property, in which the Company has an interest, including all plants, buildings, structures, fixtures, erections, improvements, easements, servitudes, rights-of-way, spur tracks and other appurtenances situate on or forming part of such real (immovable) property; "Parties" means the Vendors and the Purchaser collectively, and "Party" means any one of them; "Pension Plans" means all benefits relating to retirement or retirement savings including pension plans, pensions or supplemental pensions, "registered retirement savings plans" (as defined in the Income Tax Act (Canada)), "registered pension plans" (as defined in the Income Tax Act (Canada)) and "retirement compensation arrangements" (as defined in the Income Tax Act (Canada)); "Permitted Encumbrances" means the Encumbrances listed in Schedule 1.1(b); "Person" means any individual, sole proprietorship, partnership, firm, entity, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, Governmental Authority, and where the context requires any of the foregoing when they are acting as trustee, executor, administrator or other legal representative; "Personal Information" means any information in the possession or under the control of the Company about an identifiable individual other than the name, title or business address or telephone number of an Employee; "Purchase Price" has the meaning given in Section 3.1; "Purchased Shares" means all of the issued and outstanding shares in the capital of the Company as of the Closing Date; "Rate" means the rate per annum equal to the rate quoted by the Bank of Montreal as the reference rate of interest it uses for determining interest rates on Canadian dollar commercial loans in Canada and designated as such Bank's prime rate; - 14 - "Real Property" means the Owned Real Property and the Leased Real Property; "Real Property Leases" means those agreements to lease, leases, subleases or licences or other agreements or rights pursuant to which the Company uses or occupies the Leased Real Property; "Release" has the meaning prescribed in any Environmental Laws and includes, any sudden, intermittent or gradual release, spill, leak, pumping, addition, pouring, emission, emptying, discharge, injection, escape, leaching, disposal, dumping, deposit, spraying, burial, abandonment, incineration, seepage, placement or introduction, whether accidental or intentional; "Remedial Order" means any administrative complaint, direction, order or sanction issued, filed, imposed or threatened by any Governmental Authority pursuant to any Environmental Laws and includes, any order requiring investigation or remediation of any site or any remediation or clean-up of any Hazardous Substance, or requiring that any Release or any other activity be reduced, modified or eliminated or requiring any form of payment or co-operation be provided to any Governmental Authority; "SFBC" means SFBC International Inc., a corporation governed by the laws of Delaware; "SFBC Options" means options to purchase SFBC Shares under the SFBC Plan; "SFBC Plan" means the Amended and Restated 1999 SFBC Stock Option Plan, as amended; "SFBC Shares" means shares of common stock of SFBC; "SFBC Share Price" has the meaning set forth in Section 3.2; "Share Based Rights" has the meaning set forth in Section 4.5; "Shareholders' Agreement" has the meaning set forth in Section 4.4. - 15 - "Statutory Plans" means statutory Benefit Plans which the Company are required to comply with, including the Canada and Quebec Pension Plans and plans administered pursuant to applicable health tax, workers' compensation and unemployment insurance legislation; "Subjects" means individuals subject to research, testing or trials by, at or under the control of the Company or Danapharm; "Subsidiaries" means corporations in which the Company has a controlling interest as defined in the Canada Business Corporations Act; "Tax Returns" includes all returns, reports, declarations, elections, notices, filings, forms, statements and other documents (whether in tangible, electronic or other form) and including any amendments, schedules, attachments, supplements, appendices and exhibits thereto, made, prepared, filed or required to be made, prepared or filed by Law in respect of Taxes; "Taxes" includes any taxes, duties, fees, premiums, assessments, imposts, levies and other charges of any kind whatsoever imposed by any Governmental Authority, including all interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Authority in respect thereof, and including those levied on, or measured by, or referred to as, income, gross receipts, profits, capital, transfer, land transfer, sales, goods and services, harmonized sales, use, value-added, excise, stamp, withholding, business, franchising, property, development, occupancy, employer health, payroll, employment, health, social services, education and social security taxes, all surtaxes, all customs duties and import and export taxes, countervail and anti-dumping, all license, franchise and registration fees and all employment insurance, health insurance and Canada, Quebec and other government pension plan premiums or contributions; "Technical Information" means all know-how and related technical knowledge used by the Company including: (a) all trade secrets, confidential information and other proprietary know-how (including those relating to Validated Assays); - 16 - (b) all public information and non-proprietary know-how; (c) any information of a scientific, technical, financial or business nature regardless of its form; (d) all documented research, forecasts, studies, marketing plans, budgets, market data, developmental, demonstration or engineering work; (e) all information that can be or is used to define a design or process or procure, produce, support or operate material and equipment; (f) all software but excluding the source code version of such software; (g) methods of production and procedures; and (h) all formula and designs, drawings, blueprints, patterns, plans, flow charts, parts lists, manuals and records. "Trade-marks" means all trade-marks, trade-names, brands, trade dress, business names, Uniform Resource Locators ("URL"), domain names, tag lines, designs, graphics, logos and other commercial symbols and indicia of origin whether registered or not, and any goodwill associated therewith, used by the Company including applications and registrations therefore and, without limitation, trade-marks, trade-names, brands, trade dress, business names, URL, domain names, tag lines, designs, graphics, logos and other commercial symbols and indicia of origin identified in Schedule 4.27. "Union Plans" means Benefit Plans which are or are required to be established and maintained pursuant to a Collective Agreement and which are not maintained or administered by the Company, any of the Subsidiaries or any of their affiliates; "Validated Assays" means drug and/or metabolite assays developed either by HPLC, LC-MS, LC-MS-MS, GC-MS, and RIA techniques and validated according to current - 17 - Good Laboratory Practice guidelines. These assay methods are used in different biological matrices, such as plasma, urine, serum, etc. "Vendors" means the Persons identified as such on the first page hereof; "Vendors' Agent" means The Trust Company of Bank of Montreal, who will, for the specific purposes contemplated in this Agreement, act as agent and mandatory for all of the Vendors; "Vendors' Representatives" means collectively the Persons designated by the Vendors in accordance with Section 14.3 below, who will, for the specific purposes contemplated in this Agreement, act together as agents and mandataries for all of the Vendors. "Workers' Compensation Tribunal" means, collectively, the Commission de la sante et de la securite du travail and the Commission d'appel en matiere de lesions professionnelles under the Act Respecting Industrial and Occupational Diseases (Quebec) and any successor commissions or tribunals and similar commissions and tribunals of other jurisdictions. 1.2 Certain Rules of Interpretation In this Agreement: (a) Consent - Whenever a provision of this Agreement requires an approval or consent and such approval or consent is not delivered within the applicable time limit, then, unless otherwise specified, the Party whose consent or approval is required shall be conclusively deemed to have withheld its approval or consent. (b) Currency - Unless otherwise specified, all references to money amounts are to lawful currency of Canada. (c) Governing Law - This Agreement is a contract made under and shall be governed by and construed in accordance with the laws of the Province of Quebec and the federal laws of Canada applicable in the Province of Quebec. - 18 - (d) Headings - Headings of Articles and Sections are inserted for convenience of reference only and shall not affect the construction or interpretation of this Agreement. (e) Including - Where the word "including" or "includes" is used in this Agreement, it means "including (or includes) without limitation". (f) No Strict Construction - The language used in this Agreement is the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Party. (g) Number and Gender - Unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders. (h) Severability - If, in any jurisdiction, any provision of this Agreement or its application to any Party or circumstance is restricted, prohibited or unenforceable, such provision shall, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement and without affecting the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other Parties or circumstances. (i) Statutory references - A reference to a statute includes all regulations made pursuant to such statute and, unless otherwise specified, the provisions of any statute or regulation which amends, supplements or supersedes any such statute or any such regulation. (j) Time - Time is of the essence in the performance of the Parties' respective obligations and the mere lapse of time shall have the effects contemplated herein and by law. - 19 - (k) Time Periods - Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day following if the last day of the period is not a Business Day. 1.3 Knowledge Any reference to the knowledge of any Party means to the best of the knowledge, information and belief of such Party after making reasonable due inquiries regarding the relevant matter. 1.4 Entire Agreement This Agreement and the agreements and other documents required to be delivered pursuant to this Agreement, constitutes the entire agreement between the Parties and set out all the covenants, promises, warranties, representations, conditions, understandings and agreements between the Parties pertaining to the subject matter of this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, including, without limitation, that certain letter of intent signed by certain Vendors and SFBC International Inc. dated February 8, 2002. There are no covenants, promises, warranties, representations, conditions, understandings or other agreements, oral or written, express, implied or collateral between the Parties in connection with the subject matter of this Agreement except as specifically set forth in this Agreement and any document required to be delivered pursuant to this Agreement. 1.5 Schedules The schedules to this Agreement, as listed below, are an integral part of this Agreement: Schedule Description -------- ----------- *Schedule 1.1(a) Form of Escrow Agreement** Schedule 1.1(b) Permitted Encumbrances - 20 - * Schedule 3.2 Purchase Price and Escrow Allocation** * Schedule 3.7 Allocation of Purchase Price** * Schedule 3.10A Key Employees Schedule 3.10B Form of SFBC Stock Option Agreement Schedule 4.3 Danapharm Capitalization * Schedule 4.4 Purchased Shares Schedule 4.5 Capitalization Schedule 4.12 Financial Statements Schedule 4.13 Undisclosed Liabilities * Schedule 4.16 Non-Arm's Length Transactions * Schedule 4.19 Material Suppliers and Customers** Schedule 4.23 Government Grants Schedule 4.25 Governmental Authorizations Schedule 4.27 Intellectual Property** * Schedule 4.28 Equipment Contracts** Schedule 4.30 Leased Real Property Schedule 4.32 Environmental Matters * Schedule 4.33 Employment Matters** Schedule 4.35 Pension and Benefit Plans * Schedule 4.37 Insurance** * Schedule 4.38 Material Contracts** [* Confidential Treatment Requested for Portions of these Schedules] ** These Schedules to be Filed in paper format under cover of Form SE pursuant to Form TH. - 21 - Schedule 4.40 Litigation** Schedule 4.41 Tax Matters** * Schedule 4.42 Tax Data** * Schedule 4.46 Trade Allowances** Schedule 4.47 Third Party Consents * Schedule 4.48 Location of the Assets** * Schedule 4.49 Bank Accounts Schedule 4.50 Powers of Attorney Schedule 4.53 Trials Schedule 7.6 Investment Letter Schedule 7.7 Opinion of Vendors' Counsel Schedule 7.13 Employment Contract Schedule 7.18 Form of Resignation and Release of Directors and Officers of the Company Schedule 7.21 Employees' Covenants [* Confidential Treatment Requested for Portions of these Schedules] ** These Schedules to be Filed in paper format under cover of Form SE pursuant to Form TH. ARTICLE 2 PURCHASE AND SALE 2.1 Action by Vendor and Purchaser Subject to the provisions of this Agreement, at the Closing Time: - 22 - (a) Purchase and Sale of Purchased Shares - the Vendors shall sell, transfer, assign and deliver to Purchaser and the Purchaser shall purchase all of the Purchased Shares; (b) Payment of Purchase Price - the Purchaser shall pay the Purchase Price to the Vendors as provided in Section 3.2; (c) Transfer and Delivery of the Purchased Shares - the Vendors shall transfer and deliver to the Purchaser share certificates representing the Purchased Shares duly endorsed in blank for transfer, or accompanied by irrevocable security transfer powers of attorney duly executed in blank, in either case by the holders of record, and shall take such steps as shall be necessary to cause the Company to enter the Purchaser or its nominee(s) upon the books of the Company as the holder of the Purchased Shares and to issue one or more share certificates to the Purchaser or its nominee(s) representing the Purchased Shares; and (d) Other Documents - the Vendors and Purchaser shall sign and deliver such other documents as may be necessary to complete the transactions provided for in this Agreement. 2.2 Place of Closing The Closing shall take place at the Closing Time at the offices of Osler, Hoskin & Harcourt located at 800 West Rene-Levesque Blvd., Suite 800, Montreal, Quebec, or at such other place as may be agreed upon by the Vendors and the Purchaser. - 23 - ARTICLE 3 PURCHASE PRICE 3.1 Purchase Price The amount payable by the Purchaser for the Purchased Shares (the "Purchase Price") shall be the sum of (i) $44,000,000 (the "Base Amount"), (ii) the Option Receipts and (iii) $2,000,000 of SFBC Shares. 3.2 Satisfaction of Purchase Price The Purchaser shall satisfy the Purchase Price as follows: (i) subject to clause 3.2(ii) below, by payment at the Closing Time to each Vendor of its share of the Base Amount proportional to its shareholdings in the Company as at Closing (an "Individual Base Amount"), which amount is set forth opposite such Vendor's name on Schedule 3.2. Such payment shall be deemed completed and effective once made by Purchaser to Vendors' Agent on behalf of all Vendors, by certified cheque, bank draft or wire transfer; (ii) those Vendors that are Employees of the Company as at the Closing Time ("Employee Vendors") shall receive their respective Individual Base Amount in a combination of cash and SFBC Shares as follows: At Closing Time, Purchaser shall pay to each Employee Vendor 70% of its Individual Base Amount in cash and the balance (the "Individual Share Allocation") in SFBC Shares. Such cash payment shall be deemed completed and effective once made by Purchaser to Vendors' Agent on behalf of all the Employee Vendors, by certified cheque, bank draft or wire transfer. At Closing Time, Purchaser shall cause SFBC to issue to each Employee Vendor that number of SFBC Shares calculated by dividing such Employee Vendor's Converted Individual Share Allocation by the SFBC Share Price (as defined in clause 3.2(iii) below) and to deliver (or cause - 24 - the delivery) to the Vendors the share certificates representing those SFBC Shares. (iii) at the Closing Time Purchaser shall cause SFBC, and SFBC agrees and covenants, to issue to each Vendor that number of SFBC Shares set opposite such Vendor's name on Schedule 3.2 and to deliver to the Vendors the share certificates representing those SFBC Shares, which number (the "Base Share Allocation") shall be determined by dividing $2,000,000 Converted as follows: by the 20 trading day weighted average closing price of SFBC Shares on the Nasdaq Stock Market measured by the period ending two trading days before the date of the execution of this Agreement, namely US$17.51 (the "SFBC Share Price") which quotient shall then be distributed to the Vendors proportionally to their respective shareholdings in the Company as set forth on Schedule 3.2. Purchaser shall have the option (which it may exercise up to the date preceding the Closing Date by giving written notice to the Vendors' Representatives) to pay to the Vendors (pro rata to their shareholdings in the Company as set forth on Schedule 3.2) $2,000,000 in certified cheque, bank draft or wire transfer and in that event the SFBC Shares contemplated above as the Base Share Allocation shall not be issued to the Vendors; and (iv) by payment to each Vendor of its share of the Option Receipts proportional to its shareholdings in the Company as at Closing, which share is set forth opposite each Vendor's name on Schedule 3.2. Such payment shall be deemed completed and effective once made by Purchaser to Vendors' Agent on behalf of all Vendors, by certified cheque, bank draft or wire transfer. Notwithstanding anything to the contrary herein contained, there shall be no issuance of SFBC Shares in fractions. Consequently, the value (as a fraction of the SFBC Share Price) of any fractional SFBC Share otherwise issuable under this Section 3.2 shall be paid by Purchaser by certified cheque, bank draft or wire transfer. - 25 - 3.3 Delivery of Closing Date Financial Statements As soon as reasonably practical after the Closing Date and in any event not later than 90 days thereafter, the Parties shall cause the Auditor to prepare and deliver to the Purchaser and Vendors' Representatives the Closing Date Financial Statements, including a statement of the Closing Net Working Capital. A draft of the Closing Date Financial Statements shall be provided to the Parties for review and discussion as soon as it is available and in any event no later than 60 days after the Closing Date. The Parties shall cooperate fully in the preparation of the Closing Date Financial Statements. 3.4 Net Working Capital Adjustment Subject to Section 3.5, if the Closing Net Working Capital is less than the Estimated Net Working Capital then the Vendors shall pay to the Purchaser the amount of the difference (the "Net Working Capital Adjustment") by certified cheque, bank draft or wire transfer within 10 days after delivery of the Closing Date Financial Statements, provided that (A) the first $500,000 of such Net Working Capital Adjustment shall be paid by the Escrow Agent from the Escrow Amount and (B) that there shall be no Net Working Capital Adjustment for any difference of $432,000 or less between the Closing Net Working Capital and the Estimated Net Working Capital due solely to the Company's loss, as a result of the execution of this Agreement, of the Company's "Canadian Controlled Private Corporation" status for its fiscal year commencing May 1, 2001 and the consequential loss by the Company of (i) the small business tax deduction (of approximately $32,000) or (ii) the research and development tax credits (approximately $400,000) (the proviso in this clause (B) is herein referred to as the "Second Proviso"). For greater certainty, the Second Proviso shall not apply and the Net Working Capital Adjustment shall be payable for the entire difference between the Closing Net Working Capital and the Estimated Net Working Capital if such difference is due to any change in the Company's financial position that is (a) greater than $432,000 or (b) not a result of the loss of the Company's status as a "Canadian Controlled Private Corporation" for the fiscal year commencing May 1, 2001 as a result of the execution of this Agreement. - 26 - 3.5 Objection to Closing Date Financial Statement (a) Delivery of Objection Notice. In the event that the Purchaser or Vendors' Representatives objects (the "Objecting Party") in good faith to any item of the Closing Date Financial Statements, the Objecting Party shall so advise the other party by delivery to such party of a written notice (the "Objection Notice") within 30 days after the delivery to the Objecting Party of the Closing Date Financial Statements. The Objection Notice shall set out the reasons for the Objecting Party's objection as well as the amount in dispute and reasonable details of the calculation of such amount. (b) Resolution of Disputes. The Vendors' Representatives and the Purchaser shall attempt to resolve all of the items in dispute set out in any Objection Notice within 30 days of receipt of the Objection Notice and the Vendors' Representatives and Purchaser shall jointly instruct the Auditor to attempt to assist in that resolution. Any items in dispute not resolved within such 30 day period shall be referred as soon as possible thereafter by the Vendors' Representatives and the Purchaser to the Independent Auditor. The Independent Auditor shall act as expert and not as arbitrator and shall be required to determine the items in dispute that have been referred to it as soon as reasonably practicable but in any event not later than 30 days after the date of referral of the dispute to it. In making its determination, the Independent Auditor will only consider the issues in dispute placed before it. The Vendors' Representatives and the Purchaser shall provide or make available, and shall cause the Auditor to provide or make available, all documents and information as are reasonably required by the Independent Auditor to make its determination. The determination of the Independent Auditor shall be final and binding on the Parties and the Closing Date Financial Statements shall be (or not be) adjusted in accordance with such determination. (c) Audit Expenses. The fees and expenses of the Auditor in acting in accordance with this ARTICLE 3 shall be paid by the Company. The fees and expenses of - 27 - the Independent Auditor in acting in accordance with this ARTICLE 3 shall be shared equally by the Purchaser and the Vendors. (d) Payment in Accordance with Determination. Within 5 days after resolution by agreement of the Parties of the dispute which was the subject of the Objection Notice or, failing such resolution, within 5 days after the final determination of the Independent Auditor, the Vendors shall pay (by certified cheque, bank draft or wire transfer) to the Purchaser any amount owing as a result of such resolution or final determination, calculated in accordance with the Net Working Capital Adjustment provided in Section 3.4, provided that the first $500,000 of such Net Working Capital Adjustment shall be paid by the Escrow Agent from the Escrow Amount and subject also to the application of the Second Proviso as provided in Section 3.4 above. 3.6 Interest The amounts paid as adjustments under Sections 3.4 and 3.5 shall be paid together with interest thereon calculated and compounded monthly from the Closing Date to the date of payment, at the Rate. 3.7 Allocation of Purchase Price The Purchase Price shall be allocated in accordance with the provisions of Schedule 3.7. Each of the Vendors and the Purchaser shall report the purchase and sale of the Purchased Shares in any Tax Returns in accordance with the provisions of Schedule 3.7. 3.8 Allocation of Payments Unless otherwise specifically set forth herein or at the time of the payment, all payments of Purchase Price to Vendors and all other payments of the Purchaser to the Vendors hereunder shall be deemed shared amongst the Vendors in the proportions set forth in Schedule 3.2. - 28 - 3.9 Escrow At the Closing Time each of the Vendors and Purchaser shall execute and deliver the Escrow Agreement and shall, pursuant to the terms of such Escrow Agreement, deposit with the Escrow Agent the amount of money and the SFBC Shares, as the case may be, set forth opposite each Vendors' name on Schedule 3.2 (individually an "Individual Escrow Amount" and collectively, the "Escrow Amount"). The Escrow Amount shall be held by the Escrow Agent pursuant to the Escrow Agreement as partial security for any breach of warranty, representation or covenant by any Vendor hereunder. The Escrow Amount shall be $4,700,179.19. The Escrow Amount shall be disbursed by the Escrow Agent to the Vendors at the times and in the manner set forth in the Escrow Agreement. Any Vendor who elects to do so by written notice delivered to Purchaser at Closing Time, may deposit up to all but not less than 25% of its Individual Escrow Amount in the form of SFBC Shares such Vendor receives at Closing. The number of SFBC Shares to be so deposited shall equal the Converted Individual Escrow Amount divided by the SFBC Share Price. 3.10 SFBC Options At Closing Time, but subject to all applicable Laws and Governmental Authorizations, SFBC will issue to the Key Employees of the Company identified in Schedule 3.10, an aggregate of 110,000 SFBC Options to be allocated between those selected employees of the Company as set forth in Schedule 3.10A. The SFBC Options shall be exercisable over a ten (10) year term and shall vest over a three (3) year period in equal increments (namely 1/6 of the SFBC Options granted) each June 30th and December 31st commencing December 31st, 2002, subject to continued employment on each applicable vesting date, which vested SFBC Options must be exercised within 3 months following termination of employment, the whole in accordance with and subject to the SFBC Plan. The granting of SFBC Options shall be subject to the execution of SFBC's standard Stock Option Agreement, the form of which is at Schedule 3.10B. The exercise price of the SFBC Options shall be the closing price of the SFBC Shares on the Nasdaq Stock Market on the day prior to the Closing Date. - 29 - ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE VENDORS Each of the Vendors jointly (and not solidarily) represents and warrants to the Purchaser, subject to such exceptions specifically disclosed in the disclosure Schedules referred to in this Agreement, the matters set out below and acknowledges that the Purchaser is relying on such representations and warranties as a condition of its purchase of the Purchased Shares. Notwithstanding the foregoing, representations and warranties made under Sections or clauses 4.2, 4.4, 4.7, 4.8 and 4.9(ii) are made by each concerned Vendor for his or its own account and on an individual basis only. 4.1 Incorporation and Registration (a) The Company is a corporation duly incorporated and validly existing under the laws of Quebec and has all necessary corporate power, authority and capacity to own its property and assets and to carry on its business as presently conducted. Neither the nature of its business nor the location or character of the property owned or leased by the Company requires it to be registered, licensed or otherwise qualified as an extra-provincial or foreign corporation in any jurisdiction other than in the Province of Quebec where it is duly registered, licensed or otherwise qualified for such purpose and other than jurisdictions where the failure to be so registered, licensed or otherwise qualified would not have a material adverse effect on the Company. (b) The Company owns 2,707 common shares of Danapharm, which shares represent 49% of the issued and outstanding shares of Danapharm on a fully-diluted basis. Danapharm is a corporation duly incorporated and validly existing under the laws of Ontario and has all necessary corporate power, authority and capacity to own its property and assets and to carry on its business as presently conducted. Neither the nature of its business nor the location or character of the property owned or leased by Danapharm requires it to be registered, licensed or otherwise qualified as an extra-provincial or foreign corporation in any jurisdiction where - 30 - Danapharm is duly registered, licensed or otherwise qualified for such purpose and other than jurisdictions where the failure to be so registered, licensed or otherwise qualified would not have a material adverse effect on Danapharm. 4.2 Residence of the Vendors Each of the Vendors is not a non-resident of Canada for the purposes of the Income Tax Act (Canada). Each of the Vendors is resident in the Province of Quebec. 4.3 Subsidiaries The Company has no Subsidiaries. The Company does not own, or have any interest in any shares or have an ownership interest in any other Person other than its shareholdings in Danapharm. The Company has the Investment Option and the Investment Option is a valid, legal and binding obligation of Danapharm. The authorized and issued share capital of Danapharm is fully and accurately described on Schedule 4.3 and other than as set out on such Schedule 4.3 there are no options, warrants or other rights to purchase or acquire shares or other securities of Danapharm outstanding. 4.4 Right to Sell Each of the Vendors that is not an individual (the "Corporate Vendors") is a corporation duly incorporated and validly existing under the laws of its incorporation. Each Vendor is or will be at Closing, subject only to the exercise of Anapharm Options, the sole registered and beneficial owner of the Purchased Shares set opposite its name on Schedule 4.4 with good and valid title, free and clear of all Encumbrances. Each Vendor has the exclusive right to dispose of the Purchased Shares set opposite its name on Schedule 4.4 as provided in this Agreement and such disposition will not violate, contravene, breach or offend against or result in any material default under any indenture, mortgage, hypothec, lease, agreement, obligation, instrument, charter or by-law provision, order, judgment, decree, licence, permit or Laws, to which such Vendor is a party or subject or by which such Vendor is bound or affected. The Purchased Shares are not subject to the terms of any shareholders or similar agreement, except for the shareholders' agreement dated as of February 24, 1995, as amended, concerning the Company (the "Shareholders' - 31 - Agreement"). Each Vendor which is a party to the Shareholders' Agreement hereby waives all its rights thereunder with respect to the execution of this Agreement and the sale of the Purchased Shares to the Purchaser under this Agreement and agrees and consents to the termination of the Shareholders' Agreement as of the Closing Date. The Purchased Shares are not subject to any voting trust agreement or other contract, agreement, arrangement, commitment or understanding, including any such agreement, arrangement, commitment or understanding restricting or otherwise relating to the voting, dividend rates or disposition of the Purchased Shares, except for the Shareholders' Agreement. 4.5 Capitalization The authorized and issued share capital of the Company is as set forth in Schedule 4.5. All of the Purchased Shares have been duly and validly issued (including in compliance with applicable securities related Laws) and are outstanding as fully paid and non-assessable shares. Other than Anapharm Options which shall all be exercised prior to Closing and the Purchased Shares to be issued by the Company as a result of such exercise, at Closing Time no options, warrants or other rights to purchase shares or other securities of the Company and no securities or obligations convertible into or exchangeable for shares or other securities of the Company have been authorized or agreed to be issued or are outstanding. The Purchased Shares are 100% of the issued and outstanding shares of the Company. None of the Purchased Shares has been issued in violation of, and none of the Purchased Shares is subject to, any pre-emptive or subscription rights except under the Shareholders' Agreement, and except as set forth above, there are no shares in the capital stock or other equity securities of the Company outstanding. There are no stock-appreciation rights, stock-based performance units, "phantom" stock rights or other agreements, arrangements or commitments of any character (contingent or otherwise) pursuant to which any person is or may be entitled to receive any payment or other value based on the revenues, earnings or financial performance, stock price performance, assets or other attribute of the Company or calculated in accordance therewith (other than ordinary course payments or commissions to sales representatives of the Company based upon revenues generated by them without augmentation as a result of the transactions contemplated hereby) (collectively, "Share-Based Rights") or to cause the Company to file a registration statement, listing application or - 32 - other filing under the applicable securities Laws, or which otherwise relate to the registration or listing of any securities of the Company. 4.6 Title to the Assets Except as identified elsewhere in this Agreement, the Company is the sole beneficial and (where its interests are registrable) the sole registered owner of all of its assets and interests in assets, real (immovable) and personal (movable), as the case may be, with good and valid title, free and clear of all Encumbrances other than Permitted Encumbrances. In particular, without limiting the generality of the foregoing, there has been no assignment, subletting or granting of any licence (of occupation or otherwise) of or in respect of the Company's assets or any granting of any agreement or right capable of becoming an agreement or option for the purchase of any of such assets other than pursuant to the provisions of, or as disclosed in, this Agreement or pursuant to purchase orders for Inventory accepted by the Company in the ordinary course. 4.7 Due Authorization Each of the Corporate Vendors has all necessary corporate power, authority and capacity to enter into this Agreement and to carry out its obligations under this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of each Corporate Vendor. 4.8 Enforceability of Obligations This Agreement has been duly executed by each of the Vendors and constitutes a valid and binding obligation of each Vendor enforceable against it, him or her in accordance with its terms. 4.9 Absence of Conflicting Agreements (a) The Company is not a party to, bound or affected by or subject to any indenture, mortgage, hypothec, lease, agreement, obligation, instrument, charter or by-law provision, order, judgment, decree, licence, Laws or Governmental Authorizations which would be violated, contravened, breached by, or under which default would occur or an Encumbrance would be - 33 - created as a result of the execution and delivery of this Agreement or any other agreement to be entered into under the terms of this Agreement, or any other agreement to be entered into under the terms of this Agreement, or the performance by the Vendors or the Company of any of their obligations under this Agreement or any other agreement to be entered into under the terms of this Agreement. (b) The execution and delivery of the Agreements by the Vendors does not and will not, and the consummation by the Vendors of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with or result in any violation or breach of any provision of (i) any contract, agreement in principle, letter of intent or other instrument to which any Vendor or any of its directors, officers, representatives or agents is a party or by which any of the Vendors' properties or assets may be affected or secured, or (ii) any rights of any third party with respect to the proposed acquisition of the Purchased Shares or any of the assets of the Company, or (iii) any Law applicable to the Vendors, and if the Vendor is not a natural person, the execution and delivery of this Agreement by the Vendor does not, and the consummation by the Vendors of the transactions contemplated hereby in compliance with the terms hereof will not, conflict with, or result in any violation or breach of any provision of the partnership agreement, by-laws, trust agreement or other constituent corporate, partnership or trust documents of the Vendor, as the case may be, except for any violations or breaches which, in the aggregate, would not materially impair or restrain each Vendor's ability to consummate the transactions contemplated in this Agreement. 4.10 Regulatory Approvals Other than the Investment Canada filing required pursuant to Part III of the Investment Canada Act and consents to assignment of any Governmental Authorizations disclosed in the Schedules to this Agreement, no approval, order, consent of or filing with any Governmental Authority, including any approval, order, consent or filing under the Competition Act (Canada), is required on the part of the Vendors or the Company, in connection with the execution, delivery and performance of this Agreement or any other documents and agreements to be delivered under this Agreement or the performance of the Vendors' obligations under this Agreement or any other documents and agreements to be delivered under this Agreement. - 34 - 4.11 Competition Act Assets and Revenues The assets in Canada and the gross revenues from sales in, from or into Canada of the Company and its Affiliates determined in each case as prescribed in the Competition Act (Canada) for the purposes of determining the application of the filing requirements of the Competition Act (Canada), as of January 31, 2002, are $29,442,855 and $27,613,701 (for the nine months ending on that date), respectively. 4.12 Financial Statements The Financial Statements have been prepared in accordance with GAAP applied on a basis consistent with that of the preceding period and the Financial Statements present fairly: (a) all of the assets, liabilities and financial position of the Company as at their respective dates; and (b) the sales, earnings, results of operation and changes in financial position of the Company for the twelve month period ended April 30, 2001 and the nine month period ended January 31, 2002. The Danapharm Financials are prepared in accordance with GAAP on a basis consistent with past practices and present fairly: (a) all of the assets, liabilities and financial position of Danapharm as at April 30, 2001; and (b) the sales, earnings, results of operation and changes in financial position of Danapharm for the 12 month period ended April 30, 2001. The Company does not recognize revenue prior to the signing of a written contract anticipating such revenue. 100% of the Tax credits receivable reflected in the Interim Financial Statements are collectible. Without limiting the generality of the foregoing, to Vendors' knowledge, the Company has not claimed Tax credits claimed by its Customers or suppliers. - 35 - 4.13 Absence of Undisclosed Liabilities The Company has not (and at Closing will not have) incurred any Liabilities or obligations, which continue to be outstanding, except as disclosed in the Financial Statements or on Schedule 4.13. 4.14 Absence of Changes and Unusual Transactions Since January 31, 2002: (a) no event, change or occurrence has occurred which, individually or together with any other event, change or occurrence, has or could have a material adverse effect on the business, financial condition, results of operations, assets or prospects of the Company; (b) there has not been any damage, destruction, loss, labour dispute, organizing drive, application for certification or other event, development or condition of any character (whether or not covered by insurance) materially and adversely affecting the business, assets, properties or future prospects of the Company; (c) there has not been any material change in the level of Inventories; (d) the Company has not transferred, assigned, sold or otherwise disposed of any of the assets shown or reflected in the Balance Sheet or cancelled any debts or entitlements except, in each case, in the ordinary course of business; (e) the Company has not incurred or assumed any obligation or Liability (fixed or contingent), except those listed in Schedule 4.13 and except unsecured current obligations and liabilities incurred in the ordinary course of business; (f) the Company has not discharged or satisfied any Encumbrance, or paid any obligation or Liability other than Liabilities included in the Balance Sheet and - 36 - Liabilities incurred since the date of the Balance Sheet in the ordinary course of business; (g) the Company has not suffered an operating loss or any extraordinary loss, waived or omitted to take any action in respect of any rights, or entered into any commitment or transaction not in the ordinary course of business where such loss, rights, commitment or transaction is or would be material in relation to the Company; (h) the Company has not granted any bonuses, whether monetary or otherwise, or made any general wage or salary increases in respect of its Employees, or changed the terms of employment for any Employee except in the ordinary course of business and consistent with past practice; (i) the Company has not hired or dismissed any employees, other than in the ordinary course of its business; (j) the Company has not, directly or indirectly, engaged in any transaction, made any loan or entered into any arrangement with any officer, director, partner, shareholder, Employee (whether current or former or retired), consultant, independent contractor or agent (or any family member of or legal entity controlled by any of the latter) of the Company, except in the use course of business consistent with past practice; (k) the Company, except as disclosed as a Permitted Encumbrance, has not mortgaged, hypothecated, pledged, subjected to lien, granted a security interest in or otherwise encumbered any of its assets or property, whether tangible or intangible; (l) the Company, directly or indirectly, has not declared or paid any dividends or declared or made any other payments or distributions on or in respect of any of its - 37 - shares and has not, directly or indirectly, purchased or otherwise acquired any of its shares or changed its articles of incorporation or by-laws; and (m) the Company has not authorized, agreed or otherwise become committed to do any of the foregoing. (n) Since April 30, 2001 the Company has not issued, purchased, redeemed or otherwise transacted on any of its securities, other than (i) the repurchase for cancellation of 213,950 Class A shares; and (ii) the exercise of an option held by one Corporate Vendor which resulted in the issuance of 249,000 Class A shares of the Company. 4.15 Reserves and Accruals The reserves and Accrued Liabilities disclosed on or reflected in the Financial Statements and the Books and Records are sufficient in all respects to provide for the liabilities in respect of which they have been established. 4.16 Non-Arm's Length Transactions No director or officer, former director or officer, shareholder or Employee or any other Person not dealing at arm's length with the Company or any of the Vendors has any Contracts, business dealings, supplier relationships, indebtedness, liability or obligation to, with or from the Company or Danapharm and the Company is not indebted or otherwise obligated to any such Person except for employment arrangements with Employees, the terms of which are disclosed in Schedule 4.16, and for loans granted by the Company to certain Employee Vendors for the purchase of shares of the Company, as described in Schedule 4.16, which will be reimbursed to the Company prior to or as of the Closing Date. 4.17 No Joint Venture Interests, etc. The Company is not a partner, beneficiary, trustee, co-tenant, joint-venturer or otherwise a participant in any partnership, trust, joint venture, co-tenancy or similar jointly owned business - 38 - undertaking and the Company has no investment interests in any business owned or controlled by any third party other than Danapharm. 4.18 Absence of Guarantees The Company has not given or agreed to give, or is a party to or bound by, any guarantee, surety or indemnity in respect of indebtedness, or other obligations, of any Person, or any other commitment by which the Company is, or is contingently, responsible for such indebtedness or other obligations, except for the Letter of Agreement amending the Investment Option. 4.19 Major Suppliers and Customers The Purchaser has been provided with a comprehensive listing of each supplier of goods and services to, and each customer of, the Company as of the date of such listing to whom the Company paid or billed in excess of $30,000 in the aggregate during the twelve (12) month period ended January 31, 2002, together with, in the case of customers, a work in progress spreadsheet (each, a "Material Supplier or Customer"). To the knowledge of the Vendors, no supplier or customer has any intention to change its relationship or the terms upon which it conducts business with the Company. Schedule 4.19 contains a list of all contracts with Material Suppliers and Customers. 4.20 Condition of Assets The Fixed Assets are in good condition, repair and (where applicable) proper working order, having regard to their use and age and such assets have been properly and regularly maintained. 4.21 Inventories All Inventories are valued on the books of the Company at the lower of cost, using the first in, first out method, or net realizable value. All Inventories are in quantities usable or saleable in the ordinary course of business within 12 months of the Closing Date. - 39 - 4.22 Collectibility of Accounts Receivable Subject to the reserves and Accrued Liabilities disclosed on or reflected in the Interim Financial Statements, the Accounts Receivable are good and collectible at the aggregate recorded amounts and are not subject to any defence, deduction, reduction, counterclaim or set off. There are no Contracts or other understandings, whether oral or in writing, with respect to the write down, write-off or deferral of any Accounts Receivable. 4.23 Government Grants Schedule 4.23 sets forth a complete list of all contracts or agreements relating to grants or other forms of assistance including loans with interest at below market rates, received by the Company from any Governmental Authority. 4.24 Business in Compliance with Law In all material respects, the operations of the Company have been and are now conducted in compliance with all Laws of each jurisdiction in which the Company carries on or has carried on business and the Company has not received any notice of any alleged violation of any such Laws. To Vendors' knowledge, neither the Company nor any of its employees or agents has made an untrue statement of material fact or fraudulent statement to any Governmental Authority, failed to disclose a material fact required to be disclosed to any Governmental Authority or committed an act, made a statement or failed to make a statement that could reasonably be expected to provide a basis for the revocation or termination of any Governmental Authorizations or the breach of any law. All clinical trials the Company has conducted or has had conducted for it by third parties comply in all material respects with the requirements of Good Clinical Practice, Informed Consent, and all requirements relating to protection of human subjects, found in 21 United States Code of Federal Regulation ("CFR") Sections 50, 54 and 56 (and the equivalent provisions of Canadian Laws) and that all non-clinical laboratory testing complies with the requirements of 21 C.F.R. Section 58 (and the equivalent provisions of Canadian Laws). - 40 - 4.25 Governmental Authorizations Schedule 4.25 sets forth a complete list of the Governmental Authorizations. The Governmental Authorizations listed in Schedule 4.25 are all the authorizations required by the Company to enable it to carry on its business in compliance with all Laws. The Governmental Authorizations are in full force and effect in accordance with their terms, and there have been no violations of such Governmental Authorizations and no proceedings are pending or, to the knowledge of the Vendors, threatened, which could result in their revocation or limitation. No Governmental Authorization shall be lost, diminished or adversely affected as a result of the change of control of the Company upon Closing. 4.26 Restrictive Covenants The Company is not a party to or bound or affected by any commitment, contract or document containing any covenant (a) expressly limiting the freedom of the Company to: . compete in any line of business, . acquire goods or services from any supplier, . sell goods or services to any customer or potential customer, or . transfer or move any of its assets or operations; or (b) which materially or adversely affect its business practices, operations or financial condition or the continued operation of its business after the Closing as presently carried on. 4.27 Intellectual Property (a) Schedule 4.27 sets forth a complete list and brief description of all Intellectual Property which has been registered by or on behalf of the Company or for which applications for registration have been filed in any jurisdiction. - 41 - (b) Except as disclosed in Schedule 4.27, the Company is the exclusive registered and beneficial owner of all right, title and interest in and to the Intellectual Property (with no breaks in the chain of title) free and clear of all Encumbrances and Claims. The Intellectual Property which is not owned by the Company is being used by the Company only with the written consent of or written licence from the rightful owner and all such licences are in full force and effect. (c) Except as disclosed in Schedule 4.27, all registrations of Intellectual Property owned by the Company are in full force and effect and have not been used or enforced or failed to be used or enforced in a manner that would result in their abandonment, cancellation or unenforceability. (d) Except as disclosed in Schedule 4.27, there is no claim of adverse ownership, invalidity or other opposition to or conflict with any Intellectual Property nor of any pending or, to the knowledge of the Vendors, threatened claim against the Company relating to the Intellectual Property. (e) Except as disclosed in Schedule 4.27, the use of any of the Intellectual Property by the Company does not breach, violate, infringe or interfere with any rights of any third party or require payment for the use of any intellectual property right of another. (f) The Company has not assigned, licensed or otherwise conveyed any rights or license to any of the Intellectual Property to any Person. 4.28 Equipment Contracts Schedule 4.28 sets forth a complete list of all Equipment Contracts together with a description of the equipment and other assets to which the Equipment Contracts relate. The Equipment Contracts listed in Schedule 4.28 are all those used to earn the revenue shown on the Financial Statements. All of the Equipment Contracts are in full force and effect and no default exists on the part of the Company, or, to the knowledge of the Vendors, on the part of any of the other - 42 - parties thereto. The interest of the Company under each of the Equipment Contracts is held free and clear of any Encumbrance, other than Permitted Encumbrances, and all payments due under the Equipment Contracts have been duly and punctually paid. 4.29 Owned Real Property The Company has no, and has never had any, Owned Real Property. 4.30 Leased Real Property (a) Schedule 4.30 sets forth a complete list of the Leased Real Property by reference to municipal address and Real Property Leases by reference to all relevant documents including details of parties thereto and dates of documents as well as details of annual rent payable, any discounts or premiums associated therewith, current terms, renewal rights, security deposits (or prepaid rent), and area of premises. (b) The Real Property Leases, except as set forth on Schedule 4.30, have not been altered or amended and are in full force and effect. (c) There are no agreements or understandings between the landlord and tenant, or sublandlord and subtenant, or other relevant parties, other than as contained in the Real Property Leases, pertaining to the rights and obligations of the parties thereto relating to the use and occupation of the Leased Real Property. (d) All interests held by the Company as lessee or occupant under the Real Property Leases are free and clear of all Encumbrances other than Permitted Encumbrances. (e) All payments required to be made by the Company pursuant to the Real Property Leases have been paid and the Company is not in default in meeting any of its obligations under any of the Real Property Leases. - 43 - (f) None of the landlords, sublandlords, tenants, subtenants or other relevant parties under any of the Real Property Leases is in default in meeting any of its obligations under Real Property Leases to which it is a party. (g) The Company has no option, right of first refusal or other contractual right relating to the Leased Real Property, other than as set out in the Real Property Leases. (h) No event exists which, but for the passing of time or the giving of notice, or both, would constitute a default by any party to any of the Real Property Leases and no party to any Real Property Lease is claiming any such default or taking any action purportedly based upon any such default. (i) The Company has not waived, or omitted to take any action in respect of any material rights under any of the Real Property Leases. 4.31 Real Property Generally (a) The structures, erections, improvements and fixtures situated on or used in connection with the Leased Real Property are in good condition, repair and proper working order, having regard to their use and age and such assets have been properly and regularly maintained. (b) The Company has such rights of entry and exit to and from the Real Property as are reasonably necessary to carry on its business upon the Leased Real Property. (c) No Person other than the Company is using or has any right to use, as sub-tenant or otherwise, or is in possession or occupancy of, any part of such Real Property. (d) The Company has not granted any option, right of first refusal or other contractual rights with respect to any of the Real Property Leases. - 44 - (e) The Company has not entered into any agreement to sell, transfer, encumber, or otherwise terminate or impair the right, title and interest of the Company in and to the Real Property Leases. (f) The Company has not received any notification of and the Vendors have no knowledge of, any outstanding or incomplete work orders in respect of any of the Leased Property or of any current non-compliance (other than non-compliances which are legal non-conforming under relevant zoning by-laws) with applicable statutes and regulations or building and zoning by-laws and regulations with respect to any of the Leased Property. (g) The current uses of the Leased Property are permitted under current zoning regulations. (h) The Vendors have no knowledge of any proposed or pending change to any zoning affecting the Leased Property. (i) No part of the Leased Property is subject to any building or use restriction that restricts or would restrict or prevent the use and operation of the Leased Property as it has been used or operated in the ordinary course in the past by the Company. (j) To Vendors' knowledge, no improvements constituting a part of the Leased Property encroaches on real (movable) property not forming part of the Leased Property. (k) The Vendors have no knowledge of any expropriation or condemnation or similar proceeding pending or threatened against the Real Property or any part of the Real Property. (l) To Vendors' knowledge, all components of all improvements included within the Leased Real Property, including the structural elements thereof and the heating, ventilation, air-conditioning, plumbing, electrical, mechanical and sewer systems - 45 - in or servicing the Leased Real Property are in good condition, repair and proper working order, having regard to their use and age. (m) The Real Property is fully serviced to permit the operation of the business of the Company to be carried on after Closing as it has been carried on in the ordinary course in the past. To Vendors' knowledge, all municipal levies, local improvements, imposts and permit fees due and payable by the Company prior to the Closing Date have been or shall as at the Closing Date be paid by the Company. (n) There are no matters affecting the right, title and interest of the Company in and to the Leased Property under the Real Property Leases which, in the aggregate, would materially and adversely affect the ability of the Company after the Closing Date, to carry on the business upon the Leased Property as it has been carried on in the ordinary course in the past. 4.32 Environmental Matters (a) Schedule 4.32 sets forth a complete list of the Environmental Approvals. (b) Except as set forth on Schedule 4.32, all operations of the Company conducted in the Leased Real Property while occupied by the Company, have been and are now, in compliance in all material respects with all Environmental Laws. Any Release by the Company of any Hazardous Substance into the Environment complied and complies with all Environmental Laws. All contractors of and suppliers to the Company are conducting their affairs with the Company (including, without limitation, the disposal and transport of medical waste) in compliance with all Laws and Governmental Authorizations. (c) All Environmental Approvals have been obtained, are valid and in full force and effect, have been and are being complied with, and there have been and are no - 46 - proceedings commenced or, to the knowledge of the Vendors, threatened to revoke or amend any Environmental Approval. (d) Except as disclosed in Schedule 4.32 hereto, none of the Company or any of its operations has been or is now the subject of any Remedial Order, nor do the Vendors have any knowledge of any investigation or evaluation commenced or threatened as to whether any such Remedial Order is necessary nor has any threat of any such Remedial Order been made nor are there any circumstances which could result in the issuance of any such Remedial Order. (e) The Company has not been prosecuted for or convicted of any offence under any Environmental Law, nor has the Company been found liable in any proceeding to pay any fine, penalty, damages, amount or judgment to any Person as a result of any Release or threatened Release or as a result of the breach of any Environmental Law and to the knowledge of the Vendors, there is no basis for any such proceeding or action. (f) All material environmental data and studies (including the results of any environmental audit assessment or environmental management system) relating to the Company, if any, have been delivered or made available to the Purchaser. (g) There has been no Release by the Company of any Hazardous Substance which is now present in, on or under any of the Leased Real Property or any other assets of the Company or any property currently or in the past under the charge, management or control of the Company (including underlying soils and substrata, vegetation, surface water and groundwater) at levels which exceed decommissioning or remediation standards under any applicable Environmental Laws or standards published or administered by the Governmental Authority responsible for establishing or applying such standards. (h) The Vendors have no knowledge of any Hazardous Substance in or on any assets of the Company in violation of Law or Governmental Authorizations. - 47 - 4.33 Employment Matters (a) Schedule 4.33 sets forth a complete list of the Employees, together with their titles, service dates and material terms of employment, including current wages, salaries or hourly rate of pay, benefits, vacation entitlement, commissions and bonus (whether monetary or otherwise) or other material compensation paid since the beginning of the most recently completed fiscal year (including the date of payment if paid since December 31, 2001) or payable to each such Employee. Except as disclosed in Schedule 4.33, no Employee is on short-term or long-term disability leave, parental leave, extended absence or receiving benefits pursuant to Occupational Health and Safety Laws or an order of the Workers' Compensation Tribunal. (b) Except for the Employment Contracts listed in Schedule 4.33, there are no Employment Contracts which are not terminable on the giving of reasonable notice in accordance with applicable law, nor are there any management agreements, retention bonuses or Employment Contracts providing for cash or other compensation or benefits upon the consummation of the transactions contemplated by this Agreement. (c) Except for the Benefit Plans or as disclosed in Schedule 4.33, there are no employment policies or plans, which are binding upon the Company. (d) The Company has been and is being operated in full compliance with all Laws relating to employees, including Employment Legislation and Employment Standards Legislation, Occupational Health and Safety Laws, workers compensation, human rights, labour relations and pay equity. The Company has complied with and posted plans as required under applicable pay equity legislation. There have been no Claims nor, to the knowledge of the Vendors, are there any threatened complaints under such employment-related Laws against the Company. - 48 - (e) Except as set forth on Schedule 4.33, there are no Claims or complaints nor, to the knowledge of the Vendors, are there any threatened Claims or complaints, against the Company pursuant to any Laws relating to Employees, including employment standards, human rights, labour relations, Occupational Health and Safety Laws, worker's compensation and pay equity. To the knowledge of the Vendors nothing has occurred which might lead to a Claim or complaint against the Company, under any such Laws. There are no outstanding decisions, orders or settlements or pending settlements which place any obligation upon the Company to do or refrain from doing any act. (f) All current assessments under the Occupational Health and Safety Laws in relation to the Company and all of their respective contractors and subcontractors have been paid or accrued and the Company has not been subject to any special or penalty assessment under such legislation which has not been paid. (g) Prior to the execution of this Agreement, the Vendors shall make available to the Purchaser for review, all inspection reports under the Occupational Health and Safety Laws relating to the Company. There are no outstanding inspection orders made under the Occupational Health and Safety Laws against the Company. Except as set forth in Schedule 4.33, the Company is operating in compliance with all Occupational Health and Safety Laws. To the knowledge of the Vendors, there are no pending or threatened charges against the Company under Occupational Health and Safety Laws. There have been no fatal or critical accidents which might lead to charges against the Company under Occupational Health and Safety Laws. To the knowledge of the Vendors, there are no materials present in the assets owned or used by the Company, exposure to which may result in an industrial disease as defined in the Occupational Health and Safety Laws. The Company has complied in all respects with any Remedial Orders issued under Occupational Health and Safety Laws. To the knowledge of the Vendors, there are no appeals of any Remedial Orders under Occupational Health and Safety Laws against the Company which are currently outstanding. - 49 - 4.34 Collective Agreements (a) The Company is not a party, either directly, voluntarily or by operation of law, to any Collective Agreement, letter of understanding, letter of intent or other written communication with any bargaining agent, trade union or association which may qualify as a trade union, which would apply to any Employees of the Company. (b) There are no outstanding or, to the knowledge of the Vendors, threatened unfair labour practices, complaints or applications of any kind, including any proceedings which could result in certification of a trade union as bargaining agent for Employees of the Company, and there have not been any such proceedings within the last five years. (c) To the knowledge of the Vendors there are no threatened or apparent union organizing activities involving any Employees of the Company. (d) The Company has no labour problems that might materially affect the value of the Company or lead to an interruption of any of its operations at any location. 4.35 Pension and Other Benefit Plans (a) Schedule 4.35 sets forth a complete list of the Benefit Plans. (b) Current and complete copies of all written Benefit Plans or, where oral, written summaries of the material terms thereof, have been delivered or made available to the Purchaser together with current and complete copies of all documents relating to the Benefit Plans, including, as applicable, (i) all documents establishing, creating or amending any of the Benefit Plans; (ii) all insurance contracts, investment management agreements, subscription and participation agreements; - 50 - (iii) all reports, statements, filings and material correspondence in respect of any Benefit Plans in the last 3 years; (iv) all booklets, summaries, manuals and communications of a general nature distributed or made available to any Employees or former employees concerning any Benefit Plans; (c) Except as disclosed in Schedule 4.35, each Benefit Plan is, and has been, established, registered (where required), qualified and administered in compliance with (i) the terms of such Benefit Plan, and (ii) all Laws; and the Company has not received, in the last six (6) years, any notice from any Person questioning or challenging such compliance (other than in respect of any claim related solely to that Person), and none of the Vendors or the Company has any knowledge of any such notice from any Person questioning or challenging such compliance beyond the last six (6) years. (d) All obligations to or under the Benefit Plans (whether pursuant to the terms thereof or any Laws) have been satisfied or accounted for, and there are no outstanding defaults or violations thereunder by the Company or, to the knowledge of the Vendors, any default or violation by any other party to any Benefit Plan. (e) Except as disclosed in Schedule 4.35, there have been no improvements, increases or changes to, or promised improvements, increases or changes to, the benefits provided under any Benefit Plan. None of the Benefit Plans provide for benefit increases that are contingent upon or will be triggered by the entering into of this Agreement or the completion of the transactions contemplated herein. (f) All employer or employee payments, contributions or premiums required to be remitted, paid to or in respect of each Benefit Plan have been paid or remitted in a timely fashion in accordance with its terms and all Laws, and no Taxes, penalties or fees are owing or exigible under any Benefit Plan. - 51 - (g) There is no investigation by a Governmental Authority, or Claim (other than routine claims for payment of benefits) pending or, to the knowledge of the Vendors, threatened involving any Benefit Plan, and no facts exist which could reasonably be expected to give rise to any such investigation or Claim (other than routine claims for benefits). (h) No event has occurred respecting any registered Benefit Plan which would result in the revocation of the registration of such Benefit Plan (where applicable) or which could otherwise reasonably be expected to adversely affect the tax status of any such plan. (i) No material changes have occurred in respect of any Benefit Plan since the date of the statement or other report, as applicable, issued in connection with any Benefit Plan, which would reasonably be expected to adversely affect the relevant report (including rendering it misleading in any material respect). (j) Except as set forth in Schedule 4.35, The Company has not received, or applied for any payment in respect of the demutualization of the insurer of any Benefit Plan. (k) Except as disclosed in Schedule 4.35, the Company has not taken any premium holidays under any Benefit Plan and, where so disclosed, the Company was entitled under the terms of the Benefit Plan and under all Laws to take such premium holidays. (l) None of the Benefit Plans is a Union Plan or a "multi-employer" pension plan or benefit plan as defined under Laws. (m) All Employee data necessary to administer each Benefit Plan is in the possession of the Company and is complete, correct and in a form which is sufficient for the proper administration of the Benefit Plan in accordance with its terms and all Laws. - 52 - (n) None of the Benefit Plans provide benefits beyond retirement or other termination of service to Employees or former employees or to the beneficiaries or dependants of such employees, or such benefits have been properly accrued on the Financial Statements in accordance with GAAP. (o) None of the Benefit Plans require or permit a retroactive increase in premiums or payments, or require additional premiums or payments or termination of the Benefit Plan or any insurance contact relating thereto, and the level of insurance reserves, if any, under any insured Benefit Plan is reasonable and sufficient to provide for all incurred but unreported claims. 4.36 Personal Information (a) The Company does not have a written privacy policy which governs the collection, use and disclosure of Personal Information. (b) All Personal Information provided to the Purchaser, and the manner in which such Personal Information has been obtained and provided to the Purchaser, in connection with the purchase and sale of the Purchased Shares, complies with all Laws. 4.37 Insurance The Company maintains such policies of insurance, issued by responsible insurers, as are appropriate to its operations, property and assets, in such amounts and against such risks as are customarily carried and insured against by owners of comparable businesses, properties and assets. All such policies of insurance are in full force and effect and the Company is not in default, as to the payment of premium or otherwise, under the terms of any such policy. Schedule 4.37 sets forth a complete list of all policies of insurance which the Company maintains and the particulars of such policies, including the name of the insurer, the risk insured against, the amount of coverage and the amount of any deductible and a summary of all claims under each such policy for the past two years. No coverage provided in such policies of insurance shall - 53 - be diminished, lost or otherwise adversely affected as a result of the change of control of the Company at Closing. 4.38 Material Contracts Schedule 4.38 sets forth a complete list of the Material Contracts. The Material Contracts listed in Schedule 4.38 (including all Contracts with Material Suppliers and Customers) are all in full force and effect unamended and there are no outstanding defaults or violations under any such Material Contract (including all Contracts with Material Suppliers and Customers) on the part of the Company or, to the knowledge of the Vendors, on the part of any other party to such Contracts. The Company has the capacity, including the necessary personnel, equipment and supplies, to perform all its obligations under the Material Contracts (including all Contracts with Material Suppliers and Customers). 4.39 Copies of Agreements, etc. Current and complete copies of the Material Contracts have been delivered or made available to the Purchaser and there are no current or pending negotiations with respect to the renewal, repudiation or amendment of any such agreement, plan or policy except that for Contracts with Material Suppliers and Customers, only "Master Agreements" and/or templates of standard contracts have been provided to Purchaser. 4.40 Litigation Except as disclosed in Schedule 4.40, there are no Claims, investigations, inquiries, complaints, grievances or proceedings, including appeals and applications for review, in progress, or, to the knowledge of the Vendors, pending or threatened against or relating to the Company before any Governmental Authority, which, if determined adversely to the Company, would, (a) materially and adversely affect the properties, business, results of operations, future prospects or financial condition of the Company, (b) enjoin, restrict or prohibit the transfer of all or any part of the Purchased Shares as contemplated by this Agreement, or - 54 - (c) prevent the Vendors or the Company from fulfilling any of their obligations set out in this Agreement or arising from this Agreement, and the Vendors have no knowledge of any existing ground on which any such action, suit, litigation or proceeding might be commenced with any reasonable likelihood of success. Except as disclosed in Schedule 4.40, there is no judgment, decree, injunction, rule or order of any Governmental Authority or arbitrator outstanding against the Company. The Purchaser has been provided with copies of all of the audit response letters from counsel to the Company for the last three years. 4.41 Tax Matters Except as specifically disclosed in Schedule 4.41, (a) The Company has duly and timely made or prepared all Tax Returns required to be made or prepared by it, has duly and timely filed all Tax Returns required to be filed by it with the appropriate Governmental Authority and has duly, completely and correctly reported all income and all other amounts and information required to be reported thereon. (b) The Company has duly and timely paid all Taxes, including all installments on account of Taxes for the current year, that are due and payable by it whether or not assessed by the appropriate Governmental Authority. Provision has been made on the Interim Financial Statements for amounts at least equal to the amount of all Taxes owing by the Company that are not yet due and payable and that relate to periods ending on or prior to January 31, 2002. (c) The Company has not requested, offered to enter into or entered into any agreement or other arrangement, or executed any waiver, providing for any extension of time within which (i) to file any Tax Return covering any Taxes for which the Company is or may be liable; (ii) to file any elections, designations or similar filings relating to Taxes for which the Company is or may be liable; (iii) the Company is required to pay or remit any Taxes or amounts on account of - 55 - Taxes; or (iv) any Governmental Authority may assess or collect Taxes for which the Company is or may be liable. (d) Other than those agreements and arrangements described in subsection (c), the Company has not made, prepared and/or filed any elections, designations or similar filings relating to Taxes or entered into any agreement or other arrangement in respect of Taxes or Tax Returns that has effect for any period ending after the Closing Date. (e) All income, sales (including goods and services, harmonized sales and provincial sales) and capital tax Liabilities of the Company has been assessed by the relevant Governmental Authorities and notices of assessment have been issued to each such entity by the relevant Governmental Authorities for all taxation years or periods ending prior to and including the taxation year or period ended April 30, 2001. (f) There are no proceedings, investigations, audits or Claims now pending or, to the knowledge of the Vendors, threatened against the Company in respect of any Taxes and there are no matters under discussion, audit or appeal with any Governmental Authority relating to Taxes. (g) The Company has duly and timely withheld all Taxes and other amounts required by Law to be withheld by it (including Taxes and other amounts required to be withheld by it in respect of any amount paid or credited or deemed to be paid or credited by it to or for the account or benefit of any Person, including any Employees, officers or directors and any non-resident Person), and has duly and timely remitted to the appropriate Governmental Authority such Taxes and other amounts required by Law to be remitted by it. (h) The Company has duly and timely collected all amounts on account of any sales or transfer taxes, including goods and services, harmonized sales and provincial sales taxes, required by Law to be collected by it and has duly and timely remitted - 56 - to the appropriate Governmental Authority any such amounts required by Law to be remitted by it. (i) Except pursuant to this Agreement or as specifically disclosed in writing to the Purchaser, for purposes of the Income Tax Act (Canada), the Taxation Act (Quebec) or any other applicable Tax statute, no Person or group of Persons has ever acquired or had the right to acquire control of the Company. (j) None of Sections 78, 80, 80.01, 80.02, 80.03 or 80.04 of the Income Tax Act (Canada), or any equivalent provision of the Taxation Act (Quebec) or any Tax legislation of any other province or any other jurisdiction, have applied or will apply to the Company at any time up to and including the Closing Date. (k) The Company has not acquired property from a non-arm's length Person, within the meaning of the Income Tax Act (Canada) (or the equivalent provision of the Taxation Act (Quebec)), for consideration, the value of which is less than the fair market value of the property acquired in circumstances which could subject it to a Liability under Section 160 of the Income Tax Act (Canada) (or the equivalent provision of the Taxation Act (Quebec)). (l) For all transactions between the Company and any non-resident Person with whom the Company was not dealing at arm's length during a taxation year commencing after 1998 and ending on or before the Closing Date, the Company has made or obtained records or documents that meet the requirements of paragraphs 247(4)(a) to (c) of the Income Tax Act (Canada) (or the equivalent provision of the Taxation Act (Quebec)). (m) The Company is duly registered under subdivision (d) of Division V of Part IX of the Excise Tax Act (Canada) with respect to the goods and services tax and harmonized sales tax and under Division I of Chapter VIII of Title I of the Quebec Sales Tax Act with respect to the Quebec sales tax, and the registration numbers of each of them are: GST-138459540 and QST-1016855461. - 57 - (n) The only reserves under the Income Tax Act (Canada), the Taxation Act (Quebec) or any other equivalent provincial statute to be claimed by the Company for the taxation year ending immediately prior to the acquisition of control by the Purchaser are disclosed in Schedule 4.41. (o) The Purchaser has been provided with copies of all Tax Returns and all communications to or from any Governmental Authority relating to the Taxes of any of the Company, to the extent relating to periods or events in respect of which any Governmental Authority may by Law assess or otherwise impose any such Tax on the Company. 4.42 Tax Data Complete and accurate information relating to each of the matters referred to below is disclosed hereunder or in Schedule 4.42: (a) the actual cost and adjusted cost base of capital properties is not available; (b) the capital cost allowance deducted in each class of depreciable assets is not applicable; (c) undepreciated capital cost of each class of depreciable assets; (d) paid-up capital of each class of shares; (e) no capital dividend account balance; (f) no refundable dividend tax on hand; (g) no non-capital losses available for carry over; (h) no net capital losses; - 58 - (i) $2,330 of cumulative eligible capital; (j) $2,964,797 for federal investment tax credits and $0 for Quebec investment tax credits; (k) the liabilities and any unclaimed input tax credit in respect of goods and services or harmonized sales tax and any other similar provincial value-added or multi-staged tax disclosed in (l) below; (l) there are no retail sales tax liabilities or unclaimed rebate, other than those arising in the ordinary course of business and as reflected in the Interim Financial Statements; (m) safe income; (n) section 85 elections; (o) no section 85.1 share exchanges; (p) there are no transactions or operations subject to paragraph 247(4)(a) to (c) of the Income Tax Act (Canada) or the similar provisions of the Taxation Act (Quebec); 4.43 Books and Records and Validated Assays All Books and Records have been delivered or made available to the Purchaser. Such Books and Records fairly and correctly set out and disclose in all material respects the financial position of the Company and all material financial transactions and operations relating to each of their businesses has been accurately recorded in such Books and Records. All Validated Assays have been made available to the Purchaser and are complete and accurate in all material respects. - 59 - 4.44 Corporate Records (a) The Articles and by-laws for the Company, including any and all amendments have been delivered or made available to the Purchaser and such Articles and by-laws as so amended are in full force and effect and no amendments are being made to the same. (b) The corporate records and minute books for the Company have been delivered or made available to the Purchaser. The minute books include complete and accurate minutes of all meetings of the directors (including any committee of the directors) or shareholders for the Company held to date or resolutions passed by the directors or shareholders on consent, since the date of its incorporation. The share certificate book, register of shareholders, register of transfers and register of directors for the Company, are complete and accurate in all material respects. 4.45 Management Recommendation Letters The Purchaser has been provided with copies of all management recommendation letters received by the Company or its board of directors from the Auditor, or any previous auditor of the Company, during the last three years. 4.46 Trade Allowances Except as disclosed in Schedule 4.46, no customers of the Company are entitled to or customarily receive discounts, allowances, rebates, credits, preferential terms, or similar reductions in price or other trade terms arising from any agreements or understandings (whether written or oral) with or concessions granted to any customer. Except as described in Schedule 4.46, all such discounts, allowances, rebates, credits, preferential terms, or similar reductions in price or other trade terms are at the same levels as have been in existence for the two immediately preceding fiscal years and are consistent with industry practice. Schedule 4.46 also includes a summary of all marketing and pricing policies, including promotions and trade allowances, which are currently in effect or which have been in effect during any of the last two years. - 60 - 4.47 Third Party Consents Schedule 4.47 sets forth a complete list of all notifications, filings, registrations, approvals and consents required to be obtained by the Company or the Vendors in connection with the execution, delivery and performance of this Agreement or any other documents and agreements to be delivered under this Agreement. For greater certainty, Schedule 4.47 includes all such notifications, filings, regulations, approvals and consents as are required to enable the Company to conduct its business in the ordinary course after Closing. 4.48 Location of the Assets All of the assets of the Company are located on the Leased Property or are in transit to or from the Real Property. 4.49 Bank Accounts, etc. Schedule 4.49 sets forth a complete list of all financial institutions in which the Company maintains any depository account, trust account or safety deposit box and the names of all Persons authorized to draw on or who have access to such accounts or safety deposit boxes. 4.50 Powers of Attorney Schedule 4.50 sets out a complete list of every outstanding power of attorney granted by the Company and the names of all Persons who have been given the authority to act on behalf of any of them. The Purchaser has been provided with copies of all outstanding powers of attorney granted by the Company. 4.51 Absence of Questionable Payments Neither the Company nor any director, officer, agent, employee or other person acting on behalf of the Company has used any corporate or other funds for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity to government or public officials or others in any jurisdiction or established or maintained any unlawful or unrecorded funds in violation of any Law of any jurisdiction. Neither the Company - 61 - nor any director, officer, agent, employee or other person acting on behalf of the Company has accepted or received any unlawful contributions, payments, gifts or expenditures. Neither the Company nor any director, officer, agent, employee or other person acting on behalf of the Company has committed any act which constitutes a breach of the Corruption of Foreign Public Officials Act of Canada or the U.S. Foreign Corrupt Practices Act of 1977, as amended. 4.52 No Broker Other than PricewaterhouseCoopers Securities Inc. ("PWCS"), the Vendors have carried on all negotiations relating to this Agreement and the transactions contemplated in this Agreement directly and without intervention on their behalf of any other party in such manner as to give rise to any valid claim for a brokerage commission, finder's fee or other like payment against the Purchaser or the Company. Purchaser acknowledges that Vendors have mandated PWCS in connection with this transaction and Vendors agree that all Liability for fees, costs and other charges due to PWCS shall be paid entirely by the Vendors and not the Company. 4.53 Trials Since incorporation, the Company has not used the services of any Person debarred under the provisions of the Generic Drug Enforcement Act of 1992, 21 United States Code ("U.S.C.") Section 335 a (a) or (b) (and the equivalent provisions of applicable Canadian Laws). Since incorporation, neither the Company, nor any of its officers or employees, not, to their knowledge, their agents has been convicted of any crime or engaged in any conduct for which debarment is mandated by 21 U.S.C. Section 335 a (a) (and the equivalent provisions of applicable Canadian Laws) or authorized by 21 U.S. Section 335 a (b) (and the equivalent provisions of applicable Canadian Laws). The Company has made available to Purchaser copies of any and all notice of inspectional observations (FD 483's), establishment inspection reports, warning letters and any other documents received from or issued by any Governmental Authority within the last three years that indicate or suggest lack of compliance with any law by the Company, or Persons performing services for the benefit of the Company with respect to services or products provided to the Company. The Company has not received any written notice that any Governmental Authority has commenced or threatened to initiate any action against the Company, any action to enjoin testing or research at any facility owned or used by the Company, - 62 - or any Person on behalf of the Company or except as provided on Schedule 4.53 any material civil penalty, injunction, seizure or criminal action. As to each drug tested by the Company and its officers, employees, agents and affiliates, the Company provides its test sponsors, where required, with the certification described in 21 U.S.C. Section 335a(k)(l) (and the equivalent provisions of applicable Canadian Laws)and such certification was in each case true and accurate when made. 4.54 Full Disclosure The Vendors have made available to the Purchaser, all information, including the financial, marketing, sales and operational information on a historical basis relating to the Company. All such information which has been provided to the Purchaser is true and correct in all material respects and no material fact or facts have been omitted from that information which would make such information misleading. Without limiting the generality of the foregoing, the Vendors have not failed to disclose to the Purchaser, any fact or information which, individually or together with any other fact or information that has or could have a material adverse effect on, inter alia, the financial condition, results of operations, business, assets or prospects of the Company. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser and SFBC hereby represent and warrant solidarily to the Vendors the matters set out below: 5.1 Incorporation The Purchaser is a corporation duly incorporated and validly existing under the laws of Canada and SFBC is a corporation duly incorporated and validly existing under the laws of Delaware. Each of the Purchaser and SFBC has all necessary corporate power, authority and capacity to own its property and assets and to carry on its business as presently conducted, and is duly registered, licensed or otherwise qualified in every jurisdiction where the nature of its business or the location or character of the property it owns or leases requires it to be registered, licensed or - 63 - otherwise qualified, other than jurisdictions where the failure to be so registered, licensed or otherwise qualified would not have a material adverse effect on it. 5.2 Due Authorization Each of the Purchaser and SFBC has all necessary corporate power, authority and capacity to enter into this Agreement and to carry out its obligations under this Agreement. The execution and delivery of this Agreement and the consummation of the transaction contemplated under this Agreement have been duly authorized by all necessary corporate action of each of the Purchaser and SFBC. 5.3 Enforceability of Obligations This Agreement constitutes a valid and binding obligation of each of the Purchaser and SFBC enforceable against it in accordance with its terms. 5.4 Absence of Conflicting Agreements Each of the Purchaser and SFBC is not a party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law provision, statute, regulation, order, judgment, decree, license, permit, Governmental Authorizations or Laws (other than as may be required under Section 7.19 below) which would be violated, contravened or breached by, or under which any default would occur or a Claim, restriction or Encumbrance would be created as a result of the execution and delivery by it of this Agreement or the performance by it of any of the terms of this Agreement, or any other agreement to be entered into under the terms of this Agreement, or the performance by the Purchaser or SFBC of any of their obligations under this Agreement or any other agreement to be entered into under the terms of this Agreement. 5.5 Litigation There are no Claims, investigations, complaints or proceedings in progress or, to the knowledge of the Purchaser, pending or threatened against or relating to the Purchaser or SFBC, before any Governmental Authority, which, if determined adversely to the Purchaser or SFBC, would, - 64 - (a) prevent the Purchaser from paying the Purchase Price to the Vendors; (b) enjoin, restrict or prohibit the transfer of all or any part of the Purchased Shares as contemplated by this Agreement; (c) prevent the Purchaser from fulfilling any of its obligations set out in this Agreement or arising from this Agreement; or (d) have any material adverse effect on the business, financial condition or results of operation of the Purchaser or SFBC, and each of the Purchaser and SFBC has no knowledge of any existing ground on which any such action, suit, litigation or proceeding might be commenced with any reasonable likelihood of success. 5.6 No Broker Other than Raymond James & Associates, Inc., the Purchaser has carried on all negotiations relating to this Agreement and the transactions contemplated in this Agreement directly and without the intervention on its behalf of any other party in such manner as to give rise to any valid claim for a brokerage commission, finder's fee or other like payment, and the Purchaser and SFBC agree that all Liability for fees, costs and other charges due to Raymond James & Associates, Inc. shall be paid entirely by the Purchaser and SFBC. 5.7 SFBC Shares and SFBC Options As of the Closing Time, the SFBC Shares to be issued by SFBC to the Vendors pursuant to ARTICLE 3 hereof in partial payment of the Purchase Price will be validly and duly issued and allotted in favour of the Vendors, will be listed on the Nasdaq Stock Market and will have been issued in accordance with all applicable Laws, including corporate and securities Laws, and without any material violation of any right of any Person, nor of any material obligation of SFBC. Upon their delivery to the Vendors (or to the Escrow Agent or the Vendors' Agent acting on their behalf, as the case may be), the SFBC Shares issued under this Agreement will be - 65 - outstanding as fully paid and non-assessable shares of SFBC and will be, as of the Closing Time, freely negotiable on said Nasdaq Stock Market, subject only to applicable securities Laws and to the provisions of this Agreement including Section 11.4 hereof. As of the Closing Time, the SFBC Options to be issued by SFBC to Key Employees of the Company pursuant to ARTICLE 3 hereof will be validly and duly issued and allotted in favour of such selected employees and will have been issued in accordance with the SFBC Plan and with all applicable Laws, including corporate and securities Laws applicable to SFBC, and without any material violation of any right of any Person, nor of any material obligation of SFBC. 5.8 Prospectus; SEC Documents; SFBC Financial Statements SFBC has filed all reports required to be filed pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act") during the preceding 12 month period, including its Annual Report on Form 10-K for the year ended December 31, 2001 as filed with the Securities and Exchange Commission (the "SEC") under the Exchange Act (collectively referred to as the "SEC Documents"). The Prospectus dated December 13, 2001 (the "Prospectus") filed by SFBC pursuant to rule 424(b)(1) under the Securities Act of 1933 (the "Securities Act") and the SEC Documents, as of their respecting filing dates, complied in all material respects with the requirements of the Securities Act and the Exchange Act, and the applicable rules and regulations of the SEC thereunder, as the case may be, and the Prospectus and the SEC Documents contained no untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. The financial statements of SFBC, including the notes thereto, included in the Prospectus and in the SEC Documents (the "SFBC Financial Statements") comply as to form with applicable accounting requirements and with published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles consistently applied (except as may be indicated in the notes thereto or, in the case of unaudited - 66 - statements, as permitted by Form 8-K, Form 10-QSB or regulations of the SEC) and present fairly the consolidated financial position of SFBC at the dates thereof and of its operations and cash flows for the period then ended (subject, in the case of unaudited statements, to normal recurring audit adjustments). There has been no change in SFBC accounting policies except as described in the notes to the SFBC Financial Statements. There has been no material adverse change in the assets (tangible or otherwise), business, financial condition, results of operations or prospects of SFBC since the respective dates of the Prospectus, the SEC Documents and the SFBC Financial Statements. ARTICLE 6 NON-WAIVER; SURVIVAL 6.1 Non-Waiver (a) No investigations made by or on behalf of the Purchaser or SFBC at any time shall have the effect of waiving, diminishing the scope or otherwise affecting any representation or warranty made by the Vendors in or pursuant to this Agreement. No waiver by the Purchaser or SFBC of any condition or other provisions, in whole or in part, shall constitute a waiver of any other condition or provision (whether or not similar) nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. (b) No investigations made by or on behalf of the Vendors at any time shall have the effect of waiving, diminishing the scope or otherwise affecting any representation or warranty made by the Purchaser or SFBC in or pursuant to this Agreement. No waiver by the Vendors of any condition or other provisions, in whole or in part, shall constitute a waiver of any other condition or provision (whether or not similar) nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. - 67 - 6.2 Nature and Survival (a) Subject to subsection (b), all representations and warranties contained in this Agreement on the part of each of the Parties shall survive the Closing, the execution and delivery under this Agreement of any share or security transfer instruments or other documents of title to any of the Purchased Shares and the payment of the consideration for the Purchased Shares. (b) Representations and warranties relating to or impacted by tax matters, including those set out in Section 4.41, arising in or in respect of a particular period ending on, before or including the Closing Date shall survive for a period of 48 months from the Closing Date, except in the event that any Claim in respect thereof involves or is in any way related to any misrepresentation on any Tax Return or other document filed or required to be filed pursuant to the Income Tax Act (Canada), Excise Tax Act (Canada), the Taxation Act (Quebec) the Quebec Sales Tax Act or any other applicable tax Law that is attributable to neglect, carelessness or willful default or any fraud in filing a Tax Return or other document or in supplying any information, in which case the representations and warranties involving, relating to or impacting Tax matters, including those set out in Section 4.41, shall survive indefinitely. All other representations and warranties of any of the Parties shall only survive for a period of 24 months from the Closing Date. If no claim shall have been made under this Agreement against a Party for any incorrectness in or breach of any representation or warranty made in this Agreement prior to the expiry of these survival periods, such Party shall have no further liability under this Agreement with respect to such representation or warranty. (c) Notwithstanding the limitations set out in subsection (b), any Claim which is based on title to the Purchased Shares, or the SFBC Shares, or SFBC Options, or assets of the Company, intentional misrepresentation or fraud may be brought (even if the Indemnified Parties knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) at any time and - 68 - any Claim based on a breach of any misrepresentation on any Tax Return or other document filed or required to be filed pursuant to the Income Tax Act (Canada), the Excise Tax Act (Canada), the Taxation Act (Quebec), the Quebec Sales Tax Act, or any other Tax Law that is attributable to neglect, carelessness or willful default or any fraud in filing the Tax Return or other document or in supplying any information may be brought at any time. ARTICLE 7 PURCHASER'S CONDITIONS PRECEDENT The obligation of the Purchaser to complete the purchase of the Purchased Shares under this Agreement shall be subject to the satisfaction of, or compliance with, at or before the Closing Time, each of the following conditions precedent (each of which is acknowledged to be inserted for the exclusive benefit of the Purchaser and may be waived by it, in writing, in whole or in part). 7.1 Truth and Accuracy of Representations of Vendors at the Closing Time All of the representations and warranties of the Vendors made in or pursuant to this Agreement shall be true and correct as at the Closing Time and with the same effect as if made at and as of the Closing Time (except as such representations and warranties may be affected by the occurrence of events or transactions expressly contemplated and permitted by this Agreement) and the Purchaser shall have received as of the Closing Time a certificate of each of the Vendors confirming the truth and correctness of such representations and warranties. 7.2 No Material Adverse Change No event, change or occurrence shall have occurred which, individually or together with any other event, change or occurrence, shall have had or could have a material adverse effect on, inter alia, the Leased Property, Fixed Assets, Inventories, Intellectual Property, business, results of operations, prospects or financial condition of the Company from that reflected on the Interim Financial Statements shall have occurred and the Company shall not have suffered any material loss of or damage (by fire or other hazard) to its Leased Property, Fixed Assets, Inventories or - 69 - other assets, whether or not insured. There shall have been no material adverse change in any Law applicable to the Company and/or its business operations. 7.3 No Litigation No action or proceeding shall have been instituted, or, to the knowledge of each of the Vendors, the Company or the Purchaser, threatened, and no order of any court, agency, commission or authority shall exist which questions the validity of this Agreement or seeks to restrain the consummation of the transactions contemplated by this Agreement and which, in the reasonable opinion of counsel for the Purchaser, will render it impossible or inadvisable for the Purchaser to consummate the transactions provided for in this Agreement. 7.4 Performance of Obligations Each of the Vendors shall have performed or complied with, in all respects, all their obligations and covenants under this Agreement. 7.5 Receipt of Closing Documentation All documentation relating to the due authorization and completion of the sale and purchase of the Purchased Shares under this Agreement and all actions and proceedings taken on or prior to the Closing in connection with the performance by the Vendors of their obligations under this Agreement, shall be satisfactory to the Purchaser, acting reasonably, and the Purchaser shall have received copies of all such documentation or other evidence as it may reasonably request in order to establish the consummation of the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection with such transactions in compliance with these conditions, in form (as to certification and otherwise) and substance satisfactory to the Purchaser. 7.6 Investment Letter Each of the Vendors shall have executed and delivered to the Purchaser an investment letter substantially in the form attached as Schedule 7.6; - 70 - 7.7 Opinion of Counsel for Vendors The Purchaser shall have received an opinion dated the Closing Date from counsel for the Vendors, reasonably satisfactory to the Purchaser and substantially in the form attached as Schedule 7.7. 7.8 Consents, Authorizations and Registrations All consents, approvals, orders and authorizations of any Person (and registrations, declarations, filings or recordings with any Governmental Authority), required in connection with the completion of any of the transactions contemplated by this Agreement (other than with respect to the Pension Plans or Benefit Plans), the execution of this Agreement, the Closing or the performance of any of the terms and conditions of this Agreement, including any consents to the disclosure of Personal Information to the Purchaser and any consents required under Contracts and all Governmental Authorizations shall have been obtained at or before the Closing Time on terms acceptable to the Purchaser, acting reasonably. 7.9 No Proceedings There shall be no injunction or restraining order issued preventing, and no pending or threatened Claim, or proceeding, judicial or administrative or investigation against any Party by any Person, for the purpose of enjoining or preventing the consummation of the transactions contemplated by this Agreement or otherwise claiming that this Agreement or the consummation of such transactions is improper or would give rise to proceedings under any Laws. 7.10 Encumbrances The Purchaser shall have received evidence satisfactory to it that all Encumbrances other than Permitted Encumbrances have been discharged and that the assets of the Company are free and clear of all Encumbrances other than Permitted Encumbrances. - 71 - 7.11 Bonus Waiver All Employees entitled to bonuses or other special payments as a result of the change in control of the Company or otherwise as a result of the Closing shall have waived, in writing, such rights. 7.12 Releases The Vendors shall have released, in a form satisfactory to the Purchaser, any Employees from any confidentiality agreements with the Vendors, if any. 7.13 Key Employees Each of the Key Employees shall have signed employment contracts with the Company substantially in the form attached as Schedule 7.13. 7.14 Liabilities There shall be no Liabilities or obligations of the Company other than those described in the Financial Statements or that were otherwise incurred or accrued by the Company in the ordinary course of its business and in a manner consistent with its past practices since January 31, 2002. 7.15 Corporate Actions All requisite action by the Board of Directors of each of the Corporate Vendors and the Company shall have been duly taken on or prior to the Closing Date to authorize and approve the consummation of the transactions contemplated herein (including, without limitation, the transfer of the Purchased Shares to the Purchaser provided for herein), and the election and appointment of directors and officers of the Company nominated by the Purchaser and, each of the Corporate Vendors shall deliver to the Purchaser certified copies of each such resolution. The Shareholders Agreement shall have been terminated. - 72 - 7.16 Anapharm Options All of the Anapharm Options shall have been exercised by the Option Holders at least 2 Business Days prior to the Closing Date and shares of the Company shall have been issued in consideration of the Option Receipts. 7.17 Share Certificates Certificates representing all of the Purchased Shares shall be validly endorsed for transfer in blank and delivered to the Purchaser at Closing Time. 7.18 Directors and Officers of the Company The Board of Directors of the Company at the Closing Time shall consist of individuals nominated by the Purchaser and there shall have been delivered to the Purchaser at the Closing Time the resignations and releases of all individuals who are currently directors or officers of the Company and duly executed comprehensive releases from each such individual and from the Vendors of all their Claims respectively, against the Company, substantially in the form attached as Schedule 7.18. The Company's nominee to the Danapharm board of directors (currently Marc LeBel) shall have delivered to Purchaser a resignation of such person from the Danapharm board and a release given by such person in favour of Danapharm. 7.19 Securities Law Compliance The Parties shall have received all required approvals, including for the issuance of the SFBC Shares to the Vendors and SFBC Options to the Key Employees of the Company in accordance with this Agreement and applicable United States and Quebec securities Laws. Each of the Vendors shall file at the Closing Time any and all notices required by United Sates and Quebec securities Laws to complete the transactions contemplated herein. All applicable fees payable with respect to such filings will be paid by the Purchaser and SFBC. - 73 - 7.20 Escrow The Parties shall have executed the Escrow Agreement. 7.21 Employees' Covenants Each of the Employee Vendors (other than they Key Employees) of the Company shall have signed a non-disclosure, non-competition, non-solicitation and assignment of IP agreement substantially in the form attached hereto as Schedule 7.21. 7.22 Repayment of Advances All Vendors and their respective affiliated or related persons that owe any money to the Company on account of advances, loans or otherwise, shall have repaid same in full (and any interest accrued thereon) to the Company. 7.23 Termination If any of the foregoing conditions in this Article has not been fulfilled on or before the Closing Time, the Purchaser may terminate this Agreement by notice in writing to the Vendors' Representatives, in which event the Purchaser shall be released from all obligations under this Agreement as further provided in Section 12.2 herein, and unless the condition relied upon could reasonably have been performed by each of the Vendors, the Vendors shall also be released from all obligations under this Agreement. However, the Purchaser may waive in writing compliance with any condition in whole or in part if it sees fit to do so, without prejudice to its rights of termination in the event of non-fulfilment of any other condition, in whole or in part, or to its rights to recover damages for the breach of any representation, warranty, covenant or condition contained in this Agreement. ARTICLE 8 VENDORS' CONDITIONS PRECEDENT The obligations of the Vendors to complete the sale of the Purchased Shares under this Agreement shall be subject to the satisfaction of or compliance with, at or before the Closing - 74 - Time, each of the following conditions precedent (each of which is acknowledged to be inserted for the exclusive benefit of the Vendors and may be waived by it in whole or in part). 8.1 Truth and Accuracy of Representations of the Purchaser and SFBC at Closing Time All of the representations and warranties of each of the Purchaser and SFBC made in or pursuant to this Agreement shall be true and correct as at the Closing Time and with the same effect as if made at and as of the Closing Time and the Vendors shall have received a certificate of each of the Purchaser and SFBC confirming the truth and correctness of such representations and warranties. 8.2 Performance of Obligations Each of the Purchaser and SFBC shall have performed or complied with, in all respects, all its obligations and covenants under this Agreement. 8.3 Opinion of Counsel for Purchaser The Vendors' Representatives, on behalf of the Vendors, shall have received an opinion reasonably satisfactory to the Vendors' counsel, addressed to the Vendors' Representatives and Desjardins Ducharme Stein Monast and dated the Closing Date, from counsel for the Purchaser and SFBC. 8.4 SFBC Shares, SFBC Plan and SFBC Options Approvals The SFBC Plan and the issuance of the SFBC Options to Employee Vendors and the issuance of SFBC Shares to the Vendors in accordance with this Agreement shall have been approved by the Quebec Securities Commission. 8.5 Receipt of Closing Certificate Vendors' Representatives shall have received a Certificate signed by an officer of SFBC and Purchaser attesting to SFBC's and Purchaser's satisfaction of all of the conditions set forth in this ARTICLE 8. - 75 - 8.6 No Proceedings There shall be no injunction or restraining order issued preventing, and no pending or threatened Claim, or proceeding, judicial or administrative or investigation against any Party by any Person, for the purpose of enjoining or preventing the consummation of the transactions contemplated by this Agreement or otherwise claiming that this Agreement or the consummation of such transactions is improper or would give rise to proceedings under any Laws. If any of the foregoing conditions in this Article has not been fulfilled by Closing, the Vendors may terminate this Agreement by notice in writing to the Purchaser, in which event the Vendors shall be released from all obligations under this Agreement as and unless the Vendors can show that the condition relied upon could reasonably have been performed by the Purchaser, the Purchaser is also released from all obligations under this Agreement. However, the Vendors' Representatives may waive compliance with any condition in whole or in part if it sees fit to do so, without prejudice to Vendors' rights of termination in the event of non-fulfilment of any other condition in whole or in part or to its rights to recover damages for the breach of any representation, warranty, covenant or condition contained in this Agreement. ARTICLE 9 COVENANTS AND AGREEMENTS 9.1 General Each of the Parties will use its best efforts to fulfil or obtain the fulfilment of all conditions precedent set forth in this Agreement prior to the Closing Date. 9.2 Conduct of Business Prior to Closing During the period from the date of this Agreement to the Closing Time, the Vendors shall cause the Company to do the following: (a) Conduct Business in the Ordinary Course - except as otherwise contemplated or permitted by this Agreement, conduct its business in the ordinary course, consistent with past practices and regular customer service and business policies - 76 - and not, without the prior written consent of the Purchaser, enter into any transaction or do anything which, if effected before the date of this Agreement, would constitute a breach of the representations, warranties or agreements of the Vendors contained in this Agreement; (b) Maintain Good Relations - use all reasonable efforts to maintain good relations with the Employees, its customers and suppliers; (c) Continue Insurance - continue in force all policies of insurance maintained by or for the benefit of the Company and give all notices and present claims under all insurance policies in a timely fashion; (d) Perform Obligations - comply with all Laws affecting the operation of the Company; (e) Prevent Certain Changes - not, without the prior written consent of the Purchaser, take any of the actions, do any of the things or perform any of the acts described in Section 4.14. 9.3 Specific Transactions Except with the prior written approval of the Purchaser and, without limiting the generality of the foregoing, from the date of this Agreement until the Closing Time, the Company will not: (a) change its articles of incorporation or by-laws or declare, make, set aside or pay any payment, dividend or other distribution of any nature in respect to any of its capital stock nor will it, directly or indirectly, issue, redeem, retire, purchase or otherwise acquire any of its shares of capital stock; (b) take any action or omit to take any action which action or omission would, in either case, constitute a breach of any of the representations and warranties of any of the Vendors herein; - 77 - (c) enter into or terminate any material transaction or contract other than in the ordinary course of business or waive any material right; (d) enter into any new employment agreement or commitment to employees (including any commitment to pay retirement or other benefits) or hire or terminate the employment of any person whose annual compensation exceeds $65,000; (e) increase the salaries or other compensation paid, or make any changes in any plan or manner by which compensation (including benefits) is determined and paid (a) to any officer or director, or (b) to any employee, except in the ordinary course of business and consistent with past practice; (f) change its existing bank accounts, investments or safe deposit box arrangements; (g) either (a) create or incur any indebtedness in respect of borrowed funds, (b) create or incur any indebtedness or Liabilities except trade indebtedness in the ordinary course of business, (c) prepay any indebtedness or Liabilities, other than trade payables prepaid in the ordinary course of business, consistent with past practice, in order to obtain prompt payment discounts, (d) enter into or terminate any lease of real (immovable) property, (e) create or invest in any subsidiary, or (f) release or create any Encumbrances; (h) make any capital expenditure or capital expenditure commitment in excess of seventy-five thousand dollars ($75,000) for any single item or enter into any lease, as lessee, of capital equipment as to which the annual lease charge is at a rate in excess of seven thousand dollars ($7,000); (i) sell or dispose of any capital asset or make any commitment relating to any such asset other than in the ordinary course of business; (j) make any capital contribution or investment in any entity nor alter the physical content or character of any of its inventory so as to affect the nature of its business - 78 - or result in an increase or decrease in the total dollar valuation thereof other than as a result of transactions in the usual and ordinary course of business. (k) directly or indirectly enter into any Contract with any of the Vendors or any shareholder of the Vendors to make any payment or distribution to any such person other than salaries and benefits payable in the ordinary course of business consistent with past practice. 9.4 Status of Contracts The Company shall not suffer, permit or cause any material default to exist or occur under the terms of the Contracts or modify, extend or otherwise amend the Contracts. Prior to the Closing Date, the Company shall use all reasonable efforts to enforce the provisions of the Contracts, but shall take no action against any party thereto based on a default thereunder without first obtaining the approval of the Purchaser, which approval shall not be unreasonably withheld or delayed; the Company shall not terminate or cancel any Contract without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld or delayed; between the date hereof and the Closing Date, the Company shall do nothing to cause a material breach or violation of any term, covenant or provision of any of the Contracts. 9.5 Maintenance of Assets The Company will maintain its Leased Property, Fixed Assets, Inventories and machinery, equipment and other assets in good repair, order and condition. 9.6 Preservation of Business Relationships The Company will take all reasonable steps (without making any commitments other than in the ordinary course of business) to (a) preserve its business organization intact, (b) retain its key officers and employees, (c) preserve its present relationships with suppliers, and (d) retain the patronage of its customers (whether existing business or business obtained after the date hereof). - 79 - 9.7 Litigation The Vendors will promptly supply to the Purchaser copies of all litigation pertaining to the Company which may arise subsequent to the execution of this Agreement and will also advise the Purchaser promptly in writing of any threat of litigation pertaining to the Company which is made between the date of this Agreement and the Closing Date. 9.8 Compliance The Company will duly observe and conform in all material respects to all Laws of any Governmental Authority relating to its assets or to the operation and conduct of its business, and all covenants, terms and conditions upon or under which any of its assets are held or business is conducted. The Company will duly and timely file all reports and returns required to be filed with any Governmental Authority and will promptly pay when due all Taxes and charges, including interest and penalties levied or assessed, unless diligently contested in good faith by appropriate proceedings. 9.9 Consents Each of the Vendors shall use its best efforts to obtain, and to cause the Company to obtain, before the Closing Date, all consents required to be obtained from the parties to the Contracts in order for the consummation of the transaction herein contemplated to be consummated without breach or default thereunder. 9.10 Notice of Defaults Each of the Vendors and the Company shall give prompt notice to the Purchaser of the occurrence or non-occurrence of any event of which it has knowledge, the occurrence or non-occurrence of which would be likely (i) to cause any of the representations or warranties made by it in this Agreement to be untrue or inaccurate at or prior to the Closing, or (ii) to result in any of the conditions precedent to the obligations of the Vendors, the Company or the Purchaser as stipulated herein not to be satisfied so as to permit the consummation of the transactions contemplated herein on the Closing Date. - 80 - 9.11 Access for Investigation Each of the Vendors shall permit the Purchaser and its representatives, without interference to the ordinary conduct of business, to have free and unrestricted access during normal business hours to (i) the Leased Property, (ii) all other locations where Books and Records or other material relevant to the business of the Company are stored; (iii) all the Books and Records and (iv) the properties and assets used by the Company. The Vendors shall furnish to the Purchaser copies of Books and Records as the Purchaser shall from time to time reasonably request to enable confirmation of the matters warranted in ARTICLE 4. 9.12 Actions to Satisfy Closing Conditions Each of the Parties shall take all such actions as are within its power to control, and use reasonable commercial efforts to cause other actions to be taken which are not within its power to control, so as to ensure compliance with each of the conditions and covenants set forth in ARTICLE 7 or ARTICLE 8 which are for the benefit of any other Party. 9.13 Consent to Jurisdiction Each of the Parties irrevocably attorns and submits to the exclusive jurisdiction of any Quebec court sitting in Montreal in any action or proceeding arising out of or related to this Agreement and irrevocably agrees that all claims in respect of any such action or proceeding shall be heard and determined in such Quebec court. Each of the Parties irrevocably waives, to the fullest extent it may effectively do so, the defence of an inconvenient forum to the maintenance of such action or proceeding. A final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 9.14 Covenants Relating to Intellectual Property (a) Neither the Vendors nor the Company shall, directly or indirectly, take or tolerate any action which will adversely affect the ownership, validity or enforceability of any of the Intellectual Property; - 81 - (b) the Employee Vendors and the Company shall execute all documents reasonably requested by Purchaser to effect further the registration, maintenance and renewal of any registration respecting the Intellectual Property; and (c) the Vendors shall not apply to register any intellectual property right, in any part of the Intellectual Property. If any such application for registration is or has been filed by the Vendors in which, in the sole opinion of the Purchaser or the Company acting in good faith, is the same as or derived from any Intellectual Property, the Employee Vendors shall, within a reasonable time, but in any event within thirty (30) days of a Notice from the Purchaser or the Company, immediately assign it in writing to the Company. The Vendors shall reimburse the Purchaser for all the costs and expenses of any litigation or other legal proceedings, including legal fees incurred by the Purchaser or Company in enforcing this provision. ARTICLE 10 INDEMNIFICATION 10.1 Indemnifications for Breaches of Covenants and Warranty, etc. (a) The Vendors (the "Indemnifying Parties") shall indemnify and save harmless, jointly (and not solidarily) on a pro rata basis with respect to their respective share of the Purchase Price, the Purchaser, and SFBC, and their respective directors, officers, employees, agents and shareholders (the "Indemnified Parties"), from and against all Claims which may be made or brought against the Indemnified Parties or the Company, or which the Indemnified Parties or the Company may suffer or incur, directly or indirectly as a result of or in connection with any non-fulfilment of any covenant or agreement on the part of the Indemnifying Parties under this Agreement or any incorrectness in or breach of any representation or warranty of the Indemnifying Parties contained in this Agreement or in any certificate or other document furnished by the Indemnifying Parties pursuant to this Agreement. The foregoing obligation of indemnification in respect of such Claims shall be subject to: - 82 - (i) the limitation contained in Section 6.2 respecting the survival of the representations and warranties of the Parties; (ii) the requirement that the Indemnifying Parties shall, in respect of any Claim made by any third Person, be afforded an opportunity at its sole expense to resist, defend and compromise such Claim; and (iii) the limitation that, for Claims made in connection with any representation or warranty, the Indemnifying Parties shall not be required to pay any such amount until the aggregate of such Claims exceeds $250,000 and upon the aggregate of such Claims exceeding $250,000 the Indemnifying Parties shall be required to pay the amount owing in respect of all of such Claims including the $250,000 except that the foregoing limitation shall not apply to wilful breaches of this Agreement or fraud. (iv) the maximum liability of each Vendor under this Section 10.1 shall be the amount of the Purchase Price (in cash or SFBC Shares) received by such Vendor under this Agreement, including, for greater certainty, any amount deposited under the Escrow Agreement pursuant to Section 3.1 above, on a pro rata basis with respect to their respective share of the Purchase Price, and interest on such amount determined at the Rate and calculated from the Closing Date until such Vendor satisfies its indemnification obligations hereunder. (b) The Purchaser and SFBC (the "Indemnifying Parties") shall indemnify and save harmless, solidarily, the Vendors, and their respective directors, officers, employees, agents and shareholders, as the case may be, (the "Indemnified Parties"), from and against all Claims which may be made or brought against the Indemnified Parties, or which the Indemnified Parties may suffer or incur, directly or indirectly as a result of or in connection with any non-fulfilment of any covenant or agreement on the part of the Indemnifying Parties under this Agreement or any incorrectness in or breach of any representation or warranty of the Indemnifying Parties contained in this Agreement or in - 83 - any certificate or other document furnished by the Indemnifying Parties pursuant to this Agreement. The foregoing obligation of indemnification in respect of such Claims shall be subject to: (i) the limitation contained in Section 6.2 respecting the survival of the representations and warranties of the Parties; and (ii) the requirement that the Indemnifying Parties shall, in respect of any Claim made by any third Person, be afforded an opportunity at their sole expense to resist, defend and compromise such Claim. (iii) the limitation that, for Claims made in connection with any representation or warranty, the Indemnifying Parties shall not be required to pay any such amount until the aggregate of such Claims exceeds $250,000 and upon the aggregate of such Claims exceeding $250,000 the Indemnifying Parties shall be required to pay the amount owing in respect of all of such Claims including the $250,000 except that the foregoing limitation shall not apply to wilful breaches of this Agreement or fraud. (iv) the maximum aggregate liability of Purchaser and SFBC under this Section 10.1 shall be the product of the SFBC Share Price multiplied by the number of SFBC Shares issued to Vendors at the Closing and interest on such amount determined at the Rate and calculated from the Closing Date until the Purchaser or SFBC satisfies its indemnification obligations hereunder. 10.2 Indemnification Procedures for Third Party Claims (a) In the case of Claims made by a third party (including any Governmental Authority) with respect to which indemnification is sought, the Party seeking indemnification (in this Section, the "Indemnified Parties") shall give prompt notice, and in any event within 20 days, to the Indemnifying Parties of any such - 84 - Claims. If the Indemnified Parties fails to give such notice, such failure shall not preclude the Indemnified Parties from obtaining such indemnification but its right to indemnification may be reduced to the extent that such delay prejudiced the defence of the Claim or increased the amount of liability or cost of defense and provided that no claim for indemnity in respect of the breach of any representation or warranty contained in this Agreement may be made unless notice of such Claim has been given prior to the expiry of the survival period applicable to such representation and warranty pursuant to Section 6.2. (b) The Indemnifying Parties shall have the right, by notice to the Indemnified Parties given not later than 10 days after receipt of the notice described in subsection (a), to assume the control of the defence, compromise or settlement of the Claim, provided that such assumption shall, by its terms, be without cost to the Indemnified Parties and provided the Indemnifying Parties acknowledges in writing its obligation to indemnify the Indemnified Parties in accordance with the terms contained in this Section in respect of that Claim. (c) Upon the assumption of control of any Claim by the Indemnifying Parties as set out in subsection (b), the Vendors shall diligently proceed with the defence, compromise or settlement of the Claim at their sole expense, including if necessary, employment of counsel reasonably satisfactory to the Indemnified Parties and, in connection therewith, the Indemnified Parties shall cooperate fully, but at the expense of the Indemnifying Parties with respect to any out-of-pocket expenses incurred, to make available to the Indemnifying Parties all pertinent information and witnesses under the Indemnified Parties' control, make such assignments and take such other steps as in the opinion of counsel for the Indemnifying Parties are reasonably necessary to enable the Indemnifying Parties to conduct such defence. The Indemnified Parties shall also have the right to participate in the negotiation, settlement or defence of any Claim at its own expense. - 85 - (d) The final determination of any Claim pursuant to this Section, including all related costs and expenses, shall be binding and conclusive upon the Parties as to the validity or invalidity, as the case may be of such Claim against the Indemnifying Parties. (e) If the Indemnifying Parties do not assume control of a Claim as permitted in subsection (b), the Indemnified Parties shall be entitled to make such settlement of the Claim as in its sole discretion may appear advisable, and such settlement or any other final determination of the Claim shall be binding upon the Vendors. (f) Where the Indemnifying Parties under this Section 10.2 are the Vendors, the Vendors shall exclusively act through and be represented by, for all purposes, the Vendors' Representatives. 10.3 Other Indemnification Provisions Each of the Vendors hereby agrees that it will not make any claim for indemnification against the Company by reason of the fact the it was a director, officer, employee, or agent of any such entity or was serving at the request of any such entity as a partner, trustee, director, officer, employee, or agent of another entity (whether such claim is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or otherwise and whether such claim is pursuant to any statute, Articles, bylaw, agreement or otherwise) with respect to any action, suit, proceeding, complaint, claim or demand brought by Purchaser against such Vendor (whether such action, suit, proceeding, complaint, claim or demand is pursuant to this Agreement, applicable law or otherwise). 10.4 Losses Defined Subject to Article 1613 of the Civil Code of Quebec, in determining the amount of losses suffered by the Purchaser by reason of any of the matters hereinabove referred to, the term "Claims" shall include, in addition to amounts expended and Liabilities incurred, the amount of any diminution of or adverse effect upon the value of the Company or its business relating from - 86 - or arising out of any of the matters hereinabove referred to; in determining the amount of such Claims, the following factors and circumstances shall be taken into account: (a) any adverse effect upon the ability of the Purchaser or the Company to conduct the business of the Company in as profitable a manner as same was conducted prior to the occurrence of such event or the matter giving rise to such Claim; (b) any adverse effect upon the value of the Company or its business or assets to the Purchaser attributable to any inaccuracy in the Financial Statements and in particular the level of profitability of the Company during the fiscal periods covered by the Financial Statements; (c) the Purchase Price paid by the Purchaser or SFBC; and (d) any other factors or circumstances which may be relevant to a fair and complete determination of the effect of such breach, non-fulfilment or other matter upon the value of the Purchaser's investment in the Company. ARTICLE 11 ADDITIONAL COVENANTS OF THE PARTIES 11.1 Outstanding Anapharm Options Subject to the receipt of all Governmental Authorizations, the Vendors shall cause the Company to make such amendments to the Anapharm Plan and take all such other steps as may be necessary or desirable: (i) to allow all persons holding Anapharm Options pursuant to the Anapharm Plan who may do so under applicable Laws to exercise their Anapharm Options on an accelerated vesting basis at least 2 Business Days prior to Closing. 11.2 Preparation of Filings (a) SFBC, the Vendors, the Purchaser and the Company shall cooperate in the preparation of any applications for orders, registrations, consents, filings, circulars and - 87 - approvals and the preparation of any required documents reasonably deemed by the Parties to be necessary to discharge their respective obligations under applicable Laws in connection with this Agreement; (b) Each of SFBC, the Vendors, the Company and the Purchaser shall promptly notify the others if at any time before the Closing Date it becomes aware that an application for an order, any registration, consent, circular or approval, registration statement or any other filing under companies, corporations or securities Laws contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made, or that otherwise requires an amendment or supplement to such application, registration statement or filing, and the Parties shall cooperate in the preparation of any amendment or supplement to the application, registration statement or filing, as required. (c) All fees and costs relating to any of the above-mentioned proceedings will be borne and paid by the Purchaser and SFBC. 11.3 Covenants of Purchaser Regarding SFBC Securities Each of the Purchaser and SFBC covenants and agrees that, except as contemplated in this Agreement, prior to the Closing Date, SFBC will, at its own costs, prepare and file with all applicable securities commissions or similar securities regulatory authorities of Canada all necessary applications to seek exemptions, if required, from the prospectus, registration and other requirements of the applicable securities Laws of Canada for the issuance by SFBC of SFBC Shares pursuant to this Agreement. 11.4 Restriction on Future Sales by Vendors Each of the Vendors agrees that neither it nor any of its Affiliates or associates will sell, offer to sell, pledge, hypothecate, contract to sell, sell any option or contract to purchase or otherwise enter into any swap or arrangement (a monetization arrangement) which has the effect of transferring all or any portion of the economic benefits of ownership of the SFBC Shares received under this Agreement or publicly announce any intention to do so, at any time prior to: - 88 - (i) in the case of SFBC Shares received by Employee Vendors as their Individual Share Allocation, two years after the Closing Date; and (ii) in all other cases, one year after the Closing Date. 11.5 SFBC Share Legends The Parties agree that all SFBC Shares issued to Vendors at Closing shall bear the following legends: "THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR ANY PROVINCIAL OR STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS AS MAY BE APPLICABLE OR AN OPINION OF COUNSEL TO THE CORPORATION THAT AN EXEMPTION FROM SUCH APPLICABLE LAWS EXISTS. THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A SHARE PURCHASE AGREEMENT BY AND AMONG SOFINOV SOCIETE FINANCIERE D'INNOVATION INC., OTHER VENDORS, SFBC CANADA, INC. AND ANAPHARM INC. AND AN ESCROW AGREEMENT BY AND AMONG THE TRUST COMPANY OF THE BANK OF MONTREAL, AS ESCROW AGENT, MARC LEBEL AND OTHER VENDORS, COPIES OF WHICH WILL BE PROVIDED UPON REQUEST." 11.6 Stub Period Returns The Purchaser shall cause the Company to duly and timely make or prepare all Tax Returns required to be made or prepared by them and to duly and timely file all Tax Returns required to be filed by them for any period which ends on or before the Closing Date and for which Tax Returns have not been filed as of such date. The Purchaser may cause the Company to make the election referred to in subsection 256(9) of the Income Tax Act (Canada), and comparable provisions of applicable provincial legislation, and to file such election(s) for the Company's taxation year(s) ending immediately before the Closing Time. The Purchaser shall also cause the Company to duly and timely make or prepare all Tax Returns required to be made or prepared by them and to duly and timely file all Tax Returns required to be filed by them for periods beginning before and ending after the Closing Date. The Vendors and the Purchaser shall cooperate fully with each other and make available to each other in a timely fashion such data - 89 - and other information as may reasonably be required for the preparation of any Tax Return of the Company for a period ending on, prior to or including the Closing Date and shall preserve such data and other information until the expiration of any applicable limitation period under any applicable law with respect to Taxes. All fees and costs relating to the Stub Period Returns will be borne and paid by the Company. ARTICLE 12 TERMINATION 12.1 Termination of Agreement The Purchaser may terminate this Agreement by giving written notice to each of the Vendors or the Vendors' Representatives at any time prior to the Closing Date (A) in the event any of the Vendors or the Company (i) has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, (ii) the Purchaser has notified each of the Vendors or Vendors' Representatives of such breach, and (iii) such breach has continued without cure for a period of 10 days after the notice of breach or (B) if the Closing shall not have occurred on or before April 15, 2002 by reason of the failure of any conditions precedent under ARTICLE 7 hereof. The Vendors may not terminate this Agreement, without the prior written consent of the Purchaser, unless otherwise stipulated in this Agreement or if the Closing shall not have occurred on or before April 15, 2002 by reason of the failure of any conditions precedent under ARTICLE 8 hereof. 12.2 Effect of Termination Unless otherwise stipulated in this Agreement, if any party terminates this Agreement pursuant to the provisions set forth herein, all rights and obligations of the parties hereunder shall terminate without any Liability of any party to any other party (except the confidentiality obligations of the parties hereto, or for any Liability of any party then in breach). - 90 - 12.3 Exclusive Dealing (a) Without limitation of the Vendors' other obligations under this Agreement, until May 8, 2002, each Vendor signing this Agreement (a "Signing Shareholder") and the Company agrees that: (i) he or it will work exclusively and in good faith with SFBC and Purchaser in an effort to achieve Closing; (ii) neither he or it nor any of the officers or directors of the Company shall, and that each Signing Shareholder and the Company shall use his or its best efforts or to cause his or its employees, agents and representatives (including PricewaterhouseCoopers Securities Inc., any other investment banker, attorney, or accountant acting on his or its behalf) not to, directly or indirectly, initiate, solicit, encourage, pursue or continue any discussions or negotiations with any third parties or knowingly facilitate (including by way of furnishing information) any inquiries or the making of any proposal or offer with respect to a merger, amalgamation, reorganization, share exchange, consolidation, business combination, capitalization, recapitalization, sale of securities (other than pursuant to the exercise of employee stock options), liquidation, dissolution or similar transaction involving the Company, or any purchase or sale of the assets of the Company (any such proposal or offer other than a proposal or offer made by SFBC or an affiliate thereof is referred to as an "Acquisition Proposal"); (iii) neither he or it nor any of the officers or directors of the Company shall, and that he or it shall use his or its best efforts to cause his or its employees, agents and representatives (including any investment banker, attorney or accountant acting of behalf of him or it) not to, directly or indirectly, have any discussion with or provide any Confidential Information or date to any Person relating to an Acquisition Proposal, or engage in any negotiations concerning an Acquisition Proposal, or - 91 - knowingly facilitate any effort or attempt to make or implement an Acquisition Proposal or accept an Acquisition Proposal. (b) The Company agrees that it shall use reasonable best efforts to promptly inform its directors, officers, key employees, agents and representatives of the obligations undertaken in this Section 12.3. 12.4 Termination Fee In the event that the Company or any of the Signing Shareholders breach their obligations under this Section 12.3, then the Company and the Signing Shareholders committing such breach shall pay SFBC a termination fee equal to $1,410,000. ARTICLE 13 POST-CLOSING COVENANTS 13.1 Post-Closing Covenants The Parties agree as follows with respect to the period following the Closing. (a) General. In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under ARTICLE 10 above). The Vendors acknowledge and agree that from and after Closing, Purchaser will be entitled to possession of all documents, books, records (including Tax records), agreements, and financial data of any sort relating to the Company. (b) Transition. None of the Vendors will take any action that is designed or intended to have the effect of discouraging any lessor, licensor, Customer, supplier or other business associate of the Company from maintaining the same business - 92 - relationships with the Company after the Closing as it maintained with the Company prior to the Closing. (c) Confidentiality. Each of the Vendors shall (i) treat and hold all of the Confidential Information in confidence, shall not, directly or indirectly, disclose such information to any third parties, and shall protect the confidentiality thereof, (ii) refrain from using any of the Confidential Information except in connection with this Agreement, and (iii) deliver within 10 days of Closing to the Company or destroy, at the request and option of Purchaser, all tangible embodiments (and all copies) of the Confidential Information which are in his, her or its possession. In the event that any of the Vendors is requested or required (by oral question for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, that Vendor will notify Purchaser promptly of the request or requirement so that Purchaser may seek an appropriate protective order or waive compliance with the provisions of this section. If, in the absence of a protective order or the receipt of a waiver hereunder, any of the Vendors is, on the advise of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, that Vendor may disclose the Confidential Information to the tribunal; provided, however, that the disclosing Vendor shall use such Vendor's best efforts to obtain, at the request of Purchaser, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as Purchaser shall designate. The foregoing provisions shall not apply to any Confidential information which is generally available to the public immediately prior to the time of disclosure. (d) Covenant Not to Compete. For a period of four (4) years from and after the Closing Date, none of the Vendors will, directly or indirectly, (including as an investor, employee, consultant, partner, lender or otherwise), engage anywhere in Canada or the United States in any business that the Company conducts as of the Closing Date; provided, however, that no Vendor shall be in breach of this section by reason of such Vendor (i) holding not more than 5% of the outstanding stock - 93 - of any publicly-traded corporation which operates the same or a similar business as the Company, or (ii) becoming involved with an enterprise engaged in two or more lines of business, one of which is the same or similar to the Company's business (the "Prohibited Business") if the Vendors involvement is totally unrelated to the Prohibited Business. If the final judgment of a court of competent jurisdiction declares that any term or provision of this section is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid and unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. This Section 13.1(d) does not apply to Sofinov Societe Financiere d'Innovation Inc., Jean Marier, Fregico Inc., Gestion M&D Provencher Inc., Serge Carriere, Robert Goyer, Eric Masson, Nicola Stephan d'Ulisse, Johane B. Champagne, Guylaine Perron and Stephane Marin. ARTICLE 14 GENERAL 14.1 Public Notices Prior to the Closing, all public notices to third parties and all other publicity concerning the transactions contemplated by this Agreement shall be jointly planned and coordinated by the Vendors' Representatives and the Purchaser and no Party shall act unilaterally in this regard without the prior approval of the other Party, such approval not to be unreasonably withheld, except where required to do so by law or by the applicable regulations or policies of any provincial or Canadian or other regulatory agency of competent jurisdiction or any stock exchange or stock market. - 94 - 14.2 Expenses Each of the Parties shall pay their respective legal, accounting, and other professional advisory fees, costs and expenses incurred in connection with the purchase and sale of the Purchased Shares and the preparation, execution and delivery of this Agreement and all documents and instruments executed pursuant to this Agreement and any other costs and expenses incurred. In particular, the Vendors shall be responsible for any fees and expenses of any broker or investment advisor retained by them or the Company in connection with the sale of the Purchased Shares and such fees and expenses shall not constitute an obligation of the Company or the Purchaser. 14.3 Vendors' Representatives The Vendors hereby appoint Mr. Marc LeBel, Mr. Maurice Provencher and Sofinov Societe Financiere d'Innovation (collectively, the "Vendors' Representatives") as their representatives and mandataries hereunder and expressly agree that (i) all the Vendors shall be bound by any action taken or document signed and delivered by all of the Vendors' Representatives, in such capacity and on behalf of all the Vendors, including any notice, consent or approval required or permitted to be given, in connection with this Agreement, and (ii) the Purchaser and SFBC shall be entitled to rely on any action taken or document signed and delivered by all of the Vendors' Representatives, in such capacity and on behalf of all the Vendors. The Vendors may, at any time, replace any or all of the Vendors' Representatives, or reduce or increase their number, as the case may be, by giving to the Purchaser or SFBC, to the Escrow Agent and to the Vendors' Agent, a written notice of such change (indicating the name and address of any new Vendors' Representative) signed by Vendors who held a majority of the voting Purchased Shares immediately prior to the Closing Date. 14.4 Notices Any notice, consent or approval required or permitted to be given in connection with this Agreement (in this Section referred to as a "Notice") shall be in writing and shall be sufficiently - 95 - given if delivered (whether in person, by courier service or other personal method of delivery), or if transmitted by facsimile or e-mail: (a) in the case of a Notice to the Vendors, to each of the Vendors' Representatives at: Marc LeBel 2050 Rene-Levesque Blvd. West Sainte-Foy (Quebec) Canada G1V 2K8 Fax: 418-688-5264 and Maurice Provencher 2201 Chemin St-Louis Apt. 704 Sillery (Quebec) Canada G1T 1P9 Fax: (418) 527-8333 and Sofinov Societe Financiere d'Innovation Inc. 1801 McGill College 13th Floor Montreal (Quebec) Canada H3A 2N4 Fax: 514-847-2628 Attention: President -------------------- (b) in the case of a Notice to the Purchaser at: SFBC Canada, Inc. c/o SFBC International Inc. 11190 Biscayne Boulevard Miami, Florida 33181 Attention: CEO Fax: (305) 895-8616 - 96 - (c) Copy to SFBC at: 11190 Biscayne Boulevard Miami, Florida 33181 Attention: Dr. Gregory B. Holmes Fax: (305) 895-8616 E-mail: gholmes@sfbci.com ----------------- (d) Copy to Harris & Gilbert, LLP at: 1645 Palm Beach Lakes Boulevard Suite 550 West Palm Beach, Florida 33401 Fax: (561) 478-1817 E-mail: mharris@flseclaw.com (e) Copy to Osler, Hoskin & Harcourt at: 800 Rene-Levesque Boulevard West Suite 800 Montreal, Quebec H3B 1X9 Attention: Shahir Guindi Fax: (514) 904-8101 E-mail: sguindi@osler.com Any Notice delivered or transmitted to a Party as provided above shall be deemed to have been given and received on the day it is delivered or transmitted, provided that it is delivered or transmitted on a Business Day prior to 5:00 p.m. local time in the place of delivery or receipt. However, if the Notice is delivered or transmitted after 5:00 p.m. local time or if such day is not a Business Day then the Notice shall be deemed to have been given and received on the next Business Day. Any Party may, from time to time, change its address by giving Notice to the other Parties in accordance with the provisions of this Section. - 97 - 14.5 Assignment This Agreement shall enure to the benefit of and be binding upon the Parties and their respective successors (including any successor by reason of amalgamation of any Party) and assigns. 14.6 Amendment No amendment, supplement, modification or waiver or termination of this Agreement and, unless otherwise specified, no consent or approval by any Party, shall be binding unless executed in writing by the Party to be bound thereby. 14.7 Further Assurances The Parties shall, with reasonable diligence, do all such reasonable things as may be required to consummate the transactions contemplated by this Agreement, and each Party shall provide such further documents or instruments required by any other Party as may be reasonably necessary or desirable to effect the purpose of this Agreement and carry out its provisions, whether before or after the Closing. 14.8 Language The Parties confirm that it is their wish that this Agreement, as well as any other documents relating to this Agreement, including notices, schedules and authorizations, have been and shall be drawn up in the English language only. Les signataires confirment leur volonte que la presente convention, de meme que tous les documents s'y rattachant, y compris tout avis, annexe et autorisation, soient rediges en anglais seulement. 14.9 Execution and Counterparts This Agreement may be executed by the Parties in counterparts and may be executed and delivered by facsimile and all such counterparts and facsimiles shall together constitute one and the same agreement. [Signatures on following pages] - 98 - - 99 - IN WITNESS OF WHICH the Parties have executed this Agreement. SOFINOV SOCIETE FINANCIERE D'INNOVATION INC. By: ---------------------------------------- Name: Title: By: -------------------------------------- Name: Title: GESTION M&D PROVENCHER INC. By: ---------------------------------------- Maurice Provencher President FREGICO INC. By: ---------------------------------------- Julien Dufour President --------------------------------------------- JEAN MARIER (per Maurice Provencher, as mandatary, duly authorized for the purposes hereof as he so declares) - 100 - GESTION MARC LEBEL INC. By: ---------------------------------------- Marc LeBel President ---------------------------------------- MARC LEBEL ---------------------------------------- FRANCOIS VALLEE (per Marc LeBel, as mandatary, duly authorized for the purposes hereof as he so declares) ---------------------------------------- ROBERT GOYER (per Maurice Provencher, as mandatary, duly authorized for the purposes hereof as he so declares) ---------------------------------------- SERGE CARRIERE (per Maurice Provencher, as mandatary, duly authorized for the purposes hereof as he so declares) - 101 - ---------------------------------------- GUYLAINE PERRON ---------------------------------------- STEPHANE MARIN ---------------------------------------- ERIC MASSON ---------------------------------------- JOHANE B. CHAMPAGNE ---------------------------------------- NICOLA STEPHAN D'ULISSE (per Marc LeBel, as mandatary, duly authorized for the purposes hereof as he so declares) ---------------------------------------- DENIS HACHE - 102 - ---------------------------------------- JEAN COUTURE (per Marc LeBel, as mandatary, duly authorized for the purposes hereof as he so declares) ANAPHARM INC. By: ---------------------------------------- Marc LeBel President - 103 - SFBC CANADA, INC. By: ---------------------------------------- David Natan President and Secretary SFBC INTERNATIONAL, INC. By: ---------------------------------------- Arnold Hantman Chief Executive Officer ANNEX A OPTION HOLDERS Marc LeBel, of Quebec City (Quebec), and Francois Vallee, of Quebec City (Quebec), and Robert Goyer, of Montreal (Quebec) and Serge Carriere, of Montreal (Quebec), and Guylaine Perron, of Quebec City (Quebec), and Johane B. Champagne, of St. Raymond (Quebec), and Stephane Marin, of Quebec City (Quebec), and Eric Masson, of Quebec City (Quebec), and Nicola Stephan D'Ulisse, of St.Lazare (Quebec), and Denis Hache, of Quebec City (Quebec), and Jean Couture, of Levis (Quebec) LIST OF SCHEDULES Schedule Description -------- ----------- * Schedule 1.1(a) Form of Escrow Agreement** Schedule 1.1(b) Permitted Encumbrances * Schedule 3.2 Purchase Price and Escrow Allocation** * Schedule 3.7 Allocation of Purchase Price** * Schedule 3.10 Key Employees Schedule 3.10B Form of SFBC Stock Option Agreement Schedule 4.3 Danapharm Capitalization * Schedule 4.4 Purchased Shares Schedule 4.5 Capitalization Schedule 4.12 Financial Statements Schedule 4.13 Undisclosed Liabilities * Schedule 4.16 Non-Arm's Length Transactions * Schedule 4.19 Material Suppliers and Customers** Schedule 4.23 Government Grants Schedule 4.25 Governmental Authorizations Schedule 4.27 Intellectual Property** Schedule 4.28 Equipment Contracts Schedule 4.30 Leased Real Property Schedule 4.32 Environmental Matters * Schedule 4.33 Employment Matters** Schedule 4.35 Pension and Benefit Plans * Confidential Treatment Requested for Portions of these Schedules ** These Schedules to be Filed in paper format under cover of Form SE pursuant to Form TH. - 2 - * Schedule 4.37 Insurance** * Schedule 4.38 Material Contracts** Schedule 4.40 Litigation** Schedule 4.41 Tax Matters * Schedule 4.42 Tax Data** * Schedule 4.46 Trade Allowances** Schedule 4.47 Third Party Consents Schedule 4.48 Location of the Assets * Schedule 4.49 Bank Accounts Schedule 4.50 Powers of Attorney Schedule 4.53 Trials Schedule 7.6 Investment Letter Schedule 7.7 Opinion of Vendors' Counsel Schedule 7.13 Employment Contract Schedule 7.18 Form of Resignation and Release of Directors and Officers of the Company Schedule 7.21 Employees' Covenants [* Confidential Treatment Requested for Portions of these Schedules] ** These Schedules to be Filed in paper format under cover on Form SE pursuant to Form TH. SCHEDULE 1.1 (b) PERMITTED ENCUMBRANCES [Summary of French Written Documents] Because real movables and real rights pertaining to the property of an enterprise must always be published, the attached document refers to all personal and real rights on movable property of Anapharm that are registered at the "Register of Personal and Movable Real Rights" of the Government of Quebec. Anapharm's personal and real rights which are registered are: movable hypothecs and rights under long-term leases (e.g.: long-term rental of equipment). SCHEDULE 1.1(b) PERMITTED ENCUMBRANCES See document attached hereto. Page 1 de 5 [GRAPHIC Terminer session R D P R M Quebec APPEARS Registre des droits personnels et reels mobiliers HERE] [Page d'accueil][Coordonnees][Ecrivez-nous!][Aide en ligne] Inscriptions sous la designation d'une personne physique ou d'un organisme Date, heure, minute de certification: 2002-02-22 15:00 Nom de l'organisme: ANAPHARM INC. Code postal: G1V 2K8 Nombre de fiches detaillees: 75 FICHE SYNOPTIQUE Fiche Inscription Date heure:minute 001 02-0059496-0001 2002-02-14 10:50 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 002 02-0051038-0001 2002-02-08 11:07 DROITS RESULTANT D'UN BAIL 003 02-0000946-0001 2002-01-03 14:09 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 004 01-0476476-0001 2001-12-21 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 005 01-0460662-0003 2001-12-11 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 006 01-0442930-0016 2001-11-28 14:13 DROITS RESULTANT D'UN BAIL 007 01-0406126-0001 2001-11-05 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 008 01-0384052-0001 2001-10-19 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 009 01-0319214-0003 2001-09-04 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 010 01-0297885-0004 2001-08-17 09:42 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 011 01-0248879-0004 2001-07-13 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 012 01-0231077-0001 2001-06-29 10:11 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 013 01-0229755-0001 2001-06-29 09:00 Page 2 de 5 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 014 01-0212582-0002 2001-06-18 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 015 01-01999579-0001 2001-06-07 13:57 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 016 01-0188032-001 2001-05-31 11:46 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 017 01-0177447-0001 2001-05-24 14:55 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 018 01-0120288-0001 2001-04-17 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 019 01-0109247-0004 2001-04-06 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 020 01-0102389-0001 2001-04-02 09:00 Modification d'un droit publie 021 01-0080381-0002 2001-03-16 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 022 01-0080163-0003 2001-03-15 13:34 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 023 01-0076448-0003 2001-03-13 10:29 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 024 01-0071641-0001 2001-03-08 10:26 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 025 01-0057361-0002 2001-02-23 10:14 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 026 01-0031926-0006 2001-02-01 10:09 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 027 01-0023898-0004 2001-01-25 10:02 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 028 01-0007364-0001 2001-01-10 09:00 HYPOTHEQUE CONVENTIONNELLE SANS DEPOSSESSION 029 01-0007357-0001 2001-01-10 09:00 HYPOTHEQUE CONVENTIONNELLE SANS DEPOSSESSION 030 01-0007363-0001 2001-01-10 09:00 HYPOTHEQUE CONVENTIONNELLE SANS DEPOSSESSION 031 00-0311449-0027 2000-10-16 11:38 DROITS RESULTANT D'UN BAIL ET CESSION DES DROITS 032 00-0308731-0008 2000-10-13 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 033 00-0278318-0063 2000-09-18 10:24 DROITS RESULTANT D'UN BAIL 034 00-0272338-0005 2000-03-13 13:44 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 035 00-0272338-0004 2000-09-13 13:44 DROITS DE PROPRIETE DU CREDIT-BAILLEUR Page 3 de 5 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 036 00-0272338-0001 2000-09-13 13:44 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 037 00-0264184-0003 2000-09-08 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 038 00-0245738-0002 2000-08-24 14:23 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 039 00-0242063-0022 2000-08-23 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 040 00-0241399-0001 2000-08-22 11:37 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 02-0053216-0001 2002-02-08 09:00 RECTIFICATION D'UNE INSCRIPTION 02-0051041-0001 2002-02-08 11:09 Renouvellement de la publicite d'un droit 01-0341770-0001 2001-09-19 14:07 Cession d'un droit 041 00-0232704-0001 2000-08-15 11:17 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 042 00-0217950-0003 2000-08-02 10:37 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 043 00-0217932-0001 2000-08-02 10:22 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 02-0053221-0001 2002-02-11 09:00 RECTIFICATION D'UNE INSCRIPTION 02-0051035-0001 2002-02-08 11:02 Renouvellement de la publicite d'un droit 044 00-0216984-0003 2000-08-02 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 045 00-0198729-0001 2000-07-18 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 046 00-0184277-0001 2000-07-05 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 047 00-0155135-0010 2000-06-09 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 048 00-0153099-0002 2000-06-08 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 049 00-0139054-0005 2000-05-26 14:05 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 050 00-0118051-0004 2000-05-10 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 051 00-0110259-0007 2000-05-02 10:48 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 052 00-0106023-0096 2000-04-27 14:31 DROITS RESULTANT D'UN BAIL ET CESSION DES DROITS Page 4 de 5 053 00-0103923-0002 2000-04-26 09:51 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 054 00-0090126-0002 2000-04-12 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 055 00-0071963-0009 2000-24 09:15 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 056 00-0052155-0001 2000-03-03 14:09 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 057 00-0049452-0002 2000-03-02 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 058 00-0038079-0003 2000-02-17 12:10 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 059 00-0034757-0012 2000-02-14 14:23 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 060 00-0032192-0001 2000-02-10 09:00 HYPOTHEQUE CONVENTIONNELLE SANS DEPOSSESSION 061 00-0017656-0038 2000-01-25 13:57 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 00-0311786-0001 2000-10-16 14:08 ASSIGNMENT OF RIGHTS 062 99-0215012-0001 1999-12-07 13:31 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 063 99-0215011-0032 1999-12-07 13:29 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 064 99-0215011-0031 1999-12-07 13:29 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 065 99-0215011-0030 1999-12-07 13:29 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 066 99-0215011-0029 1999-12-07 13:29 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 067 99-0118476-0001 1999-07-22 11:30 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 068 99-0087472-0001 1999-05-31 09:30 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 069 99-0071186-0001 1999-05-05 09:30 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 070 99-0042756-0001 1999-03-18 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 071 99-0004153-0001 1999-01-12 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 072 98-0091522-0001 1998-07-21 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 073 98-0068387-0001 1998-06-10 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 074 98-0021587-0001 1998-02-26 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR 075 96-0158587-0001 1996-12-23 09:00 HYPOTHEQUE CONVENTIONNELLE SANS DEPOSSESSION [GRAPHIC Terminer session R D P R M Quebec APPEARS Registre des droits personnels et reels mobiliers HERE] [Page d'accueil][Coordonnees][Ecrivez-nous!][Aide en ligne] Inscriptions sous la designation d'une personne physique ou d'un organisme Date, heure, minute de certification: 2002-02-22 15:00 Nom de l'organisme: ANAPHARM Code postal: O1V 2K9 Nombre de fiches detaillees: 1 FICHE SYNOPTIQUE Fiche Inscription Date heure:minute 001 01-0454582-0001 2001-12-06 09:00 DROITS RESULTANT D'UN BAIL ET CESSION DES DROITS Demande d'etat certifie Retoue a la page Recherche des Inscriptions sous la designation d'une personne physique ou d'un organisme Consulter les inscription sous la designation du'une autre peronsonne physique ou organisme ou sous un autre numero d'identification d'un vehicule routier Retour a la page Consulter le registre|Page d'accueil|Ecrivez-nous (c)Gouvernement du Quebec, 1997-2002 [GRAPHIC Terminer session R D P R M Quebec APPEARS Registre des droits personnels et reels mobiliers HERE] [Page d'accueil][Coordonnees][Ecrivez-nous!][Aide en ligne] Inscriptions sous la designation d'une personne physique ou d'un organisme Date, heure, minute de certification: 2002-02-22 15:00 Nom de l'organisme: ANAPHARM INC. Code postal: H4A 3K6 Nombre de fiches detaillees: 1 FICHE SYNOPTIQUE Fiche Inscription Date heure:minute 001 00-0155135-0010 2000-06-09 09:00 DROITS DE PROPRIETE DU CREDIT-BAILLEUR Demande d'etat certifie Retoue a la page Recherche des Inscriptions sous la designation d'une personne physique ou d'un organisme Consulter les inscription sous la designation du'une autre peronsonne physique ou organisme ou sous un autre numero d'identification d'un vehicule routier Retour a la page Consulter le registre|Page d'accueil|Ecrivez-nous (c)Gouvernement du Quebec, 1997-2002 [GRAPHIC Terminer session R D P R M Quebec APPEARS Registre des droits personnels et reels mobiliers HERE] [Page d'accueil][Coordonnees][Ecrivez-nous!][Aide en ligne] Inscriptions sous la designation d'une personne physique ou d'un organisme Date, heure, minute de certification: 2002-02-22 15:00 Nom de l'organisme: ANAPHARM INC. Code postal: G1V 3W7 Nombre de fiches detaillees: 1 FICHE SYNOPTIQUE Fiche Inscription Date heure:minute 001 95-0129059-0001 1995-11-01 09:00 HYPOTHEQUE CONVENTIONNELLE SANS DEPOSSESSION Demande d'etat certifie Retoue a la page Recherche des Inscriptions sous la designation d'une personne physique ou d'un organisme Consulter les inscription sous la designation du'une autre peronsonne physique ou organisme ou sous un autre numero d'identification d'un vehicule routier Retour a la page Consulter le registre|Page d'accueil|Ecrivez-nous (c)Gouvernement du Quebec, 1997-2002 [GRAPHIC Terminer session R D P R M Quebec APPEARS Registre des droits personnels et reels mobiliers HERE] [Page d'accueil][Coordonnees][Ecrivez-nous!][Aide en ligne] Inscriptions sous la designation d'une personne physique ou d'un organisme Date, heure, minute de certification: 2002-02-22 15:00 Nom de l'organisme: ANAPHARM INC. Code postal: H3X 2H9 Nombre de fiches detaillees: 1 FICHE SYNOPTIQUE Fiche Inscription Date heure:minute 001 01-0105269-0001 2001-04-04 09:00 HYPOTHEQUE CONVENTIONNELLE SANS DEPOSSESSION Demande d'etat certifie Retoue a la page Recherche des Inscriptions sous la designation d'une personne physique ou d'un organisme Consulter les inscription sous la designation du'une autre peronsonne physique ou organisme ou sous un autre numero d'identification d'un vehicule routier Retour a la page Consulter le registre|Page d'accueil|Ecrivez-nous (c)Gouvernement du Quebec, 1997-2002 SCHEDULE 3.10 KEY EMPLOYEES - [*] - [*] - MARC LEBEL; - [*] - [*] - [*] [*] Confidential portions omitted and filed separately with the Commission. SCHEDULE 3.10-A ALLOCATION OF SFBC OPTIONS BETWEEN KEY EMPLOYEES Key Employees Names Allocation of SFBC Options ------------------- -------------------------- - [*] [*] - [*] [*] - MARL LEBEL 35,000 - [*] [*] - [*] [*] - [*] [*] TOTAL 110,000 [*] Confidential portions omitted and filed separately with the Commission. SCHEDULE 3.10 (B) FORM SFBC STOCK OPTION AGREEMENT See document attached hereto. Draft 3-02-02 NON-QUALIFIED STOCK OPTION AGREEMENT ------------------------------------ THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into as of this day of ,2002, between SFBC International, Inc. (the "Company") - ---- -------- and (the "Employee"), an employee of the Company's subsidiary, ------------ SFBC , Inc. References to the Company in this Agreement shall also ----------- include SFBC , Inc., except where referring to the Options and the ------------ shares of common stock. WHEREAS, by action taken by the board of directors (the "Board") of the Company, it has adopted the Second Amended and Restated 1999 Stock Option Plan (the "Plan"); and WHEREAS, by action taken by the Board or the Compensation Committee of the Board it has been determined that in order to enhance the ability of the Company to attract and retain qualified employees, it has granted the Employee the right to purchase common stock of the Company pursuant to non-qualified options. NOW THEREFORE, in consideration of the mutual covenants and promises hereafter set forth and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Grant of Non-Qualified Options. The Company irrevocably grants to the ------------------------------ Employee, as a matter of separate agreement and not in lieu of salary or other compensation for services, the right and option (the "Options") to purchase all or any part of an aggregate of shares of authorized but unissued or --------- treasury common stock of the Company on the terms and conditions herein set forth. The common stock shall be unregistered unless the Company voluntarily files a registration statement covering such shares with the Securities and Exchange Commission. 2. Price. The exercise price of the shares of common stock subject to the ----- Options shall be the closing price of the Company's common stock on the Nasdaq Stock Market on the last trading day prior to the date on which the Employee executed or executes his Employment Agreement with the Company. 3. Vesting-When Exercisable. ------------------------- (a) The Options shall vest over three years in six equal increments on June 30 and December 31 of each year, commencing on December 31, 2002, as long as the Employee remains employed on each applicable vesting date. In lieu of fractional vesting, the number of Options shall be rounded up each time until fractional Options are eliminated. (b) Subject to Sections 3 (c) and 4 of this Agreement, Options may be exercised prior to vesting and remain exercisable for 10 years from the date of grant. (c) However, notwithstanding any other provision of this Agreement, all Options, whether vested or unvested shall be immediately forfeited in the event of: Draft 3-02-02 1 Draft 3-02-02 (1) Termination for any reason including without cause and including, but not limited to, fraud, theft, employee dishonesty and violation of Company policy; (2) Purchasing or selling securities of the Company without written authorization in accordance with the Company's inside information guidelines then in effect; (3) Breaching any duty of confidentiality including that required by the Company's inside information guidelines then in effect; (4) Competing with the Company; (5) Being unavailable for consultation after leaving the Company's employ if such availability is a condition of any agreement between the Company and the Employee; (6) Recruitment of Company personnel after termination of employment, whether such termination is voluntary or for cause; (7) Failure to assign any invention or technology to the Company if such assignment is a condition of employment or any other agreements between the Company and the Employee; or (8) A finding by the Company's Board that the Employee has acted against the interests of the Company. 4. Termination of Relationship. --------------------------- (a) If for any reason, except death or disability as provided below, the Employee ceases to act as an employee of the Company, all rights granted hereunder shall terminate effective three months from the date the Employee ceases to act as an employee, except as otherwise provided for herein. (b) If the Employee shall die while an employee of the Company, his estate or any Transferee, as defined herein, shall have the right within one year from the date of the Employee's death to exercise the Employee's vested Options subject to Section 3(c). For the purpose of this Agreement, "Transferee" shall mean a person to whom such shares are transferred by will or by the laws of descent and distribution. (c) No transfer of the Options by the Employee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the letters testamentary or such other evidence as the Board may deem necessary to establish the authority of the state and the acceptance by the Transferee or Transferees of the terms and conditions of the Options. (d) If the Employee becomes disabled while employed by the Company within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, the three month period referred to in Section 4(a) of this Agreement shall be extended to one year. Draft 3-02-02 2 Draft 3-02-02 5. Profits on the Sale of Certain Shares; Redemption. If any of the events ------------------------------------------------- specified in Section 3(c) of this Agreement occur within one year from the last date of employment (the "Termination Date") (or such longer period required by any written employment agreement), all profits earned from the sale of the Company's securities, including the sale of shares of common stock underlying Options, during the two-year period commencing one year prior to the Termination Date shall be forfeited and forthwith paid by the Employee to the Company. Further, in such event, the Company may at its option redeem shares of common stock acquired upon exercise of Options. The Company's rights under this Section 5 do not lapse one year from the Termination Date but are a contract right subject to any appropriate statutory limitation period. 6. Method of Exercise. The Options shall be exercisable by a written notice ------------------ which shall: (a) state the election to exercise the Options, the number of shares to be exercised, the person in whose name the stock certificate or certificates for such shares of common stock is to be registered, his address and social security number (or if more than one, the names, addresses and social security numbers of such persons); (b) contain such representations and agreements as to the holder's investment intent with respect to such shares of common stock as set forth in Section 11 hereof; (c) be signed by the person or persons entitled to exercise the Options and, if the Options are being exercised by any person or persons other than the optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such person or persons to exercise the Options. (d) be accompanied by full payment of the purchase or exercise price therefor in United States dollars by check. The certificate or certificates for shares of common stock as to which the Options shall be exercised shall be registered in the name of the person or persons exercising the Options. 7. Sale of Shares Acquired Upon Exercise of Options. Any shares of the ------------------------------------------------ Company's common stock acquired pursuant to Options granted hereunder cannot be sold by the Employee until at least two years elapse from the date of grant of the Options and one year from the date of exercise. Nothing in this Section 7 shall be deemed to reduce the holding period set forth under the applicable securities laws. 8. Anti-Dilution Provisions. The Options granted hereunder shall have the ------------------------ antidilution rights set forth in the Plan. 9. Necessity to Become Holder of Record. Neither Employee nor his/her ------------------------------------ estate, as provided in Section 4(c), shall have any rights as a stockholder with respect to any shares covered by the Options until such person shall have become the holder of record of such shares. No adjustment shall be made for cash dividends or cash distributions, ordinary or extraordinary, in Draft 3-02-02 3 Draft 3-02-02 respect of such shares for which the record date is prior to the date on which he/she shall become the holder of record thereof. 10. Reservation of Right to Terminate Relationship. Nothing contained in ---------------------------------------------- this Agreement shall restrict the right of the Company to terminate the relationship of the Employee at any time, with or without cause. The termination of the relationship of the Employee by the Company, regardless of the reason therefor, shall have the results provided for in Sections 4 and 5 of this Agreement. 11. Conditions to Exercise of Options. In order to enable the Company to --------------------------------- comply with the Securities Act of 1933 (the "Securities Act") and relevant state law, the Company may require the Employee, his estate, or any Transferee, as a condition of the exercising of the Options granted hereunder, to give written assurance satisfactory to the Company that the shares subject to the Options are being acquired for his own account, for investment only, with no view to the distribution of same, and that any subsequent resale of any such shares either shall be made pursuant to a registration statement under the Securities Act and applicable state law which has become effective and is current with regard to the shares being sold, or shall be pursuant to an exemption from registration under the Securities Act and applicable state law. The Options are subject to the requirement that, if at any time the Board shall determine, in its discretion, that the listing, registration, or qualification of the shares of common stock subject to the Options upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with the issue or purchase of shares under the Options, the Options may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected. 12. Duties of Company. The Company shall at all times during the term of ----------------- Options: (a) Reserve and keep available for issue such number of shares of its authorized and unissued common stock as will be sufficient to satisfy the requirements of this Agreement; (b) Pay all original issue taxes with respect to the issue of shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith; (c) Use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto. 13. Parties Bound by Plan. The Plan and each determination, interpretation --------------------- or other action made or taken pursuant to the provisions of the Plan shall be final and shall be binding and conclusive for all purposes on the Company and the Employee and his/her respective successors in interest. 14. Severability. In the event any parts of this Agreement are found to be ------------ void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted. Draft 3-02-02 4 Draft 3-02-02 15. Arbitration. Any controversy, dispute or claim arising out of or ----------- relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in Miami-Dade County, Florida (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof. 16. Benefit. This Agreement shall be binding upon and inure to the benefit ------- of the parties hereto and their legal representatives, successors and assigns. 17. Notices and Addresses. All notices, offers, acceptance and any other --------------------- acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipted delivery, by facsimile delivery or, if mailed, postage prepaid, by certified mail, return receipt requested, as follows: The Employee: The Company: SFBC International, Inc. 11190 Biscayne Boulevard Miami, Florida 33181 Facsimile (305) 895-8616 with a copy to: Michael D. Harris, Esq. Michael Harris, P.A. 1654 Palm Beach Lakes Blvd., Suite 550 West Palm Beach, FL 33401 Facsimile: (561) 478-1817 or to such other address as either of them, by notice to the other may designate from time to time. The transmission confirmation receipt from the sender's facsimile machine shall be evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing. 18. Attorney's Fees. In the event that there is any controversy or claim --------------- arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to a reasonable attorney's fee, costs and expenses. 19. Governing Law. This Agreement and any dispute, disagreement, or issue ------------- of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the Draft 3-02-02 5 Draft 3-02-02 internal laws of the State of Delaware without regard to choice of law considerations. 20. Oral Evidence. This Agreement constitutes the entire Agreement between ------------- the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought. 21. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature. 22. Additional Documents. The parties hereto shall execute such additional -------------------- instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder. 23. Section or Paragraph Headings. Section headings herein have been ----------------------------- inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement. IN WITNESS WHEREOF the parties hereto have set their hand and seals the day and year first above written. WITNESSES: SFBC INTERNATIONAL, INC. By: - -------------------------- ------------------------------ Arnold Hantman Chief Executive Officer EMPLOYEE By: - -------------------------- ------------------------------ Draft 3-02-02 6 SCHEDULE 4.3 DANAPHARM CAPITALIZATION Unlimited number of common shares of which only 5,525 common shares have been issued and are currently outstanding. See the following documents attached hereto: . Option Agreement dated October 22, 1999 between Daedal Management & Investment, Inc., the Company and Danapharm Clinical Research, Inc. . Letter of Agreement dated February 5, 2001 between Bank of Montreal, Daedal Management & Investment, Inc., Mr. Frank Naus and Danapharm Clinical Research, Inc. THIS OPTION AGREEMENT made the 22nd day of October, 1999. AMONG: DAEDAL MANAGEMENT & INVESTMENT INC., a corporation existing under the laws of the Province of Ontario, (hereinafter referred to as "Daedal") OF THE FIRST PART -and- ANAPHARM INC., a corporation existing under the laws of the Province of Quebec, (hereafter referred to as "Anapharm") OF THE SECOND PART -and- DANAPHARM CLINICAL RESEARCH INC., a corporation existing under the laws of the province of Ontario, (hereinafter referred to as the "Corporation") OF THE THIRD PART WHEREAS: A. Daedal and Anapharm are, at the date of this Agreement, the registered and beneficial owners of 2,818 and 2,707 common shares, respectively, in the capital of the Corporation, which collectively represents all of the used and outstanding shares in the capital of the Corporation; B. Daedal and Anapharm have entered into a Shareholder Agreement (the "Shareholder Agreement") dated the date hereof regarding their shareholdings in the Corporation; and C. Notwithstanding anything contained in the Shareholder Agreement, each of Daedal and Anapharm has agreed to provide certain options to the other party whereby the other party may acquire common shares of the Corporation from it; -2- NOW THEREFORE THIS INDENTURE WITNESSTH that in consideration of the premises and the mutual covenants herein contained, the parties hereby covenant and agree with each other as follows: ARTICLE 1 OPTION TO PURCHASE BY ANAPHARM TO INCREASE ANAPHARM'S HOLDINGS 1.1 Option to Purchase Notwithstanding anything contained in the Shareholder Agreement, Anapharm shall have the option to purchase from Daedal, at any time after two years (2) from the date of this Agreement, a number of common shares of the Corporation sufficient to allow Anapharm to increase the number of common shares it holds up to fifty-four percent (54%)(the "Percentage Interest") of all of the then issued and outstanding common shares of the Corporation. The price to be paid by Anapharm, and certain other matters related to the exercise and closing of the option, in accordance with Article 7 herein. 1.2 If Daedal is Unable or Refuses to Complete the Transaction If at the time Anapharm wishes to exercise such option, Daedal is unable or refuses to complete the transaction, Anapharm shall have the right to subscribe for a number of common shares of the Corporation to allow Anapharm to increase the number of common shares it holds up to the Percentage Interest at the same aggregate price and on the other terms and conditions as set out in Article 7 herein. For greater certainty, the aggregate subscription price to be paid by Anapharm to the Corporation in such event shall be equal to the amount determined when the number of common shares Anapharm would have acquired from Daedal had Daedal been able or not refused to complete the transaction is multiplied by the price per common share provided for in Article 7 herein. ARTICLE 2 OPTION TO PURCHASE ON TERMINATION OF EMPLOYMENT OF FRANK NAUS FOR CAUSE 2.1 Option to Purchase In the event that the employment of Frank Naus is terminated by the Corporation for cause at any time, Anapharm shall have the option, exercisable within ninety days (90) after the date of such termination, to purchase all, and not less than all, of the common shares of the Corporation then owned by Daedal. The price to be paid by Anapharm, and certain other matters related to the exercise and closing of the option, shall be in accordance with Article 7 herein. -3- ARTICLE 3 FIRST RIGHT OF REFUSAL AND OPTION TO PURCHASE ON RETIREMENT OF FRANK NAUS 3.1 First Right of Refusal In the event that Frank Naus voluntarily leaves the employment of the Corporation at any time, Daedal shall have the right, for a period of ninety days (90) from the date that Frank Naus ceased to be an employee of the Corporation, to obtain a bona fide offer from a third party for all, and not less than all, of the common shares of the Corporation then owned by Daedal. In the event that Daedal obtains such an offer in such ninety (90) day period, it hereby grants to Anapharm a first right of refusal to purchase Daedal's common shares in accordance with the terms and subject to the conditions of the First Right of Refusal set out in section 5.1 of the Shareholder Agreement. In the event that Anapharm fails to exercise such first right of refusal, Daedal may complete the sale of its shares to the third party purchaser and Anapharm hereby agrees to consent and approve such transfer of shares on the condition that such third party purchaser on closing confirms, in writing, to the satisfaction of the solicitors representing Anapharm, its understanding and agreement that it should be bound by the terms of the Shareholder Agreement. 3.2 Option to Purchase In the event that Daedal fails to find a third party purchaser for its shares, within the ninety (90) day period as provided for in section 3.1 above, Daedal shall so advise Anapharm in writing and Anapharm shall have the option, exercisable within ninety (90) days after the expiry of the ninety (90) day period referred to in section 3.1, to purchase all, and not less than all, of the common shares of the Corporation then owned by Daedal. The price to be paid by Anapharm, and certain other matters related to the exercise and closing of the option, shall be in accordance with Article 7 herein. ARTICLE 4 OPTION TO PURCHASE ON DEATH OF FRANK NAUS 4.1 Option to Purchase In the event of the death of Frank Naus at any time, Anapharm shall have the option, which shall be triggered at the time of such death but may not be exercised until not less than five (5) years have passed from the date of this Agreement, to purchase all, and not less than all, of the common shares of the Corporation owned by Daedal at the time of exercise of the option. The price to be paid by Anapharm, and certain other matters related to the exercise and closing of the option, shall be shall be in accordance with Article 7 herein. -4- ARTICLE 5 OPTION TO PURCHASE IF FRANK NAUS CEASES TO CONTROL DAEDAL 5.1 Option to Purchase In the event that Frank Naus ceases to control Daedal in accordance with section 2.3 of the Shareholder Agreement, Anapharm shall have the option, exercisable within ninety days (90) after the occurrence of such event, to purchase all, and not less than all, of the common shares of the Corporation then owned by Daedal. The price to be paid by Anapharm, and certain other matters related to the exercise and closing of the option, shall be in accordance with Article 7 herein. ARTICLE 6 OPTION TO PURCHASE IN THE EVENT OF BANKRUPTCY, INSOLVENCY, LIQUIDATION OR DISSOLUTION 6.1 Option to Purchase In the event that either Anapharm or Daedal becomes bankrupt or insolvent or is liquidated or dissolved, the other party shall have the option, exercisable within ninety (90) days after the occurrence of any such event, to purchase all, and not less than all, of the common shares of the Corporation then owned by the party which has become bankrupt or insolvent or has been liquidated or dissolved. The price to be paid by Anapharm, and certain other matters related to the exercise and closing of the option, shall be in accordance with Article 7 herein. ARTICLE 7 OPTION PRICE AND OTHER TERMS AND CONDITIONS 7.1 Price Per Common Share The price to be paid for each common share on the exercise of any option provided for in this Agreement shall be based on the value as of the date of exercise of such option of all of the issued and outstanding common shares of the Corporation. Specifically, such price per common share shall be the greater of (i) $18.10 and (ii) the amount determined by multiplying by nine (9) the Corporation's EBITDA (earnings before interest, taxes, depreciation and amortization, as determined by the Corporation's accountants in accordance with generally accepted accounting principles) for the fiscal year of the Corporation immediately preceding the time of calculation and then dividing the result by the total number of common shares of the Corporation outstanding at the time of the calculation. 7.2 Closing Arrangements The purchase of any common shares pursuant to any option contained in this Agreement shall be closed thirty (30) days after notice is delivered to the party selling shares of the other party's -5- intention to exercise its option pursuant to the terms of this Agreement. The purchase price for common shares pursuant to any such option shall be payable by certified cheque on the closing date. ARTICLE 8 GENERAL 8.1 Notice Any demand, notice or other communication (hereinafter in this Article referred to as a "Communication") to be given in connection with this Agreement shall be given in writing and may be given by personal delivery, by registered mail or by transmittal by facsimile addressed to the recipient as follows: To: DAEDAL MANAGEMENT & INVESTMENT INC.: 591 Grandview Avenue London, Ontario, N6K 3G1 Attn: President Telephone: (519) 471-5761 Facsimile: (519) 471-5761 To: ANAPHARM INC.: 2050 Boul. Rene-Levesque Quest 5eme etage Sainte-Foy, Quebec G1V 2K8 Attn: President Telephone: (418) 527-4000 Facsimile: (418) 527-3556 To: DANAPHARM CLINICAL RESEARCH INC.: 245 Pall Mall Street London, Ontario N6A 1P4 Attn: President Telephone: (519) 679-2759 -6- Facsimile: (519) 679-9482 or to such other address, facsimile number or individual as may be designated by notice by either party to the other. Any Communication given by personal delivery shall be conclusively deemed to have been given on the date of actual delivery thereof and, if given by registered mail, on the third business day following the deposit thereof in the mail and, if given by facsimile, on the day of transmittal thereof. If the party giving any Communication knows or ought reasonably to know of any difficulties with the postal system which might affect the delivery of mail, any such Communication shall not be mailed but shall be given by personal delivery or by facsimile. 7.2 Time of Essence Time shall be of the essence of this Agreement and every part hereof. 7.3 Further Assurances The parties covenant and agree that they and their heirs, executors, administrators, successors and assigns will sign such further agreements, assurances, papers and documents, attend such meetings, enact such by-laws, pass such resolutions, and exercise such votes and generally do and perform or cause to be done and performed such further and other acts and things as may be necessary or desirable from time to time, in order to give full effect to this Agreement and every part hereof. 7.4 Severability The invalidity of any provision of this Agreement or any covenant herein contained on the part of any party, shall not affect the validity of any other provision or covenant. 7.5 Conflict with Shareholder Agreement In the event of any conflict between the provisions of this Agreement and the provisions of the Shareholder Agreement, the provisions herein shall govern and take priority over such conflicting provisions of the Shareholder Agreement. 7.6 Successors and Assigns This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective heirs, executors, administrators, personal representatives, successors and permitted assigns. 7.7 Governing Law This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the Courts of such province shall have jurisdiction to entertain any action arising in connection therewith. -7- 7.8 Headings and Captions The headings and captions of articles, sections and paragraphs in this agreement have been inserted for convenience of reference only, and such headings and captions are not a part hereof and shall not be deemed in any manner to modify, explain, enlarge or restrict any of the provisions hereof. 7.9 Counterparts This Agreement may be executed in counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument. 7.10 Transmission by Facsimile The parties hereto agree that this Agreement and any other documentation contemplated herein may be transmitted by facsimile and that the reproduction of signatures by facsimile will be treated as binding as if originals and each party hereto undertakes to forthwith deliver a manually executed original to each of the other parties. IN WITNESS WHEREOF each of the parties has executed this Agreement as of the date and year first above written. SIGNED, SEALED AND DELIVERED ) DAEDAL MANAGEMENT & INVESTMENT INC. ) ) ) Per: /s/ Illegible ) ---------------------------------- ) Duly Authorized Officer ) ) ) ANAPHARM INC. ) ) ) Per: ) ---------------------------------- ) Duly Authorized Officer ) ) ) DANAPHARM CLINICAL RESEARCH INC. ) ) ) Per: /s/ Illegible ) ---------------------------------- ) Duly Authorized Officer -7- 8.8 Headings and Captions The headings and captions of articles, sections and paragraphs in this agreement have been inserted for convenience of reference only, and such headings and captions are not a part hereof and shall not be deemed in any manner to modify, explain, enlarge or restrict any of the provisions hereof. 8.9 Counterparts This Agreement maybe executed in counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument. 8.10 Transmission by Facsimile The parties hereto agree that this Agreement and any other documentation contemplated herein may be transmitted by facsimile and that the reproduction of signatures by facsimile will be treated as binding as if originals and each party hereto undertakes to forthwith deliver a manually executed original to each of the other parties. IN WITNESS WHEREOF each of then parties has executed this Agreement as of the date and year first above written. SIGNED, SEALED AND DELIVERED ) DAEDAL MANAGEMENT & INVESTMENT INC. ) ) ) Per: /s/ Illegible ) ---------------------------------- ) Duly Authorized Officer ) ) ) ANAPHARM INC. ) ) ) Per: /s/ Illegible ) ---------------------------------- ) Duly Authorized Officer ) ) ) DANAPHARM CLINICAL RESEARCH INC. ) ) Per: /s/ Illegible ) ---------------------------------- ) Duly Authorized Officer -8- The undersigned hereby undertakes and covenants to Anapharm Inc. and Danapharm Clinical Research Inc. that he shall cause Daedal Management and Investment Inc. to comply with its obligations and responsibilities set out in the foregoing Option Agreement. DATED the 22nd day of October, 1999. /s/ Frank M. Naus --------------------------------------- Frank M. Naus Sainte-Foy (Quebec), February 5, 2001 Bank of Montreal 500 Grande-Allee East Quebec City, Quebec G1R 2J7 - -and- Daedal Management & Investment Inc. 591 Grandview Avenue London, Ontario N6K 3G1 - -and- Mr. Frank Naus 591 Grandview Avenue London, Ontario N6K 3G1 - -and- Danapharm Clinical Research Inc. 245 Pall Mall, #101A London, Ontario N6A 1P4 LETTER OF AGREEMENT ------------------- Sirs: We refer to the loan in the principal amount of seventy-five thousand Canadian dollars (Cdn.$75,000) made by the Bank of Montreal (the "Bank") to Mr. Frank Naus under a Promissory Note made as of January 18, 2001 (the "Loan"). We understand that Daedal Management & Investment Inc. ("Daedal") has guaranteed the Loan in favour of the Bank and, as a collateral of such guaranty, has agreed to pledge in favour of the Bank two hundred and seventy-seven (277) Common shares (the "Pledged Shares ") of the two thousand eight hundred and eighteen (2,818) Common shares of the share capital of Danapharm Clinical Research Inc. ("Danapharm") it holds (the "Pledge"). Letter of Agreement Page 2 - -------------------------------------------------------------------------------- At the request of Daedal and the Bank, Anapharm Inc. ("Anapharm") hereby agrees to the terms and conditions provided hereunder. 1.0 PLEDGE OF SHARES ---------------- Anapharm agrees to the Pledge, notwithstanding the provisions of section 2.2 of the Shareholder Agreement among Daedal, Anapharm and Danapharm dated October 22, 1999 (the "Shareholder Agreement"), conditional and subject to the terms and conditions provided in section 3.0 hereafter. 2.0 OPTION TO PURCHASE ------------------ 2.1 Anapharm covenants and agrees, exclusively in favour of the Bank, to exercise its option to purchase the Pledged Shares, and to purchase the Pledged Shares, at the latest on September 1st, 2002, in accordance with the provisions of the Option Agreement among Daedal, Anapharm and Danapharm dated October 22, 1999 (the "Option Agreement"), subject to the provisions of section 3.0 hereafter. 2.2 However, should the aggregate purchase price of the Pledged Shares under the Option Agreement, be less than seventy-five thousand Canadian dollars (Cdn. $75,000), then Daedal shall sell to Anapharm, which agrees to buy, additional Common shares of the share capital of Danapharm (the "Additional Shares"), at the same price per share and on the same terms and conditions as the Pledged Shares, in such number required in order for Anapharm to purchase from Daedal, a number of shares of the share capital of Danapharm, including the Pledged Shares, having an aggregate value of seventy-five thousand Canadian dollars (Cdn. $75,000), at the time of their valuation under the Option Agreement, the purchase price thereof being payable in accordance with section 3.1 hereafter. 2.3 The other provisions of the Option Agreement, if not amended by or inconsistent with the provisions of this Letter of Agreement, shall continue to govern the relations of the parties hereto with respect to matters covered therein. 3.0 COVENANT -------- 3.1 The Bank covenants to agree to the sale of the Pledged Shares by Daedal to Anapharm under the Option Agreement, conditional and subject to the payment of the aggregate purchase price of the Pledged Shares and of the Additional Shares, as the case may be, by Anapharm to the Bank, on behalf of Daedal and as reimbursement of the Loan for the benefit of Naus, to which payment Daedal and Naus hereby irrevocably agree. Letter of Agreement Page 3 - -------------------------------------------------------------------------------- 3.2 Moreover, the Bank covenants to sell the Pledged Shares to Anapharm in accordance with the provisions of the Option Agreement, in case the Bank has exercised its rights under the Pledge and the Pledged Shares having been transferred in the name of the Bank, or in any other case where the Bank may have the ownership or any similar interest in the Pledged Shares, the Bank hereby agreeing to comply and abide, as Daedal, by the provisions of the Option Agreement and the Shareholder Agreement, as the case may be. 3.3 Daedal and Mr. Frank Naus covenant and agree solidarily (jointly and severally), to indemnify or reimburse Anapharm of all fees and costs incurred by Anapharm in relation with this Letter of Agreement. 3.4 Upon the Loan being repaid in full, this Letter of Agreement shall terminate and have no further force or effect, save and except for section 3.3 above, as the case may be. If you agree with the terms and conditions herein, please confirm your acceptance of this Letter of Agreement by executing the enclosed copy and returning it to the undersigned on or before February 9, 2001. ANAPHARM INC. Per: /s/ Marc LeBel ----------------------------- Marc LeBel, President ACCEPTANCE ---------- The undersigned confirm that the foregoing is satisfactory and consent with the above-mentioned terms and conditions. Feb. 7, 2001 BANK OF MONTREAL Per: /s/ Illegible ----------------------------- Per: ----------------------------- Letter of Agreement Page 4 - -------------------------------------------------------------------------------- , 2001 - -------------- DAEDAL MANAGEMENT & INVESTMENT INC. Per: /s/ Frank Jackie Naus ----------------------------- Frank Jackie Naus ----------------------------- Frank Jackie Naus DANAPHARM CLINICAL RESEARCH INC. Per: /s/ Frank Naus ----------------------------- Frank Naus Per: /s/ Marc LeBel ----------------------------- Marc LeBel SCHEDULE 4.4 PURCHASED SHARES PURCHASE SHARES FOLLOWING THE EXERCISE OF THE GRANTED SHARE OPTIONS
===================================================================================================================== Vendors' names Class A Common Class B Common Class C Common Class D Common Shares Shares Shares Shares (voting) (voting) (voting) (non-voting) =============================================================================---------------------------------------- Sofinov Societe Financiere 782,050 d'Innovation inc. 334,000 249,000 - --------------------------------------------------------------------------------------------------------------------- Gestion M&D Provencher inc. 500,000 100,000 100,000 - --------------------------------------------------------------------------------------------------------------------- Fregico inc. 500,000 100,000 100,000 - --------------------------------------------------------------------------------------------------------------------- Gestion Marc Lebel inc. 410,000 27,330 - --------------------------------------------------------------------------------------------------------------------- Marc Lebel 133,333 179,337 64,950 - --------------------------------------------------------------------------------------------------------------------- [*] [*] [*] [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- TOTAL: 3,108,350 824,000 676,000 313,926 =====================================================================================================================
GRANTED SHARE OPTIONS TO BE EXERCISED
===================================================================================================================== Vendors' names Class A Common Class B Common Class C Common Class D Common Shares Shares Shares Shares (voting) (voting) (voting) (non-voting) =============================================================================---------------------------------------- Marc Lebel 5,619 [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - ---------------------------------------------------------------------------------------------------------------------
===================================================================================================================== Vendors' names Class A Common Class B Common Class C Common Class D Common Shares Shares Shares Shares (voting) (voting) (voting) (non-voting) =============================================================================---------------------------------------- - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- [*] [*] - --------------------------------------------------------------------------------------------------------------------- TOTAL: 93,934 266,296 =====================================================================================================================
[*] Confidential portions omitted and filed separately with the Commission. SCHEDULE 4.5 CAPITALIZATION The authorized share capital of the Company is as follows: - ---------------------------------------------------------- The share capital of the Company consisting of unlimited number of Class A common shares, an unlimited number of Class B common shares, an unlimited number of Class C common shares, an unlimited number of Class D common shares and an unlimited number of Class A preferred shares. The issued share capital of the Company is as follows: - ------------------------------------------------------ . Class A common shares: $3,014,416; . Class B common shares: $824,000; . Class C common shares: $676,000; . Class D common shares: $47,630. SCHEDULE 4.12 FINANCIAL STATEMENTS See the following documents attached hereto: . "Non-Consolidated Financial Statements - April 30, 2001"; and . "Unaudited Financial Statements - January 31, 2002" attached hereto. Non-Consolidated Financial Statements Anapharm Inc. April 30, 2001 - -------------------------------------------------------------------------------- AUDITORS' REPORT - -------------------------------------------------------------------------------- To the Shareholders of Anapharm Inc.: We have audited the non-consolidated balance sheet of Anapharm Inc. as at April 30, 2001 and the non-consolidated statements of income, retained earnings and cash flows for the year then ended. These non-consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these non-consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. In our opinion, these non-consolidated financial statements present fairly, in all material respects, the financial position of the Company as at April 30, 2001 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles, except that the interest in the joint venture is not recorded according to the proportionate consolidation method, as mentioned in note 2. Ernst & Young LLP Quebec City, Canada June 22, 2001. Chartered Accountants 1 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NON-CONSOLIDATED BALANCE SHEET - -------------------------------------------------------------------------------- As at April 30 2001 2000 $ $ - ------------------------------------------------------------------------ ASSETS Current assets Cash and cash equivalents 1,170,942 812,870 Temporary investments [note 3] 1,045,605 1,097,968 Accounts receivable [note 6] 3,865,485 4,008,349 Tax credits receivable [note 7] 2,925,383 2,254,185 Research contracts in progress 2,141,945 2,453,289 Supplies inventory 715,448 509,931 Prepaid expenses 329,544 148,639 Current portion of investments 305,409 -- - ------------------------------------------------------------------------ Total current assets 12,499,761 11,285,231 - ------------------------------------------------------------------------ Investments [note 4] 1,081,879 748,518 - ------------------------------------------------------------------------ Fixed assets [notes 5 and 8] 10,916,942 7,560,429 - ------------------------------------------------------------------------ Deferred income taxes 18,071 -- - ------------------------------------------------------------------------ 24,516,653 19,594,178 - ------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities 2,773,538 2,004,657 Invoicing exceeding estimated costs and profit on research contracts in progress 1,081,042 1,870,953 Current portion of long-term debt 1,784,370 1,367,649 - ------------------------------------------------------------------------ Total current liabilities 5,638,950 5,243,259 - ------------------------------------------------------------------------ Long-term debt [note 8] 5,329,628 3,876,867 - ------------------------------------------------------------------------ Deferred income taxes -- 918,426 - ------------------------------------------------------------------------ Shareholders' equity Share capital [note 9] 2,188,095 1,870,000 Retained earnings 11,359,980 7,685,626 - ------------------------------------------------------------------------ 13,548,075 9,555,626 - ------------------------------------------------------------------------ 24,516,653 19,594,178 - ------------------------------------------------------------------------ Commitments [note 11] Contingencies [note 14] See accompanying notes On behalf of the Board Director Director 2 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NON-CONSOLIDATED STATEMENT OF RETAINED EARNINGS - -------------------------------------------------------------------------------- Year ended April 30 2001 2000 [11 months] $ $ - ---------------------------------------------------------------------------- Balance, beginning of year 7,685,626 3,250,763 Add Net income 5,435,903 4,434,863 - ---------------------------------------------------------------------------- 13,121,529 7,685,626 - ---------------------------------------------------------------------------- Deduct Dividends Class A 1,154,404 -- Class B 329,600 -- Class C 270,400 -- Class D 7,145 -- - ---------------------------------------------------------------------------- 1,761,549 -- - ---------------------------------------------------------------------------- Balance, end of year 11,359,980 7,685,626 - ---------------------------------------------------------------------------- See accompanying notes 3 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NON-CONSOLIDATED STATEMENT OF INCOME - -------------------------------------------------------------------------------- Year ended April 200l 2000 ------------------ ----------------- [1l months] $ % $ % - -------------------------------------------------------------------------------- Revenue 31,383,561 100.0 21,591,678 100.0 Cost of services rendered, net of tax credits [note 7] 14,128,649 45.0 8,829,358 40.9 - -------------------------------------------------------------------------------- Gross margin 17,254,912 55.0 12,762,320 59.1 - -------------------------------------------------------------------------------- Expenses Sales and administration 6,571,357 20.9 3,789,822 17.5 Development of assay methods, net of tax credits [note 7] 2,068,254 6.6 1,482,507 6.9 - -------------------------------------------------------------------------------- 8,639,611 27.5 5,272,329 24.4 - -------------------------------------------------------------------------------- Other expenses (revenues) Interest on long-term debt 457,549 1.5 278,107 1.3 Other interest and bank charges 46,506 0.2 70,725 0.3 Interest income (209,056) (0.7) (110,329) (0.5) Equity in earnings from the joint venture (189,400) (0.6) (32,000) (0.1) - -------------------------------------------------------------------------------- 105,599 0.4 206,503 1.0 - -------------------------------------------------------------------------------- 8,745,210 27.9 5,450,446 25.4 - -------------------------------------------------------------------------------- Income before income tax 8,509,702 27.1 7,283,488 33.7 - -------------------------------------------------------------------------------- Income Taxes Current 1,077,779 3.4 2,804,638 13.0 Deferred 1,996,020 6.4 43,987 0.2 - -------------------------------------------------------------------------------- 3,073,799 9.8 2,848,625 13.2 - -------------------------------------------------------------------------------- Net income 5,435,903 17.3 4,434,863 20.5 - -------------------------------------------------------------------------------- See accompanying notes 4 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NON-CONSOLIDATED STATEMENT OF CASH FLOWS - ------------------------------------------------------------------------------- Year ended April 30 2001 2000 [11 months] $ $ - ------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income 5,435,903 4,434,863 Adjustments for Amortization of fixed assets and government assistance 2,485,723 1,185,903 Income taxes and deferred credits (936,497) 536,362 Loss on disposal of fixed assets 64,801 125,308 Gain on disposal of investments (13,456) -- Equity in earnings from the joint venture (189,400) (32,000) - ------------------------------------------------------------------------------- 6,847,074 6,250,436 Net change in non-cash working capital items [note 12] (894,183) (2,024,363) - ------------------------------------------------------------------------------- Cash flows relating to operating activities 5,952,891 4,226,073 - ------------------------------------------------------------------------------- INVESTING ACT1VITIES Additions to fixed assets, net of government assistance of $440,973 [$149,402 in 2000] (3,651,994) (1,630,362) Disposal of fixed assets 60,064 44,000 Additions to investments (380,522) (716,518) Disposal of investments 21,651 302,620 Change in temporary investments 52,363 101,575 - ------------------------------------------------------------------------------- Cash flows relating to investing activities (3,898,438) (1,898,685) - ------------------------------------------------------------------------------- 5 [LOGO OF ERNST & YOUNG COMPANY] - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Anapharm Inc. NON-CONSOLIDATED STATEMENT OF CASH FLOWS (Cont'd) - ------------------------------------------------------------------------------- Year ended April 30 2001 2000 [11 months] $ $ - ----------------------------------------------------------------------------- FINANCING ACTIVITES Fixed assets financed by accounts payable 269,741 83,974 Repayment of secured demand loan -- (750,000) Bank loan -- (417,818) Increase in long-term debt 1,575,000 475,000 Decrease in long-term debt (2,020,625) (1,005,566) Issuance of share capital 233,907 -- Dividend payments Class A (1,154,404) -- Class B (329,600) -- Class C (270,400) -- - ----------------------------------------------------------------------------- Cash flows relating to financing activities (1,696,381) (1,614,410) - ----------------------------------------------------------------------------- Net increase in cash and cash equivalents 358,072 712,978 Cash and cash equivalents, beginning of year 812,870 99,892 - ----------------------------------------------------------------------------- Cash and cash equivalents, end of year 1,170,942 812,870 - ----------------------------------------------------------------------------- Supplementary information Interest paid 467,104 318,581 Income taxes paid 12,233 -- - ----------------------------------------------------------------------------- See accompanying notes 6 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 l. INCORPORATION AND NATURE OF OPERATIONS The Company was incorporated under Part 1A of the Companies Act (Quebec) on April 18, 1994. Its principal activity is drug research for customers, particularly in the field of pharmacokinetics [the metabolizing of drugs in humans]. 2. SIGNIFICANT ACCOUNTING POLICIES Financial statements Since the shareholders have access to all relevant information pertaining to the group's resources and operating results, the financial statements of the joint venture, Danapharm Clinical Research Inc., are not consolidated using the proportionate consolidation method. The interest in the joint venture is recorded using the equity method. As they are not general purpose financial statements, some users may require additional information. Use of estimates These financial statements have been prepared by Management in accordance with Canadian generally accepted accounting principles. In preparing these consolidated financial statements, Management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. In Management's opinion, the financial statements have been properly prepared using careful judgment within the reasonable limits of materiality and within the framework of the accounting policies summarized below. Revenues from research contracts Revenues and profits from research contracts are recorded based on the percentage-of-completion of the projects. For each contract, using its best estimates, the Company's Management determines the revenues and costs anticipated for the contracts. Unexpected events could arise and as a result, these estimates could change. Any anticipated loss on a contract is recorded in the year in which it is determined. Cash and cash equivalents Cash and cash equivalents comprise cash and temporary investments with maturities of less than three months. 7 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 2. SIGNIFICANT ACCOUNTING POLICIES [Cont'd] Temporary investments Temporary investments are recorded at the lower of cost and fair market value. Research contracts in progress Research contracts in progress represent the excess of costs and profit recognized on the contracts in progress over the amounts billed. Supplies inventory Supplies inventory is valued at the lower of cost and replacement value. Cost is determined on the first-in, first-out basis. Investments The investment in shares of the joint venture is recorded using the equity method. Other investments are recorded at cost. Fixed assets Fixed assets are recorded at cost and amortized using the following methods and annual rates: Clinical, laboratory and office equipment Straight-line 4 to 7 years Clinical, laboratory and office furniture Declining balance 20% Computer equipment and software Straight-line 4 years Small clinical and laboratory tools Straight-line 3 years Leasehold improvements are recorded at cost and amortized on the straight-line basis over the remainder of the various leases. 8 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 2. SIGNIFICANT ACCOUNTING POLICIES [Cont'd] Capital leases Capital leases are contracts under which virtually all the risks inherent to ownership of the property are transferred to the lessee. These contracts are accounted for by recording an asset and a corresponding obligation equal to the lesser of the following amounts: the present value of the minimum lease payments and the fair value of the property on the date of the lease. Assets recorded under capital leases are amortized using the same method as for similar fixed assets acquired by the Company. Government assistance Tax credits for scientific research and experimental development related to the acquisition of fixed assets are accounted for as a reduction thereof and are amortized using the same methods and rates as for the corresponding fixed assets, while those related to current expenditures are accounted for as a reduction thereof. Invoicing exceeding estimated costs and profit on research contracts in progress This invoicing represents the excess of the amounts billed on research contracts in progress over the costs and profit recognized. Income taxes The Company provides for income taxes under the tax deferral method. According to this method, timing differences between income for accounting purposes and income for tax purposes [which arise because certain revenue or expense items are recognized at different times for accounting or for tax purposes] result in deferred income taxes. 9 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Apri1 30, 2001 2. SIGNIFICANT ACCOUNTING POLICIES [Cont'd] Foreign currency transaction Balances denominated in foreign currencies are translated to Canadian dollars using the temporal method. According to this method, monetary balance sheet items are translated at the exchange rate in effect a year end, whereas non monetary items are translated using historical exchange rates. Revenues and expenses [other than amortization which is translated at the exchange rate corresponding to the related fixed assets] are translated at the exchange rate in effect on the transaction date or using average exchange rates for the year. Gains and losses resulting from translation are included in the statement of income. Stock option plan The Company offers a stock option plan, which is described in note 9. No expense is recognized for this plan when stock options are issued to employees and directors. Any consideration received when the options are exercised is applied to the Company's share capital. 3. TEMPORARY INVESTMENTS 2001 2000 $ $ - ------------------------------------------------------------------------------- Bankers' acceptances, bearing interest at an effective rate of 5.26% to 5.50%, maturing from July to October 2000 -- 696,150 Term investments, bearing interest at rates from 4.75% to 5.80%, redeemable, maturing from March to July 2001 1,045,605 401,818 - ------------------------------------------------------------------------------- 1,045,605 1,097,968 - ------------------------------------------------------------------------------- 10 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc, NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 4. INVESTMENTS
2001 2000 $ $ - ----------------------------------------------------------------------------------- Danapharm Clinical Research Inc.-joint venture 2,707 shares [49%] 49,000 49,000 Cumulative equity in earnings 221,400 32,000 Advances, bearing interest at prime plus 2%, due quarterly [April 30, 2001: 8.50%; April 30, 2000: 9.00%]. The total amount was cashed in June 2001 290,000 290,000 - ----------------------------------------------------------------------------------- 560,400 371,000 - ----------------------------------------------------------------------------------- Bond bearing interest at 4.45%, maturing in June 2002 [fair market value as at April 30, 2001: $748,768] 749,845 -- - ----------------------------------------------------------------------------------- Bond bearing interest at 5.25%, cashed in advance -- 369,323 - ----------------------------------------------------------------------------------- Loans to shareholders, bearing interest at prime plus 0.5% [April 30, 2001; 7.50%], due according to established terms and conditions, maturing in April 2006 77,043 -- - ----------------------------------------------------------------------------------- Industrial Alliance Life Insurance Company 745 shares -- 8,195 - ----------------------------------------------------------------------------------- 1,387,288 748,518 Current portion of investments 305,409 -- - ----------------------------------------------------------------------------------- 1,081,879 748,518 - -----------------------------------------------------------------------------------
11 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 5. FIXED ASSETS
2001 2000 ------------------------- ------------------------- Accumulated Accumulated Cost amortization Cost amortization $ $ $ $ - --------------------------------------------------------------------------------------- Leasehold improvements 3,566,687 541,407 1,842,352 288,955 Clinical, laboratory and office equipment 8,726,849 2,945,736 6,574,377 1,247,556 Clinical, laboratory and office furniture 630,169 215,771 414,357 143,754 Computer equipment and software 3,381,360 861,865 1,249,631 407,613 Small clinical and laboratory tools -- -- 32,867 32,867 - --------------------------------------------------------------------------------------- 16,305,065 4,564,779 10,113,584 2,120,745 Accumulated amortization 4,564,779 2,120,745 - --------------------------------------------------------------------------------------- 11,740,286 7,992,839 Less: Government assistance, balance to be amortized 823,344 432,410 - --------------------------------------------------------------------------------------- Net value 10,916,942 7,560,429 - ---------------------------------------------------------------------------------------
Property held under capital leases amounts to a cost of $7,658,404 [$5,340,847 in 2000] and accumulated amortization of $2,266,851 [$955,907 in 2000] for a net book value of $5,391,553 [$4,384,940 in 2000]. The Company acquired fixed assets for an amount of $2,315,107 in 2001 [$2,579,914 in 2000] which were financed by capital leases. 6. BANK LOAN The Company has an operating credit facility of a maximum amount of $2,000,000 [$1,500,000 in 2000] which is repayable on demand and bears interest at prime plus 0.50% [2001: 7.00%; 2000: 7.50%]. A movable charge on accounts receivable has been pledged to secure this credit facility. The balance available as at April 30, 2001 amounts to $1,875,000 following the issuing of a letter of guarantee of $125,000, 12 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapbarm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 7. SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT EXPENSES Certain amounts recorded as scientific research and experimental development tax credits relate to income tax returns that have not yet been reviewed by the tax authorities. In case of any differences between the amounts claimed by the Company and the amounts granted by the tax authorities, the resulting gain or loss will be recorded in the period in which the differences arise. 8. LONG-TERM DEBT
2001 2000 $ $ - ------------------------------------------------------------------------------------ Secured loans Loan, interest at prime rate plus 1.50%, repayable in monthly principal instalments of $9,895 plus interest, maturing in May 2003. A movable charge without delivery on the equipment is provided as collateral 277,060 395,800 Loan, interest at prime rate plus 1.25%, repaid in advance in May 2001. A movable charge without delivery on the equipment is provided as collateral 79,648 104,647 Loan, interest at prime rate plus 1.25%, repayable in monthly principal instalments of $16,667 plus interest, maturing in April 2008. A movable charge without delivery on the equipment with a net book value of $269,535 is provided as collateral 1,400,000 -- Loan, interest at prime rate plus 1%, repayable in monthly principal instalments of $4,090 plus interest, maturing in February 2004. The loan was repaid in advance during the year -- 184,906 - ------------------------------------------------------------------------------------ To carry forward 1,756,708 685,353
13 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 8. LONG-TERM DEBT [Cont'd]
2001 2000 $ $ - ----------------------------------------------------------------------------------- Carried forward 1,756,708 685,353 Secured loans [Cont'd] Loan, prime rate plus 1.50%, repayable in monthly principal instalments of $5,104 plus interest, maturing in May 2003. The loan was repaid in advance during the year -- 188,854 Loan, prime rate plus 0.75%, repayable in monthly principal instalments of $2,083 plus interest, maturing in December 2004. The loan was repaid in advance during the year -- 116,666 Unsecured loans Investissement Quebec, interest free, repayable in semi- annual principal instalments of $37,500 commencing in September 2004, maturing in March 2008,* 175,000 -- Canada Economic Development, interest free, repayable in semi-annual principal instalments of $25,000, maturing in February 2001 -- 50,000 - ----------------------------------------------------------------------------------- To carry forward 1,931,708 1,040,873
- ---------- * The maximum amount of this loan is $700,000 which may be received no later than April 30, 2002 in four instalments of $175 000 provided predetermined criteria are met with respect to the number of regular, full-time employees and additions to fixed assets. Thereafter, conditions related to the number of employees and the total payroll must be met for five years, otherwise the lender may demand partial or total repayment thereof based on the predetermined criteria. 14 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 8. LONG-TERM DEBT [Cont'd]
2001 2000 $ $ - -------------------------------------------------------------------------------------- Carried forward 1,931,708 1,040,873 Capital leases Obligations under capital leases, bearing interest at rates of 7.30% to 8.75%, maturing between 2002 and 2006 5,182,290 4,203,643 - -------------------------------------------------------------------------------------- 7,113,998 5,244,516 - -------------------------------------------------------------------------------------- Current portion Secured and unsecured loans 398,074 420,745 Obligations under capital leases 1,386,296 946,904 - -------------------------------------------------------------------------------------- 1,784,370 1,367,649 - -------------------------------------------------------------------------------------- 5,329,628 3,876,867 - --------------------------------------------------------------------------------------
Payments required on the long-term debt, excluding those related to the obligations under capital leases, are as follows: 2001-2002 - $398,074; 2002-2003 - $318,754; 2003-2004 - $239,564; 2004-2005 - $243,754 and 2005-2006 - - $243,754. Minimum payments required under capital leases are as follows: $ - ---------------------------------- Years ending April 30 2002 1,763,651 2003 1,627,660 2004 1,509,007 2005 1,037,460 2006 175,296 Other 91,001 - ---------------------------------- 6,204,075 Interest 1,021,785 - ---------------------------------- 5,182,290 - ---------------------------------- 15 [LOGO OF ERNST & YOUNG COMPANY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 9. SHARE CAPITAL Authorized Unlimited number of: Class A Common shares, without par value, voting and participating. Class B common shares, without par value, voting and participating. Class C common shares, without par value, voting and participating. Class D common shares, without par value, non-voting and participating. Class A preferred shares, non-voting, non-participating, with a discretionary, preferred, non-cumulative dividend, redeemable at their par value at the holder's or the Company's option. 2001 2000 $ $ - -------------------------------------------------------------------------------- Issued and fully paid 2,979,366 Class A common shares [2,830,000 in 2000] 2,083,907 1,850,000 824,000 Class B common shares 11,734 11,734 676,000 Class C common shares 8,266 8,266 47,630 Class D common shares [none in 2000] 84,188 -- - -------------------------------------------------------------------------------- 2,188,095 1,870,000 ================================================================================ During the year, options on 149,366 Class A shares were exercised for a cash consideration of $233,907 and options on 47,630 Class D shares were exercised in exchange for loans to shareholders totalling $84,188. 16 [LOGO OF ERNST & YOUNG] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 9. SHARE CAPITAL [Cont'd] During the year, the Company declared dividends for an amount of $1,761,549 of which $1,754,404 was paid in cash and $7,145 was applied to reduce loans to shareholders. Stock option plan The Company has adopted a stock option plan for its directors and senior management. Under the plan, 380,200 Class D non voting shares have been reserved for issue purposes. The maximum term for the options is five years and the exercise price is determined by the Company's Board of Directors when the options are granted. Options vest at an annual rate of 20%, except for certain options with an exercise price of $1.566 which were granted in May 1999. In addition, 342,934 options on Class A voting shares were granted as well as reserved for issue purposes and vested on issuance. Rights associated with these options are no governed by predetermined rules. A summary of the status of the Company's stock option plan as at April 30, 2001 and April 30, 2000 and changes during the years ending on those dates is presented below: 2001 2000 -------------------- ------------------- Weighted Weighted Number average Number average of exercise of exercise Options shares price shares price $ $ - ----------------------------------------------------------------------- Outstanding, beginning of year 665,500 1.66 600,550 1.67 Granted 140,726 6.00 64,950 1.64 Exercised (196,996) 1.61 -- -- - ----------------------------------------------------------------------- Outstanding, end of year 609,230 2.68 665,500 1.66 Options exercisable at year-end 444,689 589,724 17 [LOGO OF ERNST & YOUNG] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 9. SHARE CAPITAL [Cont'd] Stock option plan [Cont'd] The following table sets out a summary of information relating to stock options as at April 30, 2001: Options outstanding Options exercisable ------------------------------------------ ------------------------ Weighted Number of Number of average Weighted options Weighted options contractual average exercisable average Exercise outstanding as at life exercise as at exercise price Apri1 30, 2001 remaining price April 30, 2001 price ($) (shares) (years) ($) (shares) ($) - -------------------------------------------------------------------------------- 1.566 210,844 2.52 1.566 191,359 1.566 1.807 249,000 1.17 1.807 249,000 1.807 2.000 10,825 1.73 2.000 2,165 2.000 6.000 138,561 2.94 6.000 2,165 6.000 - -------------------------------------------------------------------------------- 609,230 444,689 ================================================================================ 10. GRANTS AND GOVERNMENT ASSISTANCE The Company has obtained government assistance in the form of scientific research and experimental development tax credits for an amount of $7,302,903 [$3,782,670 in 2000]. These amounts were applied against expenses related to the cost of services rendered, expenses related to the development of assay methods and as a deduction from fixed assets. 11. COMMITMENTS a) As at April 30, 2001, the Company was party to three separate leases expiring between March 2003 and March 2008, for its places of business. The expense for the year amounts to $1,187,598 and the minimum annual rent payable for the next five years is as follows: 2001-2002: $1,212,461; 2002-2003: $1,210,890; 2003-2004: $1,193,611; 2004-2005: $1,193,611 and 2005-2006: $1,197,196. 18 [LOGO OF ERNST & YOUNG] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 11. COMMITMENTS [Cont'd] b) As at April 30, 2001, the Company was also committed to pay rent totalling $130,705 under equipment operating leases expiring in January 2004. The minimum annual rent payable is as follows: 2001-2002 - $106,015; 2002-2003 - $20,813; 2003-2004 - $3,877. 12. CASH FLOWS The net change in non-cash working capital items may be summarized as follows:
2001 2000 [11 months] $ $ - ------------------------------------------------------------------------------------- Decrease (increase) in accounts receivable 142,864 (1,408,592) Increase in tax credits receivable (671,198) (426,317) Decrease (increase) in research contracts in progress 311,344 (1,210,366) Increase in supplies inventory (205,517) (389,267) Increase in prepaid expenses (180,905) (40,814) Increase in accounts payable and accrued liabilities 499,140 376,973 Increase (decrease) in invoicing exceeding estimated costs and profit on research contracts in progress (789,911) 1,074,020 - ------------------------------------------------------------------------------------- (894,183) (2,024,363) =====================================================================================
13. FINANCIAL INSTRUMENTS The fair value of the Company's financial instruments such as cash and cash equivalents, temporary investments, accounts receivable and accounts payable is representative of their carrying-value due to their short-term maturities. The fair value of long-term debt approximates the carrying value because the interest rates reflect the market rates in effect at the year-end, except for the interest-free, unsecured loan of $175,000 as at April 30, 2001 [$50,000 as at April 30, 2000] the fair value of which amounts to approximately $137,778 as at April 30, 2001 [$47,800 as at April 30, 2000]. Although the Company sells to a number of customers, three customers represent approximately 37% of the accounts receivable as at April 30, 2001 [five customers represented approximately 55% as at April 30, 2000]. 19 [LOGO OF ERNST & YOUNG] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- April 30, 2001 14. CONTINGENCIES Three former employees are jointly suing the Company for an amount that could reach $170,000. The lawsuit is based on amounts that could have been paid to them under the stock option plan during their respective employment periods. Based on the information currently available, it is Management's opinion that the outcome of the case cannot be predicted. No amount has been provided for in the financial statements with respect to this claim. A provision will be recorded in the year the amount, if any, is known. 15. COMPARATIVE FIGURES Certain figures in the 2000 financial statements were reclassified to conform to the presentation adopted in 2001. 16. SUBSEQUENT EVENTS . On June 22, 2001, the Company purchased 213,950 Class A shares from a shareholder for a nominal consideration. The same shareholder also exercised 249,000 stock options on Class A for a total consideration of $449,943. The number of Class A shares outstanding on that date is now 3,014,416 shares for a paid-up capital amount of $2,533,849. . On June 22, 2001, the Company contracted a new debt under a capital lease to purchase computer equipment up to a maximum of $625,000. . The Company received the total amount of the advance due from Danapharm Clinical Research Inc., joint venture, for an amount of $290,000 plus interest. 20 [LOGO OF ERNST & YOUNG] - -------------------------------------------------------------------------------- Supplementary information Anapharm Inc. Unaudited -- See Accountants' Report April 30, 2001 - -------------------------------------------------------------------------------- ACCOUNTANTS' REPORT - -------------------------------------------------------------------------------- To the shareholders of Anapharm Inc., Our audit of the non-consolidated financial statements of Anapharm Inc. for the year ended April 30, 2001 was performed to be able to express an opinion on the basic financial statements mentioned in our report to the shareholders as at June 22, 2001. Supplementary information is provided for additional analysis, but is not required for the basic non-consolidated financial statements. This information has not been subjected to the audit procedures applied to the basic nonconsolidated financial statements and consequently, we are not expressing an opinion as to the reliability of the presentation of the above-mentioned information. Ernst & Young LLP Quebec City, Canada June 22, 2001 Chartered Accountants 1 [LOGO OF ERNST & YOUNG] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. COST OF SERVICES RENDERED - ------------------------------------------------------------------------------- Year ended April 30 2001 2000 [11 months] $ $ - ------------------------------------------------------------------------------- Direct Salaries and benefits 8,083,053 4,880,350 Compensation for volunteers 3,403,701 1,943,654 Supplies 2,486,515 1,273,505 Media planning 1,231,507 534,355 Laboratory tests 653,474 684,576 Subcontracting 933,627 986,210 Physicians' fees 453,037 255,961 - ------------------------------------------------------------------------------- 17,244,914 10,558,611 - ------------------------------------------------------------------------------- General Amortization of fixed assets 1,320,254 469,049 Salaries and benefits 353,974 296,492 Maintenance and repairs 31,552 83,850 Conventions and training 248,266 122,547 Tools and accessories 37,956 28,552 Professional fees 233,734 95,404 Other 475,165 110,028 - ------------------------------------------------------------------------------- 2,700,901 1,205,922 - ------------------------------------------------------------------------------- Total direct and general costs 19,945,815 11,764,533 Tax credits (5,817,166) (2,935,175) - ------------------------------------------------------------------------------- Cost of services rendered 14,128,649 8,829,358 =============================================================================== 2 [LOGO OF ERNST & YOUNG] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Anapharm Inc. EXPENSES - -------------------------------------------------------------------------------- Year ended April 30
2001 2000 [11 months] $ $ - ---------------------------------------------------------------------------------- Sales and administration Selling expenses Salaries and benefits 648,684 324,011 Entertainment and travel 159,046 120,644 Memberships, subscriptions, conventions and conferences 296,373 162,806 Advertising 109,915 78,977 - ---------------------------------------------------------------------------------- 1,214,018 686,438 - ---------------------------------------------------------------------------------- Administrative expenses Salaries and benefits 1,734,856 1,163,871 Rent and other related expenses 1,187,598 618,975 Office and supplies 557,158 407,410 Amortization of fixed assets 788,566 342,501 Insurance, taxes, telephone 608,798 338,043 Doubtful accounts (recovered) -- (23,826) Recruiting and training 289,814 105,102 Equipment and miscellaneous rentals 208,980 107,922 Professional fees 373,681 135,504 - ---------------------------------------------------------------------------------- 5,749,451 3,195,502 Loss on disposal of fixed assets 51,344 125,308 Gain on foreign exchange (443,456) (217,426) - ---------------------------------------------------------------------------------- 5,357,339 3,103,384 - ---------------------------------------------------------------------------------- Total sales and administration 6,571,357 3,789,822 ================================================================================== Development of assay methods Salaries and benefits 1,446,962 912,320 Supplies 1,091,653 887,898 Amortization of fixed assets 376,903 224,951 Maintenance and repairs 182,251 138,810 Other 15,249 16,621 - ---------------------------------------------------------------------------------- 3,113,018 2,180,600 Tax credits (1,044,764) (698,093) - ---------------------------------------------------------------------------------- Total development of assay methods 2,068,254 1,482,507 ==================================================================================
3 [LOGO OF ERNST & YOUNG] - -------------------------------------------------------------------------------- Anapharm Inc. ------------ Balance Sheet DRAFT January 31, 2002 ------------
Balance sheet Provision for Bonuses to as Dynamics income taxes the management ------------- ------------------------------ Asset Current assets Cash and cash equivalents 2,792,555 2,792,555 Accounts receivable 4,199,153 4,199,153 Tax credits receivable 4,907,683 4,907,683 Research contracts in progress 2,951,028 2,951,028 Supplies inventory 733,608 733,808 Prepaid expenses 783,065 783,065 ---------- ---------- 16,367,092 16,367,092 Investments 270,400 270,400 Fixed assets 12,161,052 12,161,052 Deferred income taxes 2,706,171 (2,061,860) 644,311 ---------- ---------- 31,504,715 29,442,855 ========== ========== Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued liabilities 3,713,983 226,912 3,940,895 Invoicing exceeding cost 718,100 718,100 Current portion of long-term debt 1,845,767 1,845,767 ---------- ---------- 6,277,850 6,504,762 Long-term debt 5,715,109 5,715,109 Shareholders' Equity Share capital 2,638,037 2,638,037 Retained earnings 16,873,719 (2,061,860) (226,912) 14,584,947 ---------- ---------- 19,511,756 17,222,984 ---------- ---------- 31,504,715 29,442,855 ========== ==========
CUMULATIVE RESULTS ANAPHARM, INC. DRAFT RESULTS ------------------------------------------------------------------------------------- AS AT JANUARY 31, 2001 JANUARY 2002 JANUARY 2002 ------------------------------------------------------------------------------------- ACTUAL % BUDGET % Ecart (reel-budg) -------------------- ------------- ---------------- ----------- -------------------- Revenues Bioanalytical 13,267,213 100.0% 12,059,674 100.0% 1,197,639 Clinical 13,342,407 100.0% 14,434,714 100.0% -1,092,307 Scientific affairs 1,004,081 100.0% 850,543 100.0% 158,538 -------------------- ------------- ---------------- ----------- -------------------- TOTAL 27,613,701 100.0% 27,354,831 100.0% 258,870 -------------------- ------------- ---------------- ----------- -------------------- Direct production costs - Bioanalytical Production salaries 1,941,371 14.6% 1,918,725 16.9% 22,646 Social benefits - bioanalytical 286,840 2.0% 229,900 1.9% 36,940 Supplies allocated 854,542 6.4% 1,880,824 12.9% -696,082 Columns allocated 219,171 1.7% 219,171 Other expenses allocated 273 0.0% 273 Chemical products allocated 134,839 1.0% 134,839 Reference standard 69,845 0.5% 69,845 Waste allocated 0.0% Solvents allocated 75,662 0.6% 75,562 Equipment rental 105,233 0.8% 109,634 -3,401 Production fees 227 0.0% 227 Biological matrices allocated 87,997 0.7% 87,997 Subcontracting 0.0% 4,165 -4,166 Sample transportation 12,464 0.1% 12,464 Supplies not allocated -60,024 -0.6% -60,024 Columns not allocated -3,929 0.0% -3,939 Other expenses not allocated 1,200 0.0% 1,200 Gas not allocated 27,282 0.2% 27,282 Chemical products not allocated -104 0.0% -104 Solvents not allocated -4,734 0.0% -4,734 Waste 44,606 0.3% 44,806 Biological matrices not allocated 1,530 0.0% 1,530 Purchase discount -8,949 -0.1% -6,949 Transportation 22,134 0.2% 22,134 -------------------- ------------- ---------------- ----------- -------------------- 3,788,365 28.6% 3,813,049 31.6% -24,683 Tax credits - bioanalytical -1,089,900 -8.2% -1,251,492 -10.4% 161,582 -------------------- ------------- ---------------- ----------- -------------------- 2,698,485 20.3% 2,561,556 21.2% 136,909 General production expenses - Bioanalytical General expenses 20,653 0.2% 71,677 0.6% -51,024 Expenses - CA 198 0.0% 0.0% 198 Tools and accessories 1,391 0.0% 0.0% 1,391 Equipment maintenance and repair 220,552 1.7% 304,289 2.5% -83,367 Lab and maintenance 24,116 0.2% 45,875 0.4% -21,759 Professional fees 2,558 0.0% 2,558 Meals and entertainment 4,303 0.0% 2,538 0.0% 1,765 Travel expenses 4,882 0.0% 1,449 0.0% 3,433 Depreciation - lab equipment 202,656 1.5% 293,286 2.4% -90,619 Deprecitation - LCMS 554,321 4.2% 570,289 4.7% -15,968 Depreciation - lab furniture 9,005 0.1% 7,369 0.1% 1,637 -------------------- ------------- ---------------- ----------- -------------------- 1,044,745 7.9% 1,295,771 10.7% -252,026 -------------------- ------------- ---------------- ----------- --------------------
Page 1 detailed
CUMULATIVE RESULTS ANAPHARM, INC. DRAFT RESULTS ------------------------------------------------------------------------------------- AS AT JANUARY 31, 2001 JANUARY 2002 JANUARY 2002 ------------------------------------------------------------------------------------- ACTUAL % BUDGET % Ecart (reel-budg) -------------------- ------------- ---------------- ----------- -------------------- Others fees - bioanalytical Cellular and pagers 1,766 0.0% 1,013 0.0% 753 Office supplies and expenses 19,682 0.1% 0.0% 19,682 Software and updates 4,026 0.0% 0.0% 4,026 Congress 33,934 0.3% 17,500 0.1% 16,434 Training 19,212 0.1% 31,800 0.3% -12,388 Rent 64,080 0.6% 161,577 1.3% -67,498 Others fees relative to the rent 88,817 0.7% 0.0% 88,817 Professional fees (G7) 0.0% 0.0% Depreciation - leasehold improvements 87,306 0.7% 60,020 0.5% 27,286 ----------------- ------------ ----------------- ---------- -------------------- 338,822 2.6% 261,710 2.2% 77,112 ----------------- ------------ ----------------- ---------- -------------------- Production costs - Scientific affairs Salaries - Scient. aff. 840,599 83.7% 820,800 95.5% 19,799 Social benefits 96,422 9.6% 76,709 9.0% 19,713 Ethics committee 294,834 29.3% 208,668 24.8% 85,988 Preparation de CTA 7,965 0.8% 7,965 ----------------- ------------ ----------------- ---------- -------------------- 1,239,619 122.7% 1,106,174 130.1% 133,445 ----------------- ------------ ----------------- ---------- -------------------- General production costs - Solent aff. Meals and entertainment 3,992 0.4% 5,480 0.6% -1,468 Travel expenses 2,278,830 0.9% 11,260 1.3% -2,420 Lab site maintenance 7,511 0.7% 0.0% 7,311 Cellular and pagers 6,736 0.7% 6,210 0.7% 526 Report fees 77,743 7.7% 49,500 5.8% 28,243 Office supplies and expenses 11,023 1.1% 0.0% 11,023 Software and updates 17,848 1.8% 14,750 1.7% 3,098 Photocopy 26,882 2.7% 24,119 2.8% 2,762 Professional fees 1,243 0.1% 1,243 Assoc. & abonnements 2,232 0.2% 2,232 Congress 38,991 3.9% 45,000 5.3% -6,009 Training 12,290 1.2% 11,250 1.3% 1,040 Associations and subscription 2,300 0.3% -2,300 Rent 19,112 1.9% 42,432 5.0% -23,321 Others fees relative to the rent 16,953 1.7% 0.0% 16,953 ----------------- ------------ ----------------- ---------- -------------------- 251,385 25.0% 212,272 25.0% 39,113 ----------------- ------------ ----------------- ---------- -------------------- Direct production fees - Clinical Production salaries 2,962,950 22.2% 3,233,264 22.4% -270,314 Social benefits - Clinical 371,178 2.8% 373,739 2.6% -2,581 Supplies allocated 213,164 1.6% 374,757 2.6% -161,593 Other expenses allocated 31,802 0.2% 0.0% 31,602 Solvents 24 0.0% 0.0% 24 Waste allocated 20,049 0.2% 0.0% 20,049 Equipment rental 16,548 0.1% 0.0% 16,548 Production fees 54,737 0.5% 0.0% 64,737 Volunteer compensation 3,574,559 26.8% 2,852,043 19.8% 722,616 Volunteer meals 287,642 2.2% 172,422 1.2% 115,420 Supplies not allocated 56,749 0.4% 0.0% 56,479 Other expenses not allocated 1,781 0.0% 0.0% 1,781 Waste not allocated 2,245 0.0% 0.0% 2,245 Subcontracting 0.0% 0.0% Lab lists - on study 168,036 1.3% 0.0% 168,036 ----------------- ------------ ----------------- ---------- -------------------- 7,770,292 58.2% 7,006,225 48.5% 764,068 ----------------- ------------ ----------------- ---------- --------------------
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CUMULATIVE RESULTS ANAPHARM, INC. DRAFT RESULTS ------------------------------------------------------------------------------------- AS AT JANUARY 31, 2001 JANUARY 2002 JANUARY 2002 ------------------------------------------------------------------------------------- ACTUAL % BUDGET % Ecart (reel-budg) ------------------------------------------------------------------------------------- Direct costs recruiting + screening Salaries - recruiting - screening 725,985 5.4% 672,319 4.7% 53,687 Social benefits - recruit. - screening 89,349 0.7% 79,936 0.6% 9,413 Doctor fees 330,428 2.5% 339,937 2.4% -9,509 Volunteer advertising 623,338 4.7% 741,378 5.1% -118,039 Lab tests - screening 409,126 3.1% 642,667 4.5% -233,541 Sample transportation 78,916 0.8% 0.0% 78,916 Supplies - screening 9,813 0.1% 0.0% 9,813 ----------------- ------------ ----------------- ---------- -------------------- 2,266,957 17.0% 2,476,237 17.2% -209,280 ----------------- ------------ ----------------- ---------- -------------------- 10,037,249 75.2% 6,482,461 65.7% 554,788 Clinical research project - reclassified -154,417 -1.2% -81,825 -0.4% -92,592 Tax credits - clinical -2,846,900 -21.3% -3,198,599 -22.2% 351,699 ----------------- ------------ ----------------- ---------- -------------------- 7,035,832 52.7% 6,222,036 43.1% 813,896 ----------------- ------------ ----------------- ---------- -------------------- General production expenses - Clinical General expenses 25,147 0.2% 181,500 1.3% -156,833 Fees CA 0.0% 0.0% Tools and accessories 10,262 0.1% 0.0% 10,262 Equipment maintenance and repair 12,685 0.1% 15,000 0.1% -2,315 Professional Fees 143 0.0% 30,000 0.2% -29,857 Clinical sites maintenance - clinical areas 49,895 0.4% 0.0% 49,895 Clinical sites maintenance - screening 4,001 0.0% 0.0% 4,001 Meals and entertainment - clinical 26,309 0.2% 18,030 0.1% 10,279 Meals and entertainment - screening 4,866 0.0% 0.0% 4,866 Travel expenses - clinical 75,233 0.6% 87,230 0.6% -11,997 Travel expenses - screening 7,296 0.1% 0.0% 7,296 CSGR software license 13,810 0.1% 28,125 0.2% -14,315 Web site fees 14,625 0.1% 13,500 0.1% 1,125 Depreciation - clinical equipment 80,625 0.6% 90,975 0.6% -10,350 Depreciation - clinical furniture 42,364 0.3% 43,555 0.3% -1,191 ----------------- ------------ ----------------- ---------- -------------------- 369,262 2.6% 907,915 130.1% -138,853 ----------------- ------------ ----------------- ---------- -------------------- Other fees - clinical Rent 267,313 2.2% 582,089 4.0% -294,776 Others fees relative to the rent 260,070 1.9% 0.0% 260,070 Cellular and pagers 15,480 0.1% 11,678 0.1% 3,803 Office supplies and expenses 23,717 0.2% 0.0% 23,717 Software and updates 280 0.0% 0.2% 260 Associations and subscriptions 2,762 0.0% 0.0% 2,762 Congress 19,374 0.1% 9,188 0.1% 10,187 Training 18,282 0.1% 37,500 0.3% -19,218 Training 2,655 0.0% 0.0% 2,655 Depreciation - leasehold improvements 236,937 1.8% 165,317 1.1% 71,619 ----------------- ------------ ----------------- ---------- -------------------- 866,860 6.5% 805,771 5.8% 61,079 ----------------- ------------ ----------------- ---------- -------------------- COST OF SERVICES RENDERED 13,845,079 50.1% 12,974,206 47.4% 870,874 ----------------- ------------ ----------------- ---------- -------------------- GROSS PROFIT: 13,768,622 48.9% 14,380,625 52.6% -612,003
Page 3 Detailed
CUMULATIVE RESULTS ANAPHARM, INC. DRAFT RESULTS ------------------------------- ---------------------------------------------------- AS AT JANUARY 31, 2001 JANUARY 2002 JANUARY 2002 ---------------------------------- ------------------------------------------------- ACTUAL % BUDGET % Ecart (reel-budg) -------------------- ------------- ---------------- ----------- -------------------- Selling expenses Salaries - sales 546,799 2.0% 563,970 2.1% -17,172 Social benefits - sales 50,098 0.2% 51,883 0.2% -1,785 Advertising and other selling expenses 148,399 0.6% 126,000 0.5% 22,399 Visits to clients facilities 25,057 0.1% 220,740 0.8% -195,683 Clients visits at Anapharm 10,407 0.0% 46,895 0.2% -36,288 Rent 9,580 0.0% 22,017 0.1% -12,457 Others fees relative to the rent 8,547 0.0% 0.0% 8,547 Cellular and pagers 12,693 0.0% 19,913 0.1% -7,219 Office supplies and expenses 7,304 0.0% 0.0% 7,304 Software and updates 212 0.0% 0.0% 212 Professional fees 2,044 0.0% 0.0% 2,044 Congress 204,721 0.7% 157,065 0.6% 47,856 Training 3,205 0.0% 9,000 0.0% -5,795 Associations and subscription 15,048 0.1% 23,744 0.1% -8,696 Web site fees 14,625 0.1% 13,500 0.0% 1,125 Music and entertainment 20,003 0.1% 0.0% 20,003 Travel expenses 44,637 0.2% 0.0% 44,637 ----------------- ------------ ----------------- ---------- -------------------- 1,123,358 4.1% 1,254,528 4.6% -131,170 ----------------- ------------ ----------------- ---------- -------------------- Quality Insurance Salaries - QA 640,120 2.3% 643,107 2.4% -2,987 Social benefits - QA 85,806 0.3% 72,264 0.3% 13,542 Rent 29,738 0.1% 60,381 0.2% -30,613 Others fees relative to the rent 11,628 0.0% 0.0% 11,628 Associations and subscription 0.0% 900 0.0% -900 Meals and entertainment 897 0.0% 3,245 0.0% -2,348 Travel expenses 11,848 0.0% 11,589 0.0% 259 Office supplies and expenses 15,045 0.1% 5,738 0.0% 9,308 Professional fees 601 0.0% 0.0% 601 Cellular and pagers 94 0.0% 0.0% 94 Congress 3,407 0.0% 7,000 0.0% -3,593 Training 5,941 0.0% 17,900 0.1% -10,959 ----------------- ------------ ----------------- ---------- -------------------- 806,124 2.9% 822,092 3.0% -16,968 ----------------- ------------ ----------------- ---------- -------------------- Information Technology Salaries - IT 446,994 1.6% 696,204 2.5% -249,210 Social benefits - IT 54,085 0.2% 76,076 0.3% -21,991 Rent 12,718 0.0% 41,784 0.2% -29,066 Others fees relative to the rent 10,682 0.0% 0.0% 10,682 Site maintenance and repairs 9,419 0.0% 0.0% 9,419 Phones - basic expenses 98,255 0.4% 78,185 0.3% 20,090 Cellular and pagers 2,788 0.0% 3,645 0.0% -857 Office supplies and expenses 4,625 0.0% 0.0% 4,625 Information technology supplies 30,047 0.1% 58,178 0.2% -28,131 Software and updates 22,766 0.1% 26,250 0.1% -3,484 Professional fees 4,947 0.0% 9,000 0.0% -4,063 Associations and subscription 1,587 0.0% 0.0% 1,587 Meals and entertainment 1,636 0.0% 3,375 0.0% -1,739 Travel expenses 3,339 0.0% 12,300 0.0% -8,961 Congress 5,143 0.0% 11,880 0.0% -5,707 Training 8,463 0.0% 14,250 0.1% -5,797 ----------------- ------------ ----------------- ---------- -------------------- 717,487 2.6% 1,031,778 3.8% -313,591 ----------------- ------------ ----------------- ---------- --------------------
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CUMULATIVE RESULTS ANAPHARM, INC. DRAFT RESULTS ------------------------------- ---------------------------------------------------- AS AT JANUARY 31, 2001 JANUARY 2002 JANUARY 2002 ---------------------------------- ------------------------------------------------- ACTUAL % BUDGET % Ecart (reel-budg) -------------------- ------------- ---------------- ----------- -------------------- Human Resources Salaries - HR 169,032 0.8% 173,830 0.6% -2,798 Social benefits - HR 20,110 0.1% 20,287 0.1% -177 Rent 8,392 0.0% 25,239 0.1% -16,846 Others fees relative to the rent 7,044 0.0% 0.0% 7,044 Site maintenance and repairs 475 0.0% 0.0% 475 Cellular and pagers 668 0.0% 315 0.0% 353 Meals and entertainment 2,915 0.0% 4,215 0.0% -1,300 Travel expenses 4,045 0.0% 14,367 0.1% -10,321 Associations and subscriptions 447 0.0% 960 -513 Office supplies and expenses 4,732 0.0% 0.0% 4,732 Congress 10,658 0.0% 0.0% 10,658 Training 4,816 0.0% 7,500 0.0% -2,684 Recruiting fees 138,241 0.5% 73,125 0.3% 65,116 Professional fees 24,781 0.1% 24,761 Web site fees 14,625 0.1% 13,500 0.0% 1,125 Others fees - HR 2,719 0.0% 0.0% 2,719 ----------------- ------------ ----------------- ---------- -------------------- 413,701 1.5% 331,338 1.2% -62,363 ----------------- ------------ ----------------- ---------- -------------------- Administrative expenses Salaries - admin. 1,012,686 3.7% 925,041 3.4% 67,645 Social benefits - admin. 85,598 0.3% 83,683 0.3% 1,905 Subsidies on admin. salaries 0.0% 0.0% Equipment rental 1,859 0.0% 2,774 0.0% 915 Automobile expenses 32,131 0.1% 26,278 0.1% 5,855 Expenses G7 projects 350,426 1.3% 231,250 0.8% 119,176 Rent 64,895 0.3% 142,377 0.5% -57,681 Other fees relative to the rent 86,834 0.3% 0.0% 86,834 Site maintenance and repair 30,814 0.1% 0.0% 30,814 Electricity and heating 344 0.0% 0.0% 344 Business taxes and property taxes 117 0.0% 0.0% 117 Insurance 275,816 1.0% 183,833 0.7% 91,983 Telephone 38,000 0.1% 101,986 0.4% -63,986 Cellular and pagers 3,628 0.0% 3,648 0.0% -220 Office supplies and expenses 96,715 0.4% 123,000 0.4% -26,285 Information technology 0.0% 0.0% Software and updates 1,295 0.0% 18,750 0.1% -17,455 Photocopy 57,544 0.2% 62,081 0.1% -4,537 Stamps and postal expenses 49,221 0.2% 59,952 0.2% -10,731 Other taxes and permits 90,000 0.3% 90,000 0.3% Professional fees 176,069 0.8% 133,500 0.5% 42,569 Association and subscription 4,213 0.0% 0.0% 4,213 Creances douteuses 0.0% 0.0% Doubtful accounts 11,641 0.0% 12,000 0.0% -359 Meals and entertainment 15,670 0.1% 29,250 0.1% -13,580 Travel expenses 9,533 0.0% 0.0% 9,533 Training 16,198 0.1% 6,488 0.0% 9,711 Employee social activities 53,940 0.2% 42,500 0.2% 11,440 Donations and sponsoring 20,153 0.1% 11,625 0.0% 8,528 Gain or Loss on fixed assets disposition 0.0% 0.2% Web site fees 14,626 0.1% 13,500 0.0% 1,126 Miscellaneous 4,274 0.0% 0.0% 4,274 Depreciation - office machinery 80,842 0.3% 79,354 0.3% 1,488 Depreciation - IT equipment 348,765 1.3% 406,292 1.5% -58,528 Depreciation - software 212,618 0.8% 318,752 1.2% -106,135 Depreciation - office furniture 27,023 0.1% 26,801 0.1% -1,779 Depreciation - leasehold improvements 93,266 0.3% 47,332 0.2% 45,825 ----------------- ------------ ----------------- ---------- -------------------- 3,387,544 12.3% 3,186,256 11.5% 201,290 ----------------- ------------ ----------------- ---------- --------------------
Page 5 Detailed
CUMULATIVE RESULTS ANAPHARM, INC. DRAFT RESULTS ------------------------------- ---------------------------------------------------- AS AT JANUARY 31, 2001 JANUARY 2002 JANUARY 2002 ---------------------------------- ------------------------------------------------- ACTUAL % BUDGET % Ecart (reel-budg) -------------------- ------------- ---------------- ----------- -------------------- Development of assay methods Production salaries 950,568 3.4% 1,026,914 3.8% -76,347 Social benefits 123,242 0.4% 104,277 0.4% 18,965 Supplies allocated 238,047 0.8% 1,197,428 4.4% -969,391 Columns allocated 92,886 0.3% 0.0% 92,886 Other expenses allocated 0.0% 0.0% Gas allocated 511 0.0% 0.0% 511 Chemical products allocated 104,225 0.4% 0.0% 104,225 Reference standard 163,935 0.6% 0.0% 163,635 Solvents allocated 12,250 0.0% 0.0% 12,250 Waste allocated 1,871 0.0% 0.0% 1,871 Production fees 12,955 0.2% 45,000 0.2% -32,045 Biological matrices allocated 60,587 0.5% 0.0% 60,587 Supplies not allocated 126,953 0.0% 0.0% 126,953 Columns not allocated 1,316 0.0% 0.0% 1,316 Other expenses not allocated 0.1% 0.0% Gas not allocated 28,175 0.1% 0.0% 28,175 Chemical products not allocated 758 0.0% 0.0% 758 Solvents not allocated 19,391 0.1% 0.0% 19,391 Waste not allocated 22,534 0.1% 0.0% 22,534 Maintenance and repair 110,325 0.4% 117,230 0.4% -6,904 Biological matrices not allocated 900 0.0% 0.0% 900 Documentation - DAM 13,244 0.0% 11,250 0.0% 1,994 Depreciation - LCMS 369,822 1.4% 344,144 1.3% 45,678 Amort. Deferred tax credits -37,530 -0.1% -37,530 -0.1% ----------------- ------------ ----------------- ---------- -------------------- 2,436,966 8.8% 2,808,713 10.3% -371,757 Clinical research project 154,717 0.8% 61,825 0.2% 92,582 Tax credits - DAM -733,600 -2.7% -708,025 -2.6% 25,575 ----------------- ------------ ----------------- ---------- -------------------- 1,867,733 6.7% 2,162,514 7.9% -304,741 ----------------- ------------ ----------------- ---------- -------------------- Financial expenses Interest on long-term debt 380,290 1.4% 477,552 1.7% -97,262 Interest on credit margin 3,227 0.0% 2,700 0.0% 527 Ordinary bank charges 6,246 0.0% 6,300 0.0% 126 Other banking charges 15,876 0.1% 0.0% 15,876 ----------------- ------------ ----------------- ---------- -------------------- 405,819 1.5% 486,552 1.8% -80,733 ----------------- ------------ ----------------- ---------- -------------------- Other revenue and expenses Loss (gain) on foreign exchange -128,273 -0.5% 0.0% -128,273 Interest expense (income) -101,732 0.4% -79,764 -0.3% -21,968 Other income 0.0% 0.0% ----------------- ------------ ----------------- ---------- -------------------- -230,005 0.8% -79,764 -0.3% -150,241 ----------------- ------------ ----------------- ---------- -------------------- Total expenses 8,481,802 31% 8,194,592 33% -712,791 ----------------- ------------ ----------------- ---------- -------------------- EARNINGS INCL. BONUS $5,286,820 19.2% $5,186,033 19.1% $ 100,788 ----------------- ------------ ----------------- ---------- -------------------- DEPRECIATION AND AMORTIZATION $2,329,018 $2,419,956 ----------------- ----------------- SALARIES $10,010,193 $11,640,937 ----------------- -----------------
Page 6 Detailed [ILLEGIBLE TABLE] [ILLEGIBLE TABLE] SCHEDULE 4.13 UNDISCLOSED LIABILITIES POTENTIAL CLAIMS Volunteer Diagnosed Pregnant Following her Participation to a Clinical Study In 1998 The file has been given to the Company's insurers since the Company has to conduct a follow-up on the child until he reaches the age of 6; The highly risked period is now passed and no effect has occurred during said period; See document attached hereto. Undertaking With Regards to Senior Managers Training Session The Company has taken action to provide its senior managers with a financial training session which will be given by the Hautes Etudes Commerciales (HEC) in Quebec, on March 28 and 29, 2002; The cost of such training session is around $ 12,000. There is a possibility to cancel the session, subject however to a non significant penalty. Communication Agreement Pertaining to Company's Take-Over and Other Matters Two mandates have been awarded to two different communication firms. The Company estimates the value of the first mandate at approximately $ 15,000 and the other one at $ 7,000. Volume Discount The discount included in the financial statements for each study given by clients which have been granted with volume discount, has been determined by using a rate corresponding to the most probable business volume. If, however, the business volume of a client in particular would become significantly higher than what was forecasted, an adjustment could then be necessary. Volunteer's Claim for Broken Rib There is one pending claim for an amount of $ 3,000 CDN that has been handled to the Company's insurance carrier. This claim as been filed by one of the Company's volunteers who, as it was thought initially, had a broken hip. However, it appears from the volunteer's claim (a copy of which is attached hereto), that she has broken her rib while being the subject of a study conducted by the Company. The claim is being addressed and should evolve to a private settlement in the weeks to come. [LETTERHEAD OF ASSOCIES] Ste-Fay, October 17th, 2001 ANAPHARM INC. 2050, boul Rene-Levesque Quest Sainte-Foy, (Quebec) Canada G1V-2KB Attn: Guylaine Perron, c.a., v.p. finances Object: Loss historic Insurance portfolio 1996-2001-10-17 - -------------------------------------------------------------------------------- Guylaine, As discussed you will find herewith loss historic in regard to your insurance portfolio from 1996-2001; please note that we do insure your corporation since may 31st, 1996. Don't hesitate to call me if you need any other information. Regards, /s/ Raynald Rochette Raynald Rochette [STAMPED 13 NOV. 2001] Anapharm Inc. Insurance portfolio Loss historic May 31st, 1996-2001-October 17th, 2001 1. Property coverages . No claim 2. Comprehensive general liability coverages . August 15th, 1999 T/P bodily injury 3 450,00 $ (T/P hit glasses and (paid) suffered bodily injured) . January 10th, 2000 Ice falls on T/P automobile 1 000,00 $ (paid) . February 4th, 2000 Ice falls on T/P automobile 1 273,67 $ (paid) 3. Professional liability (incl. Clinical liability) . March 2000 T/P (voluntary) suffered 7 000,00$ Bodily injury (skin problem while participating in a clinical study. . September 16th, 1998 Voluntary diagnosticated no payment pregnant after participating to a clincal study. Should be closed with no payment. Still open just in case of future problems.
4. Directors & officers liability . No claim -2- SCHEDULE 4.16 NON-ARM'S LENGTH TRANSACTIONS [Summary of French Written Documents] LOANS TO EMPLOYEES VENDOR FOR PURCHASE OF SHARES: See document attached hereto. The attached document refers to a chart stating, per employee to whom Anapharm, Inc. has granted a loan for the purchase of shares, the amount of money that will be deducted from their pay check as reimbursement of said loans. SCHEDULE 4.16 NON-ARM'S LENGTH TRANSACTIONS KEY EMPLOYEES EMPLOYMENT CONTRACTS . MARC LEBEL . Title : President and Chief Executive Officer; . Service dates: indeterminate term starting May 1, 2001; . Base Salary: $ 231,000; . Bonus: 35% to 40% of base salary subject to bonus plan and adjustment; . Benefits: Car provided by Company; . Vacation: 20 working days. . [*] . Title : Chief Operating Officer; . Service dates: indeterminate term starting May 1, 2001; . Base Salary: $ [*]; . Bonus: [*]; . Benefits: [*] ; . Vacation: [*] working days. . [*] . Title : Senior Director, Finances; . Service dates: indeterminate term starting May 1, 2001; . Base Salary: $ [*] ; . Bonus: [*] ; . Benefits: [*] ; . Vacation: [*] working days. [*] Confidential portions omitted and filed separately with the Commission. - 2 - . [*] . Title : Vice-President - Bio-analytic; . Service dates: indeterminate term starting May 1, 2001; . Base Salary: $ [*] ; . Bonus: [*]; . Vacation: [*] working days. . [*] . Title : Vice-President - Clinical operations; . Service dates: indeterminate term starting May 1, 2001; . Base Salary: $ [*] ; . Bonus: [*] ; . Benefits: [*] ; . Vacation: [*] working days. . [*] . Title : Senior Director; . Service dates: indeterminate term starting May 1, 2001; . Base Salary: $ [*] ; . Bonus: - [*] ; or [*] ; . Vacation: [*] working days. - - [*] . Title : Senior Director, Scientific and Regulatory Affairs; . Service dates: indeterminate term starting May 1, 2001; . Base Salary: $[*] ; . Bonus: - [*] ; and . Vacation: [*] working days. - 3 - LOANS TO EMPLOYEES VENDOR FOR PURCHASE OF SHARES: See document attached hereto. [*] Confidential portions omitted and filed separately with the Commission. -3- SCHEDULE 4.23 GOVERNMENT GRANTS [Summary of French Written Documents] The attached document identified in French as Fonds de diversification de l' 'economie de la capital - convention d'aide financiere is a financial assistance agreement entered into on November 2001 between Le Ministre delegue responsable de la region de la capitale nationale [freely translated as "The Responsible Minister of the National Capital Region] (the "Minister") and Anapharm, Inc., whereby the Minister has granted to Anapharm, Inc. a financial assistance for a maximum amount of Can.$180,000.00 allowing Anapharm, Inc. to achieve its electronic conformity project needed to meet the requirements of the FDA, in conformity of its business plan table dated April 18, 2001 and the modifications that have been brought to it since. The document identified as "Summary of a contract between Anapharm and Investissement Quebec for a no-interest refundable loan of $700 K" summarizes the document which is identified by the logo of "Investissement-Quebec" in the upper left part of the 9 page document. SCHEDULE 4.23 GOVERNMENT GRANTS See document attached hereto. FONDS DE DIVERSIFICATION DE LE'ECONOMIE DE LA CAPITALE CONVENTION D'AIDE FINANCIERE ENTRE LE MINISTRE DELEGUE RESPONSIBLE DE LA REGION DE LA CAPITALE NATIONALE aglessant par. M. Michel Lambert, secretaire geneal avocle au Bureau de la Capitale Nationale, Edifice 1-1, Geantic Alle Est, bureau 4,02, Quebec (Quebec) Q1R 4YR, ci-apres apelle a le MINISTRE ET ANAPHARM, INC. personne morale l'egalement constitude, ayant son siee social au 2050, boulevard Rene-Leveque Ouest, Quebec (Quebec), GIV 2KR, larguqelle ait aux presentes et est dument represalen par madame Guylalne Perrori, directrice des financiers, aux terms de la resolution du consell d'administration on date du 12 juin copie est annexie a la presento convention ci-apres appelle a l'ORGANISME, ATTENDU QUE le gouvernement a prevu un Fonde de diversification de l'econoic de la capital et qu'il en a confile la gestiue au MINISTRE: ATTENDU QUE le MINISTRE peut apporter un soutien Unaneler pour parmettre in realization de projets visant a developer et promouvoit la Capitale Nationale; ATTENDU QUE le project de l'organisme a ete recommende pat le comite de geauon du Monde; ATTENDU QUE le MINISTRE a designe la secretaite genteel associe au Bureau de la Capitale Nationale pour asurer la mise en oeuvre de la presente convention; EN CONSEQUENCE, les parties convenient de ce qui sun: 1. Objet de la convention Le MINISTRE recorde a l'ORGANISME aux conditions debeterminees dans la presente convention une side financiere maximale de 180 000 $ afin de realiser le projet de conformite electronique pour recoutrer les exigencies de la FDA, conformement aux objectile de son plan d'affaires depose en date de 18 avril 2001 et des modifications qui uni ete apportes. Le plan d'affaires de l'ORGANISME fait partie de la presente convention et cat joint en annexe. 2 2. Declaration de organisme L'ORGANISME declare que l'aide financiere qui lui est accordee or perse sur aucume depense ayent fait l'object d'un credit d'impot ou d'une aide financiere on verni de out autre programme gouvernmental (federal et provincial) n'syant pas ete declare a soo plan d'affaires. 3. Obligations de l'organisme L'ORGANISME engage a: a) realiser le projet conformement a la presente convention: b) faurrie par ectit, a chque annee financiere, un rapport sur l'utlisation de la tranche de subversion contonaut les informations et donnees necessaries su MINISTRE pour juger de l'evaluation du project relativement aux objectifs et sur delais prevus a la presente convention; c) fouerle au MINISTRE par eclat, au termes tu demier exercise financier vis par la preserve convention, un support financier a la thec ou le projet cat suppose ete termine sule le 31 mars 2003; d) permetre au MINISTRE ou a vente suttee pesonne qu'il autotise a examinet le registres, dessierer er comptes de l'organisme et de preptlee copie de tout document juge pleasante; e) respecter les reglet usuefles de gestion et faise en some que les administrateur ne en placent pas dans une situation de confit d'intende: f) participet a le demande du represendiant du MINISTRE, a l'evaluation du projet; g) n'assurer con tout temps que l'aide financiere n'est par utilisee pour le financement du service de la dette, pour le rembeursement d'aptitude un pour financer un projet deja realize; h) organiser a visito alu projet a la dernude du MINISTRE. 4. Aide financiere du MINISTRE Le MINISTRE verse a l'ORGAMISME une side financiere maximale de 180 000 $ selon les modalities qui suivene; a) un premier versement au ruontant de 90 000 $ cat efferme dans las 30 jours suivant la signature de la convenon b) le deuxieme versement au montant de 90 000 $ est effective suite a une demande faire au MINISTRE et est verse au plus tard le 31 mars 2003 et au plus tot le 1 avril 2002, conditionmellement a la realization du projet tel que confirme par un rapport cmanant d'un verttisteut externe; c) aux remands due project, l'ORGANISME testmet au rapport financiere en conformite avec l'article 8 tlc la presente convention. 5. Le MINISTRE se reserve le droite de reduire le montant de l'aide financiere: - si le montant des depenses admissibles du projet est inferieur a celui qui elait preru orginalement - ai l'addition des subventions federale et provincale depose le pourcontage au plan de financement de l'ORGAMISME; 3 - ai l'orgamisme obtient une source de financement publique additionelle qui modife le plan de financement Dans l'un ou l'autre de ces est, le reduetion de l'aide financiere est proportionelle, au moulant de reduction der dispenses ou au montant de financement supplementaire. 6. Plan de depenaca prosente par l'ORGANISME A. Codes du projet (despensee) ------------------------------- Montants $ % ------------------------------------------------------------------------- Conformite electronique 5 400 000 86.7 ------------------------------------------------------------------------- Optimisation resources humaines 276 000 4.4 ------------------------------------------------------------------------- Reduction de le duree des etudes 326 000 6.2 ------------------------------------------------------------------------- Optimisation de la qualite 91 000 1.4 ------------------------------------------------------------------------- Etude falsebilite 100 000 1.6 ------------------------------------------------------------------------- Controle des ogOts 42 000 0.7 ------------------------------------------------------------------------- Autres 67 000 1.1 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total 6 300 000 100.00 ------------------------------------------------------------------------- 7. Plan de financement de l'Organisme B. Sources de financement -------------------------- Montants $ % ------------------------------------------------------------------------- Fonds de diversification 180 000 2.8 ------------------------------------------------------------------------- Investissement Quebec 50 000 0.9 ------------------------------------------------------------------------- Anepharm 2 070 000 31.7 ------------------------------------------------------------------------- Pret de la BDC 2 000 000 31.7 ------------------------------------------------------------------------- Pret de la Banque de Montreal 2 000 000 31.7 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total 6 300 000 100.0 ------------------------------------------------------------------------- 8. Rapport financier 8.1 Conformement au Reglement sur le rapport financier des institutions subventionetees public en vertu du Cl186215 du le novembre 1994, l'ORGANISME qui recoit une subvention, par tranches de rountant, sur plusieurs exercises financiere doit peuluite aux termes de eheuren de ses exercicca financiers, un rapport de l'utlisation de la tranche de subvention et, aux termes du dernier exercise concerne, un rapport financier. a) sous reserve des normes d'attribution prevues a la programmation budgetaire, une institution qui recoit une ou des subventions, don't le montant ttal car inferieure a 250 000 $ est dispensee de produire et de renemettre un rapport financiere; b) une institution qui recoit une ou des subventiens, done le montant total est de 250 000 $ et plus, et qui produit un rapport en vertu de dispositions legals surres que celles de la Loi su l'Administration financiere (L.R.Q. chap. A-6) ou d'une (oi fiscale ou en vertu de dispositions reglementaires ne d'une decision du gouvernement on du Conseil du Tresoi, cet dispensee de produite un rapport financier. 8.2 Conformement au Regalement su les sulventiosn a des uns de construction (R.R.Q., CA-6 x 29) don't l'ORGANISME reconsit avoid rects cople, l'uccrai de la sulvention est assiletti a la condition que tout contrat pour l'execution des travaux de constructin ne soit adjudge qu'apres demands ne acumlesons suivant les regles prevu au did reglement. 4 9. Contrat de surly a) L'ORGAMISME accepte le formation d'un comite de suivi, lequel a pour mantlar de veiller a l'application de le presente convention d'aide financee; b) le comite est compse de deux representants the MINISTRE et de deux representants de l'ORGANISME. Un representant du MINISTRE en assumcia la presidence; c) le comite de suivi est couroque sur demande du president. 10. Defaut L'ORGANISME est en default losequ'il: a) est un liquidation nu en vole de dissoluriou sans l'accord du MINISTRE; b) demenagie a l'exterieure du Quebec une partic substantielle de sen actifs sans avoir obtenu l'autorisation prelable du MINISTRE c) a fair une omission un une Coeur dans une declaration, une faurec declatation, une fraude un une falsification de document; d) a quelque epoque que or soit avant le dessier versement, cai partie a un litiec ou a des procedures devant une cour da justice ou un tribunal ou une agence gouvermentale sans l'avoid revelo au MINISTRE; e) fait cestion de set blens, est sous le coup d'une ordonnance dr sequestise en verru de la Loi sur la faillite et l'insolvabilite (L.R.C. 1985) c.B-3) fait une proposition a ses de la Loi facilitant les transactions et arrangements entre les compagules et leurs crenciers (L.R.C. 1985) c. C-35) ou s'il est sous le coup d'une ordenance de liquidation en veri de la Loi sur is liquidation des companies (L.R.Q. c. L-4) ou toute suite la au oeme effect, ou s'il cat insolvable ou sur le point de deventir insolvable ou s'il me maintient pas son existence legale ou si sa situation financiere, de l'avis du MINISTRE, se detentione de facon a mtre est peril es survle; f) s'il fait defaut si l'une l'entre des conditions de cette convention. 11. Sil y a un ou de default vise a l'article 10 ou si selon a MINISTRE, il y aura ensemblement un de cer cas de default, le MINISTRE peut se prevalent, sparament ou surpulativement, de moyens suivants; a) reviser le niveau de l'aitic financiere et en avise l'ORGANISME; b) suspendre(s) versement(s) de l'aide financiere; c) exiger, au cours det trole anees qui suivent la dernier versement, le rerobousement emulatif total ou partiel de l'aide financiere ayace ete veree; d) resilier l'aide financiere pour le(s) versement(s) non effectue(s); e) annulet l'aide financiere en entire et tour versement iccu devenant aloes exigible et remboursable immediatement et en entire f) estiger toures garanties or srfecta que le MINISTRE peut juger approptiees afin de garantir le remboursement des versements effortica ou a etre effectues et l'ORGANISME a'engage a executier, a aga frais, dans les cinq (5) jours de la demande du MINISTRE tous les documents a cet effet. Le MINISTRE avise l'ORGANISME, par eceit, qu'il se raivaut, separement ou eumulavement, des moyens visca au present article er cet avis prendra effect a compter de la date de sa reception par l'ORGANISME dans les can de default vises au paragraphs a), b), c), d), e), de l'article 10, ainsi que pour les can de fausse l'declaration, fraude ou falsification de doeument prevus au paragraph 5 c) de l'article 10. Cans tout autre can de defaut lodique dans l'avis l'ORGANISME clix (10) jours poir y remedier. 12. Le montant tout remboursement partiel ou rosal de l'aide financiere eclame par le MINISTRE, conformement a l'article 10 de la presente convention, portens interet annullement, au taux d'internet sur les creances de l'etat. 13. Verification Les transactions financiers desoulant de l'execution de ce protocule sont sujerres a la verification par le Controleur des finances qui, a cette fin a tous les pouvoure prevus par a Loi sur les commissions de'enquete (L.R.Q. cc. 37) et, plus particulerement, le poucoir de prender connaissance et de faise un examon tous les registres et documents qu'il juge utiles a ocite verification. 14. Visibilite L'ORGANISME s'engage il: a) invitex le MINISTRE ou las representants designes a la conference de presac organisee pour l'announce on project et de la contribution financiere ou gouvernment; b) mentionner le Bureau de la Capitale Nationale dans les activites de promotion, de publicete et de relations publiques locaqu'il sent question cles projet et inclure plus specifiquement sur la page d'accuel de aun site Internet or dans le communique de prevse annoncant le project le libelle suivant: Ce project est resultat passible gruee a trans constriluquer de Bureau de la Capitale Nationale par l'entramire due canals de diversification al l'fonniere de ineligible; c) invitees les representants du MINISTRE lots d'activites publiques ac mitachant au projet au mentionner in collarboration du Bureau de la Capitale Nationale los de ces evenements; d) inclure le logo du Bureau de la Capitale Nationale et fourole un espace publicishire dans toul produit promotionnel ou totute publication, en particulier sur la page d'accuell du site Intenet ou un lien hypertexte conduite a alle Bureau de la Capitale Nationale. Le logo associte a la contribution comprend a signature de Bureau de la Capitale Nationale et est accompagne du symbole Quebec desposes; e) appliquez le protequele du GOVERNEMENT DU QUEBEC dans toutes le ceremonials publiques a oet effect, faire approver le scenario de cleremonic publique et de conference de precise par les representants du MINISTRE; f) Faire approver par les representants du MINISTRE un plan de visibilite detaille comprenant le presence du Bureau de la Capitale Nationale dans chacun des vehicules de communication du project on the l'evenement; g) Faite publier, sur demande, un announce faisant is promotion du project dans un media ecrit de la region. Les Depensee retenues pour fina de visibilite font partie des deposes submissibles; h) Installer, dans le cas de project de construction, d'aggrandisement, the renovation ou autres tesvaus do atenture, un panneau de chantier annoueant le project et l'implication financiere du Bureau de Capitale Nationale. 15. Le MINISTRE designee monsieur Michel Lambert, Dumont surouse, comme son represeniant pour les fins de l'execution des presentes, et iput document ou stvis egixge en vertu de la presente convention doit lui etro renus ou transmit a l'adrese suivante: Bureau de la Capitale Nationale Edifice H 875 Grande Allee Jial, bureau 4.02 Quebec (Quebec) G1R4Y8 A l'attention de Michel Lambert, secretaite general associe. 6 L'ORGANISME designee madame Guylaine Perron, comme as representante pour les fins de l'execution des presentes a tont document our avis exige en vertu de la presente convention pour lul elev remis ou transmite a l'adrosec suivante: Anapharm, Inc. 2050 boulevard Rene-Levecque Ouest Quebec (Quebec) G1V 2Kr A l'attention de Guylane Perron c.a., directrice des finances 16. L'ORGANISME auottise le MINISTRE a terramerre, sur une base confidentielle, tout document on information, relatif a la convention sur ministreres ou organisms gouvermentaux qui pourralent entc implica dans l'administration de l'oetrui de Paide financiere. 17. Les parties recountaissent et a'eugagent a ce que le prevente entente poit consideree, comroe ayant ete executee dans lo district judicisiee de Quebec. Tout litige survenant en rapport avec le present protocole sces de la competence du tribunal du district judiciaire de Quebec. 18. Le presente convention et l'aitle financiere qui y est prevue ne peuvent etre cedees en tout qu un partie a moins d'obtenier au prelable l'autorisation ecitse du MINISTRE. EN POI DE QUOI LES PARTIES, APRES AVOID PRIS CONNAISSANCE DE LA PRESENTE CONVENTION ET L'AVOIR ACCEPTEE, ONT DUMENT SIGNE IN DOUBLE EXEMPLAIRE COMME SUIT: L'ORGANISME /s/ Guylaine Petron 28 Nov 2001 - --------------------------------- ------------------------------- Par: Date Guylaine Petron, C.A. /s/ Ste. Fay ------------------------------- Lieu LE MINISTRE /s/ Michel Lambert 2001 - 11 - 15 - ---------------------------------- ------------------------------- Par: Date Michel Lambert, secretaire general associe /s/ Quebec ------------------------------- Lieu Summary of a contact between ANAPHARM and INVESTISSEMENT QUEBEC for a no-interest refundable loan of $700K This loan is part of a program entitled "Private Investment and Job Creation Promotion Fund (PAIRE)". The granting of this loan to Anapharm is directly connected to the opening of our Montreal site. The establishment of the amount located is related to the number of jobs created and the related investment size in fixed assets. Our estimates allow us to anticipate the creation of 104 jobs in Montreal over a two-year period beginning May 1, 2000 up to April 30, 2002, along with a $3M investment in fixed assets. Please note that while job creation in Quebec City is not a determining factor in this project, the needed equipment in the Quebec City laboratories, that is necessary to support our Montreal clinic operations, is eligible. This explains the total amount of $3M (leasehold improvements and miscellaneous equipment). The $700K loan will be received through four payments of $175K. These payments will be made on the basis of pre-established terms (attested by our auditors) relative both in the number of jobs created and to the amount of investments in fixed assets. No interest is applicable to the $700K loan and this for its total duration. The loan also includes a three-year reimbursement moratorium. It will be reimbursed by eight equal semi-annual payments of $87,500. The interest "holiday" has been evaluated at $444,500, which represents our grant; it goes from the actual first payment date until the last payment, seven years later (three-year payment moratorium + four-year reimbursement term). The usual fees charged by Investissement Quebec are applicable, such as the commitment fee of .05% ($2,500). General Terms o Sustainability of jobs created for a minimal period of five years. o Participation in an official announcement. o Presentation of ordinary financial data. o No sale of equipment, no permission to cease activities or to move equipment out of the Province of Quebec without the written authorization of Investissement Quebec o No particular restriction related to dividend payments. Also included several standard situations generally expected for this type of contract, which would place us in default and might cause early reimbursement or application of an interest rate. Guylaine l'erron, c.a. November 22, 2000 [GRAPHIC] Investissement Quebec Dossier numero: 0101125 ENTRE: INVESTISSEMENT-QUEBEC, personne morale logolomont constitute en vertu de l'article 1 de Lol sur Investissement Quebec et sur Garantin Quebec. Seinto-Foy, province de Quebec, Q1V 6A3 et una place d'affaires au 389, rue Saint-Jacques, bureau 500, Montreal, province du Quebec, U2Y 1n9, loi repressiture et egissant aux prosentec par monsieur Guy Leblanc, direactaur des inclasife financiers. (Ci-apres designec via Societe. ET: ANAPHARM INC., societe doment constitutes en vertu de is Loi sur lao compagnie, Partie 1A, ayant una piece d'affaires au 5160, rue Decaria, 5th stage Montreal (Quebec) H3X 2H8, ici representes et egissant aux presentos par monsieur Marc Lebal, aux president, aux termes d'une resolution aument adoptee par son conseil d'adminstration lors d'une sence doment tenue un date due ________________________, don't copis set jointe a la presente. (ci-apres designee le Raquarants. ATTENDU QUE le Requerant a l'intention de reulisei a Montreal, province de Quebec, la project decrit au paragraphs 2.1 (ei-apres le a Projet __); ATTENDU QUE le Requerant a procento a la Societe une demande de contribution financiers aux fins du l'alder a realisor son Projet; ATTENDU QUE in Societe pout sucorder une contribution financiero en venu du Programme sur le Fonds pour l'accroissement de l'Investissement prive et la relance de l'emptiel (Deuret 572-2000 due a mal 2000) (ci apres le (Fonde)) tel qu'll peut aire maditis de temps a auire; ATTENDU QUE la 8 Octobre 2000, la Societe a eta autorisen pr la Vice-premier ministreet minisire d'Etat a l'Economiu et aux Finances a accorder au Haquerant une Contribution financiere pour les Tins de son Projet conforment aux terms et conditions du Fonds et a caux stipules sux presentos; ATTENDU QUE in Societe est dispose a accorder au Requerant to contribution financiere prevue aux presentes et la Requireant dispose a l'accepter, sujnt aux terms et conditions du Fonds at a peux stiputes aux presentes. EN CONSEQUENCES, les parties aux presentes conviennent de ce quit nuit : 1. Le contrat 1.1 La presente convention relative a la Contribution financiere. Constitue la contrat compiel doment condu entre los parties (la Contrat), lorsque le Requerant a satisfait au paragraph 13. 1.2 Le Contrat annute et rampiac tout ontont, verbale au ecribe, principals ou accessoire ayant pu avoir ete concius a quelque opaque que ce soit an rapport avec le Projet. 1.3 Les hermes et expressions utilleses aux precentes ont le sans qui paut leur etre attribue aux termes du Fonds a moins qu'il no leur guil confere un sans particulier aux presentes. Intiales: Invesstiment-Quebec ______________Requirant ______________ D101125 - Anapharm Inc. Page 2 de 9 - -------------------------------------------------------------------------------- 2. Le Projet 2.1 Le Projet consiste en l'implantation d'une clinique a Montreal, province de Quebec, pour effectuer des travaux de recharches relies au development du nouveaux medicamente et de nouvaux produits pharmaceutiques, projet qui entrainera in creation de 104 nouveaux Emplois (alon la definition donnee a ce terms au paragraphe 5.2 des presentes) et des investissements en immobillsadans de 3,000,000 $ (las Depenses d'inimobillsations). 2.2 Le Requerant declare avoir commence la Projet le 1st mai 2000 et s'engage a l'achever au plus tard le 30 avril 2002. 2.3 Les parties aux presentes conviennent que le Projet pour loquei la Contribution financiere (talio que definie ci-apres) est accordee comportion les depenses et le financement ci-apres:
Immobilisariens Financement totales admissions Amenagement lonatir 1,000,000 $ 1,000,000 $ Datte a LT 2,300,000 $ Investissement Equipament Rocherche clinque 250,000 $ 250,000 $ Quebec PRSI 700,000 $ Equipement Rocherche analytique 1,750,000 $ 1,750,000 $ TOTAL 3,000,000 $ 3,000,000 $ TOTAL 3,000,000 $
3. Versament de la Contribution financiere 3.1 Sous reserve que le Requerant no soir pas en default aux lermes des presentes et sous reserve des autres dispositions du Contrat, la Societe s'engage a mattre a la disposition du Ranquerant un pret au montant maximum de 700,000 $ (ci-apres definia Contribution financiere). 4. Declaration du Requerant 4.1 Anapharm Inc. est une antile domant constitues en vertu de la loi sur les compagnios, Partie 1A; elle declane etre en regie avec les tois qui la regissant ou n'est sujette a aucon engagement ni aucune prohibition aurquais la realisation du Projet conireviendralt. 5. Modalites de versament 5.1 La Societe s'engago a vercer au Requerant la Contribution financiere pour les Emplois qui serent craos et les Depaires d'immobillisations encoures par le Requerant qurant la portoas au realissation du Projet, salon les modalities suiventes. 5.1.1 La Contribution financiers sore depourses en 4 versamente egaua de 175,000 $ chacun des que le Requerant aurs creus les Emplois et ???? (las Depenses d'Immobilissations reilieux au Projet sur une lasse cumulative selon le tableau aulvant: Emplois Immobilisations Debursements 1st deboursement: 28 500,000 $ 175,000 $ 2nd deboursement: 28 750,000 $ 175,000 $ 3rd deboursement: 28 750,000 $ 175,000 $ 4th deboursement: 28 1,000,000 $ 175,000 $ Intiales: Invesstiment-Quebec ______________Requirant ______________ D101125 - Anapharm Inc. Page 3 de 9 - -------------------------------------------------------------------------------- 5.1.2 Pour chaque deboursement de la Contribution financiers, le Ruquerant davra au prealible remetre a la Societe un certificat de ??? verificateur ???? attestant le montent des Depenses admissibles encourages pour le Projet depuis le dermier versement de la Contribution financiere ainsi que sur une dasu cumulative, et le nombre d'Emphasis crede depuis le demier versement de la Contribution financiere. 5.1.3 La demaride relataive au dernier versement de la Contribution financiere devre aux accompagne d'un certificat des verificateurs extremes du Requerant attestant qu'il a oncouru des Depense admissables d'un montant minimum de 3,000,000 $ et qu'il a cree at maintenu les 104 Emplois prevus au Projet. 5.1.4 Outre le certificat requis du Requerant au sous-paragraphs 5.1.2, toute demande de versement de la Contribution financiere devra aux accompagnee d'un repport d'etups sur le degre d'avancement du Projet. 5.2 Aux fins du Projet, un Emploi signifis tout emploi permanent occupe sur une base de 52 semainau induent la periods des vacances et comprenant un minimum due 30 heures de travail par somaine. 5.3 Ausun emploi du Raquerant existant avant is 1st mai 2000 et qui serait aboll par te Requerant ne pourre etre considere par la Societe comme pouvant constiluer un emploi pour les fins du Central. 5.4 Tout emploi pour laquel la Requerant demande le versement ou la Contribution financiers et qui set transfere d'une societe lien au Requerant situan hors du Canada pourre aire considere par la Societe comma un Emploi admissible a la Contribution financiere conditionnetlement a ce que la lodit Emploi etait occupe su depart par un non resident canadian, la Requerant anesre par ocrit que ce Vernier vol devenue a la data a laquelle commence a exercer aos ranotions dans l'entreprise du Requerant un resident canadian en vertu des lois fiscolos canadiennes applicables. 5.5 Si, avant que la Societe varae la Contribution financiere au Requerant conformanent au sous paragraphs 5.1 pour un Emploi vise au paragraphs 5.4, cet Emploi n'est plus occupe per un resident canadian a quolque eponges que ce coli pendant une periode d'au moins 2 mole consapuffs, le Requerant s'engage a aviser sans delai par ecrit la Soublle et colle-ci reduirn le montant do la Contribution financiere qu'elle acit vernair du Requerant pur les Emplois pour lesquiste ella a recu une demande de versament de la Contribution financiere du montant, specifique a cet Emploi dasailous. 5.6 L'asiablemant a tout vorsement de la Contribution financiere, in Ranqerant devra soumoitre a la Societe une rectanmation d'crite accompagne da toutes las placas justificatives raisonnablement resqulese par la Societe demontrant a satisfaction que le Requerant a respecte toutes les conditions pour avoir droit de resevoir au versament. 6. Autres conditions s'appliquant a la Contribution financiere 6.1 Aux linc du present article 6 (masse satarial) signife in somma des salares bruts versos a l'exception des benefices margineaux consentis, a l'ensemble des Emploi pour lasqueis la Requirement a recu la Contribution financiera. 6.2 Les 104 Emplois que le Requerant s'engage a crier au plus tand le 30 avril 2002 et pur lesqueis il aura rocu la Contribution financiers devrant comporter une Masses salariale versae d'au moins a 184,944 $ pour la periode debutant le 1st mai 2000 et se terminant le 30 avril 2003. 6.3 La Requerant accepte de maintainir au Quebec, si ce pour una peridoe minimals de 5 ano a compter de sa creation, chasun des Emplois pour lequel le Requeerant a recu la Contribution finaciere aux terms due Contrat. 6.4 Advenant, qu'un Emploi pour lequel le Requerant a recu la Contribution financiere solt, au cours de caura periotic de 5 ano, abeil (emporalement pour une periode d'au moins 3 mois ou de fecon permanente, la Societe so reserve le droit d'exiger du Requerant le reimbursement immediat de la Contribution financiere verses a l'egard de chaque Emploi elimine. Intiales: Invesstiment-Quebec ______________Requirant ______________ D101125 - Anapharm Inc. Page 4 de 9 - -------------------------------------------------------------------------------- 6.5 Le Hequerant devra ramattra a la Societe, dans les 120 jours de le fin de tout exercice financier pendant lo dures du Contrat, un certificat de ses verificateure externes attestant le nombre d'Emplois cries par le Requerant du cours du dernier exercise financier, le nombre d'Emplois crees at maintanue sur une base cumulative dopuis la data du debut du Projet et la Masse anioriole totale vercee au cours du dernier exercise financier ecoule pour los Emplois pour leaguels il a recu la Contribution financier de la Societe. 7. Rembursement La Roquerant remboursera la Contribution financiere en a versement senestriels, agaux et conseoutife de 57,500 $ chacuh, le premier versement seniestriel etant 40 et exigible le 6th mois suivant l'echeance d'uns periode do 3 ano suivant la date du premier debursement de la Contribution financiere. 8. Autre contribution governmentale 8.1 La Requerant deceive qu'll n'a demande ni recu du government du Quebec, de un de ses ministeres ou organismos avant autre contribution de queique neturo que ce soit pour les fine du Projet autre que la Contribution financiere. 8.2 D'er qu'll connalt le montant du toute contribution a recevoir vises au paragraphs 8.1, le Requerant s'engage a on aviser sans devial par acrit, s'il ne l'a pas deja feit la Societe qui paurra siora redulre le montant de la Contribution financiere due montant de la contribution additonnolio a recevoir par la Requerant. 8.3 Si, posterieurement au versament de la totalite de la Contribution financiere, to Requerant devault recevoir la saldo non verse d'une contribution financiere visae aux paragraphs 8.1 ou 8.2, ou une sutre contribution financiere de queique nature que an soit du governmental du Quebec, de l'un de ses ministeres ou de l'un do sos organismas pour las fins due Projet, il devra an aviser sans delai por acrit la Societe; cells-ei aura alors le droit d'exiger du Requerant la remboursement d'una paria do la Contribution financiere egale au montant de la contribution financiere addionnais reque a concurrence du montant recu de la Contribution financiere. 9. Obligations du Requerant 9.1 Pendant toute la duran du Contrat, la Requerant s'engage enviere la Societe a respecter chacun des engagements suivants : 9.1.1 presenter, avec promptitude at a aux ???, tout rapport relatif a la progression do mama qu'aux resuitats du Projet arisi qu'aux attenes du requirant tei que raisonnablemen raquis par la Societe; 9.1.2 donna e tout represontant autprise de la Societe sur preavis raisonnable et pendant les notires nomates d'affaires, un access raisonable a ses louaux, aes livres comptables et autres documents relatifs au Projet, pour inspector et evaluer es progression et les resultates du Projet; 9.1.3 remettre a la Societe, au plus tord 120 jours apres is fin de enaque annes financiere tant que le Contrat aera on viguer, une copis de mas elals financiers ??? verites. Il devra egaloment presenter, dans les mailleurs detale, des etale financiers semestrials intenmoros non verifide. La Societe a engage a no pas devoler las ranseignements contenus dons loadits etalu financiers annuals et comosurois asuf dans le cas de l'administration courante du Central au dans la masuro au il peut y atre tenu par la loi au par una ordannance de tout tribunal compatent; 9.1.4 prendre toutes les mesures requisses pour maintuals en regle son existence et an capacite juridiques et a aviser la Societe de tout defaut d'y paivenir; 9.1.5 prendro toutes les mesures requises affin de resallizer en totalite la Projet dans l'echeancier prevu au paragraphs 2.2; 9.1.6 reveler sans detal a la Societe tout fait ou avenomont de nature au compromaitre, avant l'expiration du Contrat, la realisation complete du Projet; Intiales: Invesstiment-Quebec ______________Requirant ______________ D101125 - Anapharm Inc. Page 5 de 9 - -------------------------------------------------------------------------------- 9.1.7 ne pas modifior, sans is consentement prealbia ecrit de la Societe l'equal ne poutra atra refuca sans motif valable, le Projet quqnt a sa proprietas, son cout, son financement, son ampleur, sa data de realissation, son emplacement ou l'un quelanque de san autres elements constutition; 9.1.8 ne pas poser aes gestes ou prandre des decision qui compremeissaint is realignion totals ou partielle du Projet ou la capacitie due Requerant de la realignor; 9.1.9 ne pas vendre ou autrement alignor los blanc necessaries a la reallisation et a l'exploitation du Projet, sans la consentment prealable ecrit de la Societe laquioi ne pourra etra refse sans motif vaiable; 9.1.10 ne pas cesser d'utiliser les biens du Projet ou ne pas interompre les activities relieaux au Project sans le consentement preulable ecrit de la Societe lequel no pourra etra refuse sans motif valable; 9.1.11 ne pas demenager los equipements relia au Projet a l'axteriour du Quebec sans obtonir au preaiable le consentment scrit de la Societe lequel no pelirra etra refuses sans motif valable; 9.1.12 recapostor toutes les lalu et tous les reglemants qui lui sant applicables et informer sans delui la Societe de tout defaut d na port de nature a effecier la realisation du Projet ou ses engagements stipulos aux presentes. 9.2 Cheque tois que la convenienement premiable ecrit de la Societa aura requls, to Requerant accepte que l'ectrol de ce consentement soit conditionnel a toute condition raisonnable que la Societe pourait acquerir du Raquerant afin de proleger ses starits aux tormes des presentes et d'aesuror in realisation complete du Projet. 10. Cas de force majeure 10.1 Si la Requerant no peut, avant l'expiration du Contrat, respectus l'une au l'autre de ses obligaions provues aux presentes en raison d'un cas de force majeure, il duit on avisar par acrit la Societe sans delai des qu'll a connassance da ce cas de force majeure (l'Avis do force majeure). La Societe aura 10 jours pour aviser la Requerant qu'elle acceptu l'Avis de force majeure (l'Avis d'acceptations); a defaut de la societe de ramaitre au Requerant l'Avis d'acceptation sans lodit detail, elle aura presumes avoir refuse l'Avis de force majeure. 10.2 Le Raquerant aevrs, dans l'Avis de force majeure, informer is Societe de la nature due one de force majuere qe'elle invogue, de la dunde presumes dudit mas de force majeure elinsi que des measures qu'elle entend prendre pour redulra au minimum les consequences dudit cas de force majeure sur ses obligations envers is Societe aux terms des presentes. 10.3 Le Raquerant aera, a compter de la reception de l'Avis d'acceptation de l'Avis de force majeure ou a compter de l'expiration du deini do 10 jours prevu au paragraphs pracedent, libere de ses obligations envers la Societe peur la periode pendant liquails il est dans l'incapacite de respectar sec obligations. 10.4 Si lo Societe suize le Requerant qu'elle n'est pas d'accord avec l'Avis de force majeure, los parties devrant se rencontrer sans deiai et dovant negocler de bonne ful afin d'en arriver a une enteres acceptable quant aux obligations du Requerant envers in Societe aux terms des presentes. 10.5 Lo Requerant devre prandre lout les moyenx raissanables pour limitar au maximum la dures de ce aux de force majeure at faira rapport mensuellement par acrit a la Societe des measures prises a cet egard et qos resultat obtanus. 10.6 Si la peride pendent laquelle la Requerant est dans l'incapacite de respectar sus obligations envers la Societe dans plus de 3 mois a compter de la reception par le Requerant du l'Avis d'acceptation, la Societe porre, a sa discretion, resoudre le Contrat et la Requerement devra alors rembouraer a la Societe toutos les sammas reques quant a la Contribution financiere dans un delai de 10 jours d la reception d'un demande ecrite a e coi effet. Intiales: Invesstiment-Quebec ______________Requirant ______________ D101125 - Anapharm Inc. Page 6 de 9 - -------------------------------------------------------------------------------- 11. Defaut du Requerant 11.1 Perident toute la periode durant laquelle les dispositions du Contrat s'appliquent les ellusions suiventos, sand elie limitations, sont constitutives d'un ou plisieurs defauts la Requerant; 11.1.1 la Requerant fet fatilite ou devient insoluable, est mis sous sequerre ou invesque toute loi en viguour relative aux deiteure fallis ou insolvables; 11.1.2 une ordanneau est rendue ou uno resolution est adopte visant la liquidation du Requerant, ou le Requerant set dissout; 11.1.3 la Requerant a cease do fairo affaires au Quebec, a interrompu sas activities au Quebec pour uno periode de plus de 6 mols, a transfere aux operations realias au Projet a l'exterieur du Quebec ou a vendu, cede ou dispose des cetpic reilic au Projet; 11.1.4 des consignments faux au interpeure fornals par la Requerant ont ete determinants dans la decision de la Societe d'accorder es Contribution financiere; 11.1.5 Il y a su un ou des changements importants non authorise dans la nature memo du Projet avant la data de reception par le Requerant d'une authorissation ecrite a cet effet de la Societe; 11.1.6 le Requerant n'a pas execute le Projet dans sa totalite ou n'a pas respecte les deisus stipules dans le Contract sauf, si selon la Societe, les circonstances d'une telle situation etant independencies de la volonte du Requerant; 11.1.7 le Requerant a fai defaut de ramplir ase obligations aux terms de rune ou l'autre des dispositions du Contrat; 11.1.8 il y a eu une aggravation importante des risques financiers ou economiques de l'entreprise du Raquerant do nature a maitre en peril la realisation at l'exploration du Projet pendant la periods durant laquelle les dispositions du Contrat's appliquent; 11.1.9 le Requerant no respects plus des criteros d'admissible enances au Fonds pour l'accroissement de l'investissement priva at la raison de l'emploi (Decrit 572-2000 du 9 mai 2000) toi que modifie do tempo a autre. 11.2 S'il y a defaut ou ai, ?? la Societe agissant raisonnablement. Il y auru vralserribleblement defaut du Requerant, la Societe paut exercer, seprement au cumulativement, les recoure suivants; 11.2.1 suspendre le versement de la Contribution financiere pour une durde indeterminee; 11.2.2 axigor du Requerant in reimbursement immediar total ou partial de la Contribution financiere requo; 11.2.3 annular la partie non debursede de la Contribution financiere en entier ou parbellement; 11.2.4 charger le taux d'interet annuel fixe en viguerur a la Societe sur tout retand dans le reimboursement de la Contribution financiere roque a portir du moment ou calle-ci deviant una creance exigible suite a un defant du Requerant. 11.3 Si, a la fin du Contrat etabil conformement a l'article 13, la Masse ??? totale versse par le Requerant pour les Emplois crees durant la durens du Contrat est moindre que la Masse salariale minimale prevue a la data du debut du contrat, la Societe pourre exiger du Requerant qu'll reimburse une partie du le Contribution financiere recue au prorate de la ???? material effectiverrment verses par rapport a la Maisse ??? minimale practies. Intiales: Invesstiment-Quebec ______________Requirant ______________ D101125 - Anapharm Inc. Page 7 de 9 - -------------------------------------------------------------------------------- 12. Commission d'engagement 12.1 La present offre est sujette au patement a la Societe par le Requerant, lors de la signature du Contrat par la Raquerant, d'honoraires de geation (es Commission e'engagement) de 0.5% du montent de la Contribution financiere, soft 3,500 $, sur lesquels s'appliquent is taxa federale sur les produit et services et la taxe de venue du Quebec, ci-apres respectivement designees TPS at TVQ. 12.2 La Commission d'engagement au montent de 3,500 $ qui devre etro versede a la Societe n'est reimboursable en sucune circonstance, ni en totalite ni en partie. 12.3 Le Seul encaissement de la Commission d'engagement no cree aucon droit en faveur du Requerant et n'oblige susunament is Societe a debourser quelque partie due ce soit de la Contribution financiere, cas droits et cos obligations no pouvant etro generes quo dona la meaure ou les conditions et termas maintenance au Contrat sont rencontras. 12.4 A litre d'information, la Societe detient is numero d'enregistrement; TP5; 128621561 RT aupres du government federal et le numero d'enregistrement TVQ; 1013367857 TQ 001 supres du government du Quebec. 13. Durde du contrat La dete d'entrec on viguor du Contrat an au qui concerne los obligations de la Societe est doile a laquette la Societe regois un examplaire doment sign du Contrat; le Contrat expirea loraqua in Requerant se aura conforma au paragraph 6.3 du Contrat. 14. Dispositions generales 14.1 En acceptant les termes et conditions du Contrat, le Requerant declare `avoir pris succ engagement contractual majeur a l'egard du Projet, preslablement a sa demande de la Contribution financiere, suuf ce qu'il a declare a la Societe. 14.2 Un original du Contrat dument signs par la Requerant, incluant les annexes paraphrases qui en foni partie integrante, devra etra retourne a la Societe dans les 30 jours de un dela d'emission, a l'address ol-apres mentionee a defaut de quoi, elle deviandra nulls at permies. 14.3 Auquin membre de l'Assembre nationale du Quebec et de la Chambre des Communes du Canada n'est admis a participer au Contrat, ni a en tirer des avantages. 14.4 Le Contrat est incessible sauf du consentement ecrit preniable de la Societe. 14.5 Le Projet coumis doit etre confornne a toutes las exigencies decoutant des tois et regiamants provinciaux at federaux qui lui sent applicables, notamment caux relatiffs a l'environement. 14.6 le Requerant s'engage a tenir les parties, leurs agents et leurs proposes indemnas at a couvert de touts reciumution d'une thoro perils en raison au a la mulle du la miss en ceuvre du Projet. 14.7 Le Requerant reconcil de plus que la Contribution financiere le constitute pax uno association en vue de former une societie ou una coentreprise, ni ne cree de relation de mandataire entra la Societe et la Requerant. 14.8 Au cours du Contrat, si une modification queiconque s'averait necessaire, le Requerant soumetra par ecrit a la Societe una requete en ce sans. Calle-ci informera per ocrit le Requerant de as decision. 14.9 Le Requerant s'engage a ??? sans deial la Societe de tout changement ou evenament suceptibles d'affecter de facon significative les couts, l'echeancier ou la nature du Projet. 14.10 Le Requerant a la capacito juridique et les pouvois requls pour exercer son enterprise at eigner le Contrat. Intiales: Invesstiment-Quebec ______________Requirant ______________ D101125 - Anapharm Inc. Page 8 de 9 - -------------------------------------------------------------------------------- 14.11 Le Contrat est regi et interpreable seion les lois applicables dans la province de Quebec et plus particulenement seion les dispositions du Fondi et les parties convienent que la Cour superieure de la province de Quebec et les tribunaux d'appel sont seuls competent pour entendre tout litge decouland du Contrat. 14.12 Toules les sommes exprimees en dollars au Contrat le sont daris la devise ayant cours legal au Canada. 14.13 Aux fins des presentes, l'expression Jour ouvrables signific toute joumes penant laquelle les bureaux de la Societe sont ouverts pour affaires a Montreal aet a Quebec. 15. Langue du Contrat 15.1 Le Contrat signe par les parties a este redige en francais seuiement memo at una version angininas non signce par les parties a pu lui auo yournio. Lo Requerant declare expression ce qui suit: 15.1.1 le Contrat redige en trancoin sera la coule souran de droit at obligatione entre les parties; 15.1.2 il a prie connaissance de checuno don dippoisition du Contrat redige en francais, il en comprend la parties et toutes les consequences juridiques ou receipts d'etro plainement lia par chapune du oui dispositions; 15.1.3 la version anglaise du Contract n'auro ??? affet juridique du quelque nature qu ce gait entre les parties, memo en au qui concern l'interpretation au l'application du Contrat redige en francais. 15.2 The Contract signed by the parties has been drawn up in French only even if an English version could have been furnished to the Applicant. Consequently, the Applicant expressly declares that : 15.2.1 The Contract drawn up in French shall be the sole source of rights and obligations between the parties; 15.2.2 The Applicant has taken cognizance of each disposition of the Contract drawn up in French. It understands all the legal consequences of such dispositions and accepts to be fully binded by such dispositions; 15.2.3 the English version of the Contract shall have no effect of whatever nature between the parties, even regarding the interpretation and the application of the Contract drawn up in French. 16. Annonces et ceramonies 16.1 Le Requerant consent par les presentes, a moins d'Avis contraire, a faire une announce publique par voie de communique de presse precident le nom, l'adresse at la gorro d'enterprise, le cout estime du Projet, le montaine et la forme de la Contribution financiere, ainsi qu'uelle brave description du Projet. 16.2 Le Requerant informera sans delai la Societe par ecrit de la date a laquidio l'annonce publique ara faite et la Requerant davra garder la Contrat confidential jusqu'a cette date. 16.3 Advanent que le Raquerant na fasse pas d'announce officiale conceernment is Projet dans les 30 jours sulvant la signature du Contract, la Societe pourre elle-mame, apres avis erit d'au moins a jours conne au Requerant, procedure a une telle announce official du Projet par voie d'un communique de phrase comprenant les elements mentionnes au paragraphs 16.1. 16.4 Le Requerant s'engage du plus a aviser la Societe par ecrit, au ??? 14 jours a lavance, de toute ceremonie officials organiser a l'egard du Projet. 16.5 La Requerant consent, par les presentes, a la participation des representants du government du Quebec et de la Societe a touts ceremonie officulle qu'elle organisation a l'egard du Projet. Intiales: Invesstiment-Quebec ______________Requirant ______________ D101125 - Anapharm Inc. Page 9 de 9 - -------------------------------------------------------------------------------- ET LES PARTIES AUX PRESENTES ONT SIGNE A LA DATE ET A L'ENDROIT MENTIONNES EN REGARD DE LEUR SIGNATURE RESPECTIVE. Signs a Montreal, is 31 October 2000 ------------------------ INVESTISSEMENT-QUEBEC Per: /s/ Guy Lebians ---------------------------------------- Guy Lebians Director - Incitiatife financiere Signed a , is 13 November 2000 --------------- ------------------- ANAPHARM INC. Per: [ILLEGIBLE] ---------------------------------------- Signature Title President Intiales: Invesstiment-Quebec ______________Requirant ______________ ANAPARM INC. (la (Compagnie)) Extrait d'un proces-verbal d'une reunion du conseil d'administration en dare du 17 novembre 2000. 1. PRET D'INVESTISSMENT-QUEBEC IL EST RESOLU a l'unanimite que la compagnie : 1) accepte l'offre de la contribution financiere qu'Investissement-Quebec lui a presence en date du 31 October 2000, sous forme d'une contribution financiere au montant de 700,000 $, selon les termes et conditions stipules a ladite offer at 2) autorise monsieur Marc Lebel, son president, et celui-ci est par les presentes autorise a accepter au nom de la compagnie ladite offre de la contriburdon financiere solon les termes et conditions qui y sont stipules et a signer tout document necessaire ou utile pour donner effet a la presente resolution. COPIE CERTIFEE Le 17 novembre 2000 /s/ Jean Marier ------------------------------- Jean Marier, Secretaire SCHEDULE 4.25 GOVERNMENTAL AUTHORIZATIONS - - Certificate of Authorization n(Degree) 7610-03-01-01514-01 030003917 - granted by the Ministere de l'Environnement et de la Faune to Safety Kleen Canada, Inc.; - to decontaminate tankers and barrels and to store residues stemming from decontamination works; - issued October 15, 1999. - - Exploitation Permit n(0)7610-03-01-00784-12 030002061 - granted by the Ministere de l'Environnement et de la Faune to Safety Kleen Canada, Inc.; - to store any hazardous material after having taken possession thereof for that purpose; - in force from October 29, 1998 to August 24, 2003. - - Certificate of Authorization n(0)7610-03-01-00784-12 030002575 - granted by the Ministere de l'Environnement et de la Faune to Safety Kleen Canada, Inc.; - to store contaminated soils and waters; - issued October 29, 1998. - - Exploitation Permit n(0)7610-06-01-0178311 1161130 - granted by the Ministere de l'Environnement to Safety Kleen Canada, Inc.; - to transport hazardous materials other than explosive and radioactive substances; - in force from January 29, 1999 to January 1, 2004. -19- - - Nuclear substances and radiation devices licence n(0)12359-1-03.0 - granted by the Atomic Energy Control Board to Anapharm inc.; - to possess, to sale, to import, to use and to store nuclear substances and specific authorized equipment; - in force from May 1, 2001 to April 30, 2002. - - Nuclear substances and radiation devices licence n(0)12359-2-02.0 - granted by the Atomic Energy Control Board in Anapharm inc.; - to possess, to transfer, to import, to export, to use and to store nuclear substances and specific authorized equipment; - in force from January 17, 2001 to September 30, 2002. - - Licence n(0) 2002-6455 - granted by Health Canada to Anapharm inc.; - for possession, sale, sending, transportation and delivery of controlled drugs and substances; - in force until December 31, 2002. - - Nuclear substances and radiation devices licence n(0)12359-1-03.0 - granted by the Atomic Energy Control Board to Anapharm inc.; - to possess, to transfer, to import, to use and to store nuclear substances and specific authorized equipment; - in force from May 1, 2001 to April 30, 2003. - - Certificate of Authorization n(0)7610-12-01-03068-04 120004224 - granted by the Ministere de l'Environnement et de la Faune to Pyroval inc.; - to store biomedical waste; - issued May 1, 1995. -20- - - Licence AECB-WFOL-335-6 - granted by the Atomic Energy Control Board to Monserco Ltd; - to operate a radioactive waste management facility; - in force from May 1, 2000 to April 30, 2002. -4- SCHEDULE 4.28 EQUIPMENT CONTRACTS [Summary of French Written Documents] - - The e-mail document refers to a list of renewed licences for the year 2002 and the cost of such renewal. - - The document identified in French as "CIT - Contrat Cadre et annexes de location # 300963 - # 810-0284510-001" is a master lease agreement (the "Master Agreement") entered into on May 28, 2001, between Services Financiers CIT ltee, the leaser, and Anapharm, Inc., the lessee. This Master Agreement gathered the general terms of the lease. However, several schedules are attached to said Master Agreement. The first schedule is titled "Convention de financement provisoire de location" (translated as "Provisory Financial Lease Agreement") for a amount of CAN $625,000.00 plus interest at base rate plus 3%. The following schedule titled "Annexe de location n(degree) 3000963" (translated as "Schedule to Lease n(degree) 3000963", states the lease term (36 months) and the amount of each installment (CAN $5,376.57), the first installment being payable on December 19, 2001. Schedule "A" contains the description of every movables subject to the lease, being mainly electronic and computer equipments. Schedule "B" titled "Reajustement des versements de location" (translated as "Readjustment of lease installments") modifies the interest rate identified in the first schedule of the Master Agreement. The last attached document to the Master Agreement, titled "Attestation d'acceptation de l' `equipement" is an acknowledgement of Anapharm whereby the latter agrees to accept the leased equipments and declares being satisfied with the product quality. SCHEDULE 4.28 EQUIPMENT CONTRACTS See documents attached hereto. ----------------------------------- ANAPHARM INC scedule 4.28 ----------------------------------- CAPITAL LEASE - LISTING - ----------------------- Trial balance account number Balance January 02 -------------- ------------------ Credit ball Bq Royale - --------------------- BR I 73361 2650 $ -- BR II 73452 2651 -- BR III divers 73837 2652 72,206.00 BR IV API-365 73961 2653 51,020.00 BR V API-3000 74117 2654 251,190.00 BR VI 74251 2655 275,800.00 BR VII 74252 2656 117,728.00 BR VIII 74579 2657 203,394.00 BR IX 75009 2658 27,974.00 BR X 74589 2659 748,974.00 BR XI 74963 2660 693,911.00 BR XII 74947 2661 959,725.00 BR XIII 75075 2662 46,501.00 BR XIV 74958 2663 269,781.00 BR XV 75201 2664 466,660.00 BR XVI Equip inform. 75264 2665 365,024.00 BR XVII LCMSMS 75202 2666 1,063,717.00 HP-V 7225-6 2675 94,664.00 - ---- CIT I Equip inform. 2677 170,091.00 - ----- CIT II Equip inform. 2678 69,486.00 - ------ -------------- 5,947,846 $ -------------- Guylaine Perron, c.a. fevrier 2002 9(a)(v) Anapharm Inc. 9(a)(v)Purchase and requirements agreements
Type of expense End of contract Total per --------------- --------------- --------- & Supplier Date Duration year ---------- ---- -------- ---- Recruiting Communications Voir 7/11/2002 1 year 42,249 $ Communications Voir 4/25/2002 1 year 26,641 $ Genax Communications(CHOI-FM) 12/31/2002 1 year 80,000 $ Impact Campus 11/30/2001 20 weeks 6,696 $ Journal de Montreal 5/17/2002 1 year 153,750 $ Journal de Quebec 1/1/2003 1 year 40,800 $ Publicity: Applied Clinical Trials 4/30/2002 6 publications 14,100 USD Meals: Under negociation Laboratory: Under negociation Committee of ethics --------- Per study Integrated Research Inc. Jan-02 1 year 2,000 $ 1,250 $ (under negociation for feb-02 to janv-03) 3,250 $ --------- IRB Consulting 2/1/2003 1 year 1,500 $ 2,750 $ --------- Web Site: Marootte Multimedia Inc. N/A 55,000 $ Click Net 1,740 $ Copy of -------- contract Comments -------- -------- Recruiting Communications Voir x Montreal Communications Voir x Quebec Genax Communications(CHOI-FM) x Impact Campus x Journal de Montreal Min.:143,100$; max.: 164,400$ Journal de Quebec x Publicity: Applied Clinical Trials x Meals: Laboratory. Committee of ethics Integrated Research Inc. x Regular review Regular review (second and subsequent studies, same drug/sponsor on same night) Late review (submission on Thursday by 12.00 pm) IRB Consulting x Phase 1 Therapeutic trial Web Site: Marootte Multimedia Inc. x Web Site revision Click Net Web Site housing
1 of 1 9(a)(xi) Anapharm Inc. 9(a)(xi)Maintenance agreements
Type of expense End of contract Total per Copy of --------------- --------------- --------- ------- & Supplier Date Duration year contract Comments ---------- ---- -------- ---- -------- -------- Equipment used for production(maintenance): - ------------------------------------------ Brindamour 8-Jan-02 1 year 200 $ Cold room-20 number 1 14-Jun-02 1 year 200 $ Cold room-20 number 2 Applied Biosytems 15-Mar-02 1 year 21,058 $ API 3000 S/N 487001 15-Mar-02 1 year 21,058 $ API 3000 S/N 493002 18-May-02 1 year 21,058 $ API 365 S/N 2129712(Maggie) 18-May-02 1 year 21,058 $ API 3000 SIN 1339709 18-May-02 1 year 21,058 $ API 3000 SIN 1389811 18-May-02 1 year 21,058 $ API 3000 S/N 39804 14-Jun-02 1 year 21,058 $ API 3000 SIN D5630004 14-Jun-02 1 year 21,058 $ API 3000 S/N D5530004 14-Jun-02 1 year 21,058 $ API 3000 SIN D5660004 26-Nov-02 6,5 months 11,514 $ x API 3000 S/N 1339709 26-Nov-02 6,5 months 10,888 $ x API 3000 S/N 1389811 26-Nov-02 14 months 24,209 $ x API 3000 S/N 2519904 26-Nov-02 1 year 20,850 $ x API 3000 S/N 3799909 26-Nov-02 1 year 20,850 $ x API 3000 S/N 3829909 26-Nov-02 6,5 months 10,888 $ x API 3000 S/N 39804 26-Nov-02 8,5 months 14,537 $ x API 3000 S/N 487001 26-Nov-02 8,5 months 14,537 $ x API 3000 S/N 493002 26-Nov-02 5,5 months 9,383 $ x API 3000 S/N D5530004 26-Nov-02 5,5 months 9,383 $ x API 3000 S/N D5630004 26-Nov-02 5,5 months 9,383 $ x API 3000 S/N D5660004 26-Nov-02 6,5 months 11,514 $ x API 365 S/N 2129712(Maggie) Agilent Technologies 4/8/2002 1 year 10,485 $ GCMS NCI #1 8/31/2002 1 year 10,293 $ GCMS NCI #2 Canberra Packard 18-May-02 2/28/2002 1 year 4,889 $ Gamma Cobra Meler ???? 1 year 8,352 $ Multiprobe (under negociation)
Various equipment maintenance: - ------------------------------ 1 of 2 9 (a) (xi) Anapharm Inc. 9 (a) (xi) Maintenance agreements
Type of expense End of contract Duration Total per Copy of --------------- --------------- -------- --------- ------- & Supplier Date year contract ---------- ---- ---- -------- Bell Canada & others - Telephone system: 26-Nov-02 Fees - Phone lines 1 year 61,200 $ 26-Nov-02 Answering service 1 year 4,800 $ 26-Nov-02 Link WAN: Qc-Mtl and LP 1 year 35,652 $ 26-Nov-02 IP connect dedicated LP 1 year 6,144 $ 26-Nov-02 Quebec local lines 1 year 18,276 $ 26-Nov-02 Quebec Telecommunici May-02 21,741 $ x Claude Neon Feb-05 5 years 2,232 $ ????? 5 years 348 $ Apr-06 5 years 3,576 $ May-06 5 years 780 $ Maintenance of facilities: - -------------------------- Bon-Air (Ventilation) 3/31/2003 2 years 7,308 $ Tempco 3/31/2002 1 year 7 ,620 $ Prolectron n/a 261 $ Liebert Feb-02 1 year 5,953 $ Ouebec Pare-Flammes Jan-02 1 year 35 $ Vulcain Mar-02 1 year 249 $ Empro n/a 14,673 $ Probelle Dec-03 3 years 14,400 $ Universite Laval Aug-02 1 year 13,080 $ Type of expense --------------- & Supplier Comments ---------- -------- Bell Canada & others - Telephone system: 26-Nov-02 26-Nov-02 26-Nov-02 26-Nov-02 26-Nov-02 26-Nov-02 Quebec and Montreal Telephone system Claude Neon 2 signs in Ste-Foy Graph # 99-0195A 1 sign in Trois-Rivieres Graph # 96-148 1 electronic sign in Montreal Graph # 00-1079J 1 sign in Montreal Graph # 00-1079E Maintenance of facilities: - -------------------------- Bon-Air (Ventilation) Clinical draining Clinical hood Waste room draining Aston Bousquel Analytical Lab ventilation shaft Dri-Steem other equipment rented by C. Roberge Tempco Ventilation - Montreal Prolectron Security service Liebert UPS Ouebec Pare-Flammes 7 extinguishers at 5$ each Vulcain 2 Gas detectors Empro Cleaning (site: Quebec) Probelle Cleaning (site: Montreal) Universite Laval 40 parking places
2 of 2 9(a)(iv) Anapharm Inc. Rental agreements and arrangements
Type of expense End of contract Total per Copy of --------------- --------------- --------- ------- & Supplier Date Duration year contract ---------- ---- -------- ---- -------- Rented equipment: - ----------------- 3 GCMS: (monthly invoices) - ------- Hewlett Packard (HP-7) Dec-02 1 year 50,087 $ x Hewlett Packard (HP-8) Apr-02 1 year 35,970 $ Hewlett Packard (HP-9) Sep-02 1 year 56,124 $ Entrepot frigorifique Orleans Under negociation Under negociation 23,400 $ x (should be 3 years) Various rented equipment: - ------------------------- Photocopiers: (quaterly invoices; include maintenance cost for a year) Janisse - Toshiba T-3550 Jun-03 66 months 3,725 $ Onset Capital - Toshiba T-6560 Jul-04 66 months 12,416 $ Canon - Canon Image 600 Jun-05 60 months 32,089 $ Citicorp Finance Vendeur Ltee - Toshiba T-3560 Aug-05 66 months 4,933 $ Citicorp Finance Vendeur Ltee - Toshiba T-3560 Dec-05 66 months 4,281 $ Toshiba T-2550 Full paid 901 $ Onset Capital - Toshiba E-Studio 6500 May-07 66 months 8,681 $ Fax: Toshiba TF-651 350 $ Toshiba TF-861 350 $ Toshiba TF-621 350 $ Toshiba DP 120F 350 $ Toshiba DP-85F 350 $ R/H Tosh. DP 120F (01060302) 780 $ Scanner: Services Financiers Image Inc. Dec-05 60 months 4,379 $ (scanner DR5020) Type of expense --------------- & Supplier Comments ---------- -------- Rented equipment: - ----------------- 3 GCMS: (monthly invoices) - ------- Hewlett Packard (HP-7) Contract # 7225-8 Hewlett Packard (HP-8) AC7027-R001 Hewlett Packard (HP-9) AC7027-R002 Entrepot frigorifique Orleans Refrigerating warehouse renting Various rented equipment: - ------------------------- Photocopiers: (quaterly invoices, include maintenance cost for a year) Janisse - Toshiba T-3550 Pl734449 - 1st story Onset Capital - Toshiba T-6560 MF815710 - 5th story Canon - Canon Image 600 NLE 10382 - 3rd story Citicorp Finance Vendeur Ltee - Toshiba T-3560 AD031573 - Montreal adm. Citicorp Finance Vendeur Ltee - Toshiba T-3560 EG034005 Mtl recrutement Toshiba T-2550 Bl116997 - 3rd story Onset Capital - Toshiba E-Studio 6500 # GE 11 11 04 Fax: Toshiba TF-651 Include with Photocopiers Toshiba TF-861 Include wish Photocopiers Toshiba TF-621 Include with Photocopiers Toshiba DP 120F Include with Photocopiers Toshiba DP-85F Include wish Photocopiers R/H Tosh. DP 120F (01060302) Scanner: Services Financiers Image Inc. Contract #660234 (scanner DR5020)
1 of 1 SOFTWARE AT ANAPHARM
Software Name & Version Expiration Copies Number Users Number Major Costs of Renewal Acrobat Reader 200 200 ACT 20 20 BackupExec 10 10 5 000 $ CESR v3 fevr-02 118 118 10 000 $ ChemStation 8 8 Chrom-Perfect 8 8 ClinTrial Simulator 2.0 1 1 CPS 2000 16 16 2 704 $ Crystal Report 6 4 4 Dave 2.1 4 4 Disk Keep 5 5 5 Documentum 75 75 39000 Dynamics 6.0 dec-01 1 14 16 908 $ Easy CD Creator 3.5 2 2 Entra-Pass NT 1.0 4 4 EP2 10 10 37500 Kinetica 2000 1 1 Legato 30 1 5000 Mac Ouan 6 3 Magic juil-02 7 369 $ Mail Sweeper 1 1 Microsoft Exchange 5.5 1 170 Millesium 3.2 6 6 3 000 $ MSP 98/2000 40 40 Norton Antivirus 225 225 Office 97/2000 225 225 OmniPage (Pro-9) 2 1 Oracle avr-02 200 14 400 $ PDK 10,000 400 Refer to Dynamics 6.0 PGP 1 100 PIX 1 1 3 000 $ Rees 1 1 9 000 $ SAS 6.12 oct-02 4 4 9 123 $ Virtual Tower 1 1 Vislo Pro 2000 2 2 Visual Fortran 1 1 Watson 6.2 mars-02 500 300 116 250 $ Windows NT/2000 225 225 Winn Mix 1.0 1 1 Winn Online 3.0 Prof. 1 1
1 of 1 Boucher Champagne, Johane - -------------------------------------------------------------------------------- From: Dulong, Lucie Sent: 12 fevrier, 2002 15:49 To: Boucher Champagne, Johane Cc: Masson, Eric Subject: Licences Bonjour Johanne, Voici la liste des licences dont nous avons renouvel ees cette annee: SAS : $-2,198.13 WinNolin (Pharsight) : $ 7,591.55 Micromedex : $ 8675.35 Kinetica : $ 480.00 Total : $ 18,945.03 Canadien Pour de plus amples informations n'hesitez pas a me contacter. Bonne fin de journee! Lucie Dulong Systems Coordinator Scientific and Regulatory Affairs Division (418) 527-3067 ext. 4205 [STAMP NUMBER 59 TO 66 IN FRENCH] [LOGO] CIT LEASE AGREEMENT SOFTWARE ADDENDUM - -------------------------------------------------------------------------------- 207 Queen's Quay, Suite 700, Toronto, Ontario, Canada M5J 1A7 The Master Lease Agreement made as of the 28th day of May 2001 between CIT Financial Ltd. as Lessor and ANAPHARM INC., as Lessee (the "Agreement") is amended as follows: If and to the extent that Equipment described in a Schedule includes or consists of computer software and related services (collectively "Software") the provisions of this Addendum shall apply notwithstanding anything else in the Agreement or any Schedule to the contrary: (a) The Software is owned or provided by third party supplier(s) or licensor(s) thereof ("Supplier") and is licensed or provided under one or more license or service agreement(s) ("License Agreement(s)"). (b) When used in reference to Software, the words "lease", "rent" and similar or derivative words shall be deemed to mean a "sublicense" of those rights and remedies under the License Agreement(s), if any, which Lessor is authorized to sublicense to Lessee (the "License Rights"). Lessee hereby agrees to observe, perform and discharge all of the covenants and obligations contained in the License Agreement(s). (c) Lessor does not assume any obligations under any License Agreement(s) and Lessee shall look solely to the Licensor for all support and maintenance of the Software and the performance of all other obligations of Licensor under the License Agreement. Lessor makes no representations or warranties and there are no conditions (oral, written, expressed, implied, statutory or otherwise) as to any matter whatsoever relating to the Software, the License Agreement(s) or the License Rights. Lessee shall unconditionally and without set-off, adjustment or abatement pay all rent and other amounts when due and payable under each Schedule notwithstanding any circumstance or event whatsoever, including without limitation, any failure, unacceptablility, unsuitability or unavailability of any Software, or the breach (including fundamental breach), unenforceability or termination of the License Rights or License Agreement(s). (d) If a Default occurs, Lessee agrees that in addition to Lessor's other remedies, Lessor may: (i) terminate the License Rights and without claim of breach or interference with contract by Lessee, cause Licensor to terminate and/or withhold support, maintenance, and/or other services related to the Software and/or (ii) take possession of all original and backup copies of the Software, wherever located, without affecting the Lessor's rights to damages or other remedies under the Agreement, and without liability for any injury or loss suffered by Lessee by reason of such repossession. To the extent the Software is non-transferable or its transfer restricted, Lessee agrees that Lessor and/or Licensor shall have no duty to remarket such Software or otherwise mitigate any damages relating to such Software. (e) Upon the return or repossession of any Equipment, Lessee's rights in and to the associated Software and License Rights shall terminate. Lessee irrevocably appoints Lessor as its agent and attorney to execute and deliver such documentation and agrees to assist Lessor to obtain such consents as may be required by Lessor to further assign such Software and License Rights as part of any remarketing of the Equipment by Lessor. All references to the Agreement in any Schedule entered into on or after the date of this Addendum shall be deemed to refer to the Agreement as amended hereby. Except as amended hereby, the Agreement remains in full force and effect unamended. All terms defined in the Agreement shall have the same meaning when used herein. The present document has been written in the English language at the express request of the parties. Le present document a ete redige en langue anglaise a la demande expresse des parties. DATED as of the 19th day of December, 2001. CIT Financial Ltd. ANAPHARM INC. (Lessee) By: /s/ ELSA QUEVEDO By: /s/ GUYALINE PERRON -------------------------------- ---------------------------------- Authorized Signature Authorized Signature Name/Title: ELSA QUEVEDO Name/Title: GUYALINE PERRON, CA PROGRAM MANAGER DIRECTRICE PRINCIPALE FINANCES [STAMP NUMBER 68 IN FRENCH] ------------------------------ [LOGO] documentum Contract Number: ------------------------------ SOFTWARE END USER LICENSE AGREEMENT This agreement is made as of December 17, 2001 by and between Documentum, Inc. ("Documentum"), a Delaware corporation having its principal place of business at 6801 Koll Center Parkway, Pleasanton, Ca 94566 and Name: ANAPHARM INC ("Licensee") Address: 2050 Boulevard Rene-Levesque Quest Sainte-Foy, Quebec GIV 2K8 This agreement, the Schedules and any addenda attached hereto, and each of the supplemental Schedules signed by both parties constitute the entire agreement ("Agreement") between the parties concerning Licensee's use of the Software. No purchase order, other ordering document or any hand written or typewritten text which purports to modify or supplement the printed text of this Agreement or any Schedule shall add to or vary the terms of this Agreement unless signed or initiated by both parties. This Agreement replaces and supersedes any prior verbal understandings, written communications or representations. LICENSEE DOCUMENTUM INC. By: /s/ JACQUES VANDRY DIRECTOR IT By: /s/ Sayed Darwish ----------------------------- ---------------------------------- Authorized signature Authorized Signature Sayed Darwish Vice President General Counsel JACQUES VANDRY DIRECTOR IT & Secretary Print Name/Title Print Name/Title Date: 2001-12-17 Date: 12/21/01 TERMS AND CONDITIONS 1. Definitions "Additional User" shall mean Licensee's customer, vendor, agent, subcontractor or consultant. "Confidential Information" shall mean the Software, Documentation, Developments and all information which is marked as confidential or proprietary or which is disclosed verbally and identified as confidential or proprietary at the time of disclosure. "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and operating policies of an entity through the ownership of voting securities (at least fifty-one percent (51%) of its voting or equity securities or the maximum allowed by law), contract, voting trust, or otherwise. "Developments" shall mean any ideas, know-how or techniques (including any derivative works and modifications made to the Software or Documentation) which are developed by Documentum in the course of providing Services to Licensee. "Documentum Licensors" shall mean third parties from whom Documentum has licensed software. "Documentation" shall mean the user manuals relating to the use of the Software delivered by Documentum to Licensee in electronic form. "Licensee" shall include the Licensee whose name is set forth in the first sentence of the Agreement and any affiliated entity which Controls, is Controlled by, or is under common Control with Licensee, provided all such entities ordering or using Software licensed under this Agreement have agreed to be bound by the terms and conditions of this Agreement. "Licensee Third Party Contract" shall mean a validity executed contract between Licensee and an Additional User. "Restricted Release" shall mean any version of the Software marked alpha, beta or which is otherwise designated as a restricted release. "Schedule" shall mean any schedule attached hereto or which specifically references this Agreement and which is executed by both parties. "Sent" shall mean a user designated by Licensee who is authorized to use the applicable Software licensed hereunder. "Services" shall mean consulting services purchased by Licensee under this Agreement. "Software" shall mean a machine executable copy of the object code of the software products and applications licensed by Documentum to Licensee under this Agreement, including all corrections or updates thereto. "Transfer Platform" shall mean an operating environment supported by Documentum which is different than the operating environment for which Software was originally licensed. 2. License 2.1 Subject to the terms and conditions of this Agreement, Documentum grants Licensee a perpetual, fully paid, non-exclusive, and nontransferable license to use, solely at Licensee after for Licensee's internal purposes, the licensed number of Seats, users, servers or CPUs of Software. The Software may only be used in accordance with the Documentation. Notwithstanding any terms and conditions to the contrary including, but not limited to, Section 8 (Warranty), use of Adobe software provided hereunder is subject to the terms and conditions of the Adobe End User License Agreement provided in electronic form with the Adobe software. 1 2.2. Depending on the Software specified in a Schedule or purchase order, the license granted hereunder is limited to the maximum number of Seats, users, servers or CPUs specified in such Schedule or purchase order. 2.3. Documentum reserve the right to audit, at its expense, Licensee's deployment and use of the Software for compliance with the terms of this Section 2 at any mutually agreeable time during Licensee's normal business hours. If Licensee's use of the Software is found to be greater than contracted for, Licensee will be invoiced for the additional Seats, users, servers or CPUs and the unpaid license fees shall be payable in accordance with this Agreement. If the resulting adjustments to the License and support fees owing by license are greater than five percent (5%) of the License and support fees paid by licensee under this Agreement, Licensee will pay the expenses associated with such audit in addition to the additional license and support fees. 2.4. Licensee shall implement reasonable controls to insure that it does not exceed the maximum number of Seats, users, servers or CPUs licensed, licensee may make a reasonable number of copies of the Software solely for archival or emergency back-up purposes. Documentum reserves the right to include means within the Software to limit Licensee's use of the Software to the Licensed number of Seats, users, servers or CPUs. 2.5. Licensee shall be permitted to develop and use, solely for internal purposes APIs, macros and user interface. For purposes of this Agreement, such development shall be deemed an authorized modification of the Software. 2.6. Documentum shall provide Licensee with one (1) machine executable copy of the Software and Documentation. Licensee may make copies of the Software subject to the maximum number of Seats, users, servers or CPUs licensed. Licensee may make copies of the Documentation solely for Licensee's internal use. 2.7. If use of a Transfer Platform by Licensee requires that Documentum provide Licensee with a new machine executable copy of the Software. Licensee must be subscribing to support services and be current in the payment of its support service fees for such software. 2.8. Licensee may commence an arrangement pursuant to a Licensee Third Party Contract under which an Additional User is permitted to use the Software and, for the sole purpose of permitting such use, Licensee may install Software at an Additional User's site, either by allocation of Licensee's currently licensed Software or by Licensee's purchase of additional Software licenses, provided (i) prior to any such use or installation an Additional User shall have agreed in writing to be bound by the terms and conditions of this Agreement regarding confidentially and use of the Software, and (ii) an Additional User is not charged a fee for such access, provided however that use of the Software may be a component of chargeable services rendered by Licensee, and (iii) an Additional User is not granted rights to use Software except as expressly set forth in this Section 2.8, and (iv) an Additional User's use of the Software is related solely to Licensees internal purposes, and (v) upon conclusion of a Licensee Third Party's Contract, any Software in possession of an Additional User (including partial copies within modified versions) are returned to Licensee. Licensee agrees to indemnify Documentum and hold Documentum and its directors, employees and agents harmless from all costs, losses, liability and expenses (including court costs, attorney fees, and disbursements) incurred as result of any claims or demands brought against Documentum or its directors, employees, or agents arising from or in connection with any Additional User's failure to abide by the terms and conditions of the Agreement. 3. License Exclusions Except as expressly authorized herein, Licensee shall not cause permit any: (i) copying or modification of the Software or Documentation: (ii) reverse engineering, decompilation, translation, disassembly, or discovery of the source code of all or any portion of the Software: (iii) distribution, disclosure, marketing, rental, leasing or transfer to any third party of the Software or the Documentation, or use of the Software for any dial-up, remote access, interactive or other on-line service: (iv) disclosure of the results of Software performance bench marks to any third party without Documentum's prior written consent: (v) transfer of the Software except in accordance with Section 4.1 below; or (vi) export of the Software in violation of U.N. embargoos or U.S. laws and regulations, including the Export Administration Act of 1979, as amended, and successor and legislation, and the Export Administration Regulations issued by the Department of Commerce 4. Fees and Payments Terms 4.1. Licensee shall pay (or cause a mutually agreed upon third party to pay) Documentum the fees specified in each applicable Schedule or purchase order and all associated shipping costs. If Licensee tranfers Software to Asia Pacific, Lincensee shall pay the difference between the then-current US price list and the Asia Pacific price list to Documentum within thirty (30) days from the date of transfer. 4.2. All fees shall be due and payable within thirty (30) days of the date of invoice. Licensee is responsible for all taxes concerning the Software and/or services, excluding taxes based on Documentum income. Overdue payments shall bear interest at the lesser of twelve 12 percent (12%) per annum or the maximum rate allowed under applicable law. 5. Title, Protection and Equitable Relief 5.1. Documentum (or its licensors) retains all rights, title and interest in the Software and Documentation and any copies thereof, provided, however that title to the Software media, responsibility of shipment and risk of loss shall remain with Documentum until delivery of the media to Licensee at the address specified by the Licensee. Except as otherwise expressly granted in this Agreement, no license, right or interest in any Documentum trademark, copyright, trade name or service mark is granted hereunder. 5.2. Licensee shall affix, to each full or partial copy of the Software or Documentation made by the Licensee, all copyright and proprietary information notices as were affixed to the original. 5.3. Each party acknowledges that any breach of its obligations with respect to the proprietary rights of the other party or such party's licensors may cause such other party irrepurable injury for which there may be inadequate remedies at law and that such other party and its licensors will be entitled to equitable relief, in addition to all other remedies available to it. 6. Patent and Copyright Indemnity 6.1. Documentum will defend indemnify Licensor for all costs (including reasonable attorneys fees) arising from a claim that Software furnished and used within the scope of this Agreement infringes a copyright or patent provided that (i) Licensee notifies Documentum in writing within thirty (30) days of the claim, and (ii) Documentum has sole control of the defense and all related settlement negotiations, and (iii) Licensee provides Documentum with the assistance, information, and authority necessary to perform the above; reasonable expenses incurred by Licensee in providing such assistance will be reimbursed by Documentum. 6.2. Documentum shall have no liability for any claim of infringement based on (i) use of a superseded or modified release of the Software, except for such alteration(s) or modification(s) which have been made by Documentum or under Documentum's direction, if such infringement would have been avoided by the use of a current unaltered release of the Software that Documentum provides to Licensee at no additional charge, or (ii) the combination, operation, or use of any Software furnished under this Agreement with programs or data not furnished by Documentum if such infringement would have been avoided by the use of the Software without such programs or data. 6.3. In the event the Software is held or believed by Documentum to infringe, or Licensee's use of the Software is enjoined, Documentum shall have the option, at its expense, to (i) modify the Software to be noninfringing, or (ii) obtain for Licensee a license to continue using the Software, or (iii) substitute the Software with other software reasonably suitable to Licensee, or (iv) if none of the foregoing remedies are commercially feasible, terminate the license for the infringing Software and refund the license fees paid for that Software, prorated over a five-year term from the effective date of the applicable Schedule or purchase order. This Section 6 states Documentum's entire liability for infringement. 2 7. Default and Termination 7.1. An event of default shall be deemed to have occurred if either party fails to perform any material obligation under this Agreement and such failure remains uncured for more than thirty (30) days after receipt of written notice thereof. 7.2. If an event of default occurs, the nondefaulting party, in addition to any other rights available to it under law or equity, may terminate this Agreement and all licenses granted hereunder by written notice to the defaulting party. Remedies shall be cumulative and there shall be no obligation to exercise a particular remedy. 7.3. Within thirty (30) days after termination of this Agreement, Licensee shall certify in writing to Documentum that all copies of the Software and Documentation in any form, including partial copies within modified versions. have been destroyed or returned to Documentum. 7.4. The parties' rights and obligations under Sections 5, 6, 9, 10, 16 and 17 shall survive termination of this Agreement. 8. Warranty 8.1. Documentum warrants that it has title to and/or the authority to grant licenses of the Software. 8.2. Documentum warrants for a period of ninety (90) days from Licensee's receipt of the Software that the Software, unless modified by Licensee, will perform, in all material aspects, the functions described in the Documentation when operated on the specified platform. 8.3. Documentum warrants that from the date of Licensee's receipt of the Software until ninety (90) days after January 1, 2001, that the Software will, when properly installed. (i) record, store, process, and present calendar dates falling on or after January 1, 2000, in the same manner, and with the same functionality, as the Software records, stores, processes, and presents calendar dates on or before December 3l, 1999, and (ii) lose no functionality with respect to the introduction of records containing dates falling on or after January 1, 2000. This warranty shall not apply to third party products with which the Software interacts, other than third party products which are licensed by Licensee under this Agreement. 8.4. The warranties in Sections 8.2 and 8.3 shall not apply to Restricted Release(s), or to Software which has been modified by Licensee or any party other than Documentum, or to Software which has been improperly installed or used in a manner other than as authorized under this Agreement to the extent such modification(s) or improper installation cause the breach of warranty, Documentum does not warrant that the Software will meet Licensee's requirements, or that the Software will operate in the combinations which Licensee may select for use, or that the operation of the Software will be uninterrupted or error-free, or that all Software errors will be corrected. Any claim submitted under this Section 8 must be submitted in writing to Documentum within the specified warranty period. Documentum's sole and exclusive obligation for warranty claims shall be to make the Software operate as warranted or to terminate the license for such Software and return the applicable license fees paid to Documentum for such Software. 8.5. THE WARRANTIES ABOVE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES. WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 9. Limitation of Liability EXCEPT AS PROVIDED IN SECTION 6 (PATENT AND COPYRIGHT INDEMNITY), DOCUMENTUM'S LIABILITY FOR DIRECT DAMAGES UNDER THIS AGREEMENT SHALL IN NO EVENT EXCEED THE AMOUNT PAID BY LICENSEE TO DOCUMENTUM FOR THE SOFTWARE OR THE SERVICES AS TO WHICH THE CLAIM AROSE. IN NO EVENT SHALL DOCUMENTUM OR LICENSEE BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST DATA OR LOST PROFITS, HOWEVER ARISING, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL DOCUMENTUM LICENSORS BE LIABLE FOR ANY DIRECT, SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR EXEMPLARY DAMAGES ARISING OUT OF THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION WHETHER BASED IN CONTRACT, TORT, OR ANY LEGAL THEORY, THE PARTIES AGREE TO THE ALLOCATION OF LIABILITY RISK WHICH IS SET FORTH IN THIS SECTION. 10. Confidentiality 10.1. The parties acknowledge that by virtue of their licensing, support services or consulting relationship the parties may have access to Confidential Information. The parties agree, both during the term of this Agreement and for a period of three (3) years after termination, to hold each other's Confidential Information in confidence. The parties agree not to make each other's Confidential Information available in any form to any third party (other than those of its employees or consultants under the nondisclosure obligations) or to use each other's Confidential Information for any purpose other than as contemplated by this Agreement. Each party agrees to take commercially reasonable steps to ensure that Confidential Information is not disclosed or distributed by its employees or agents in violation of the provisions of this Section 10. 10.2. Notwithstanding any provision contained in this Agreement, neither party shall be required to maintain in confidence any of the following information: (i) information which, at the time of disclosure to the receiving party, is in the public domain; (ii) information which, after disclosure, becomes part of the public domain, except by breach of this Agreement; (iii) information which was in the receiving party's possession at the time of disclosure, and which was not acquired, directly or indirectly, from the disclosing party; (iv) information which the receiving party can demonstrate resulted from its own research and development, independent of disclosure from the disclosing party; (v) information which the receiving party receives from third parties, provided such information was not obtained by such third parties from the disclosing party on a confidential basis; or (vi) information which is produced in compliance with applicable law or a court order, provided the other party is given reasonable notice of such law or order and an opportunity to attempt to preclude or limit such production. 11. Support Services 11.1. Provided Licensee has paid the applicable support and maintenance fees, Documentum will provide or cause to be provided support services for the Software (except for Restricted Release) in accordance with its support policies and procedures described in its then current technical support users guide. Support services include telephone support and updates. Support services fees shall be billed on an annual basis payable in advance. 11.2. Support will include one (1) machine executable copy of the object code for new releases, updates and enhancements of the Software that are not designated by Documentum as new products for which it charges a separate fee. Licensee may make copies of the Documentation and Software provided hereunder subject to the terms and conditions of this Agreement. No updates may be copied by Licensee to update any copies of the Software made by Licensee unless support services have been purchased for such copies. 11.3. Support services shall be provided for one (1) year from the effective date of the applicable Schedule or purchase order and shall be extended each year for an additional one (1) year term unless terminated by Licensee prior to the end of any support service term by giving written notice at least sixty (60) days prior to the end of any such term. Support commences on the date the Software is shipped to Licensee or on the date of invoice for of the Software made by Licensee. 11.4. Documentum shall have no obligation to provide support services if Licensee fails to make any required support services payment or otherwise elects to discontinue support services. In order to reinstate or renew support 3 services, Licensee must first pay Documentum the then current annual support services fee and all past unpaid support services fees. 11.5. Documentum shall have no obligation to support (i) altered, damaged or modified Software, or (ii) Software that is not the then-current or previous sequential release, or (iii) Software problems caused by Licensee's negligence, hardware malfunction or other causes beyond the control of Documentum, or (iv) Software installed in an operating environment for which the Software has not been licensed. 12. Restricted Release If Licensee is selected for participation and elect to participate in a Restricted Release program, Licensee agrees (i) Documentum shall have no obligation to correct errors in, deliver updates to, or otherwise support a Restricted Release, and (ii) Licensee will promptly report to Documentum any error discovered in the Restricted Release and provide Documentum with appropriate test data for the Restricted Release if necessary to resolve problems in the Restricted Release encountered by Licensee, and (iii) the Restricted Release is experimental, may contain problems and errors and is being provided to Licensee on an as-is basis with no warranty of any kind, express or implied, and (iv) neither party will be responsible or liable to the other for any losses, claims or damages of whatever nature, arising out of or in connection with the Restricted Release, and (v) Licensee will not use the Restricted Release in production applications without the prior written approval of Documentum, and (vi) Licensee will promptly install each later version and any production version of the Restricted Release received from Documentum and upon such receipt shall stop use of the Restricted Release. 13. Consulting Services If Documentum provides Services to Licensee, any Developments shall be the property of Documentum. Documentum grants to Licensee a nonexclusive perpetual, non-transferable royalty free license to use, solely for internal use, the Developments in accordance with this Agreement. No title shall pass to Licensee with respect to any Developments or related documentation. 14. Notices All notices shall be in writing and sent by first class mail, overnight courier, or transmitted by facsimile and confirmed by mailing, to the addresses indicated on the first page of this Agreement, or such other address as either party may indicate by at least ten (10) days prior written notice to the other party. Notices to Documentum shall be sent to the Legal Department. Notice shall be deemed to have been given upon personal delivery (in the case of overnight courier or facsimile) or five(5) business days after being sent by first class mail. 15. Assignment Licensee may not assign this Agreement (by operation of law or otherwise) or sublicense the Software without the prior written consent of Documentum. Any prohibited assignment or sublicense shall be null and void. The foregoing notwithstanding, upon written notice to Documentum, Licensee may assign, or otherwise transfer this Agreement to (i) its parent company or (ii) any of its or its parent company's subsidiaries or affiliates as long as such subsidiary or affiliate is at least fifty-one percent (51%) owned by Licensee or Licensee's parent company, or (iii) the surviving entity as a result of a merger, acquisition or reorganization of all or substantially all of Licensee's assets or stock provided such entity is not deemed by Documentum to be a direct competitor of Documentum and agrees in writing it will be bound by the terms and conditions of this Agreement. 16. Attorney's Fees In the event that any legal action, including arbitration, is required in order to enforce or interpret any of the provisions of this Agreement, the prevailing party in such action shall recover all reasonable costs and expenses, including the attorney's fees, incurred in connection therewith. 17. Governing Law This Agreement shall be governed and construed under the laws of the State of California, as if performed exclusively in California by California residents and in no event shall this Agreement be governed by the United Nations Convention on Contracts for the International Sale of Goods. 18. General 18.1 The Software is a "commercial item", as that term is defined, of 48 C.F.R. 2.101 (OCT 1995), consisting of "commercial computer software" and "commercial computer software documentation", as such terms are used in 48 C.F.R. 12.212 (SEPT 1995) and is provided to the U.S. Government only as a commercial end item. Consistent with 48 C.F.R. 12.212 and 48 C.F.R. 227.7202-1 through 48 C.F.R. 227.7202-4 (JUNE 1995), all U.S Government end users acquire the Software with only those rights forth herein. 18.2 The parties acknowledge that the Software may include software licensed by Documentum from Documentum Licensors, Documentum Licensors may be direct and intended third party beneficiaries of this Agreement and may be entitled to enforce it directly against Licensee to the extent (i) this Agreement relates to the licensing of Documentum Licensors' software products, and (ii) Documentum fails to enforce the terms of this Agreement on Documentum Licensors' behalf. 18.3 The section headings herein are provided for convenience only and have no substantive effect on the construction of this Agreement. Neither party shall be liable for any failure to perform due to causes beyond its reasonable control. If any provision of this Agreement is held to be unenforceable, the parties shall substitute for the affected provision on enforceable provision which approximates the intent and economic effect of the affected provision. The failure by a party to exercise any right hereunder shall not operate as a waiver of such party's right to exercise such right or any other right in the future. This Agreement may be ammended only by a written document executed by a duly authorized representative of each of the parties. This agreement may be executed in counterparts. A facsimile of a signed copy of this Agreement received from Licensee may be relied upon as an original and if there is any inconsistency between such facsimile and a subsequently received hard copy, the facsimile shall prevail. 4 [LOGO] anapharm ADDENDUM TO THE SOFTWARE END USER LICENSE AGREEMENT This addendum is part of the SOFTWARE END USER LICENSE AGREEMENT and its SCHEDULE between Anapharm Inc. and Documentum Inc. This addendum officializes our agreement to guarantee the prices of the quoted items on the Schedule to End User License Agreement for the next six (6) months after the signature of this addendum. This guarantee of prices is valid for all software listed except the WEB CACHE and the DEVELOPER STUDIO, which are not covered by this agreement. Licensee: ANAPHARM INC. DOCUMENTUM INC. Company Name Company Name By: /s/ JACQUES VANDRY /s/ Sayed Darwish ------------------------- -------------------------------- Authorized Representative Authorized Representative Sayed Darwish Vice President, General Counsel JACQUES VANDRY DIRECTOR IT & Secretary Printed Name And Title Printed Name and Title 2001-12-17 12/21/01 Date Date [LETTERHEAD] anapharm Schedule to End User License Agreement [LOGO] documentum
- -------------------------------------------------------------------------------------- Software Product Schedule - -------------------------------------------------------------------------------------- Standard Per Seat/ Net License Support Restricted Software License Qty Unit Fee Fees Services Release Y/N - -------------------------------------------------------------------------------------- Foundation License 75 600.00 45,000.00 8,100.00 - -------------------------------------------------------------------------------------- Documentum Administrator 2 2,500.00 5,000.00 900.00 - -------------------------------------------------------------------------------------- Developer Studio 2 5,000.00 10,000.00 1,800.00 - -------------------------------------------------------------------------------------- Reporting Gateway-Developer 1 600.00 600.00 108.00 - -------------------------------------------------------------------------------------- Reporting Gateway-Consumer 2 100.00 200.00 25.00 - -------------------------------------------------------------------------------------- WebCache 1 3,000.00 3,000.00 540.00 - -------------------------------------------------------------------------------------- AutoRender Pro 1 12,500.00 12,500.00 2,750.00 - -------------------------------------------------------------------------------------- DCM Contributor 75 500.00 37,600.00 6,750.00 - -------------------------------------------------------------------------------------- DCM Consumer Pricing 25 400.00 10,000.00 1,800.00 - -------------------------------------------------------------------------------------- Print Services Module 1 20,000.00 20,000.00 3,600.00 - -------------------------------------------------------------------------------------- 143,800.00 25,884.00 ====================================== Total Amount Due (USD): USD 169,684.00 ======================================================================================
- -------------------------------------------------------------------------------- Product Languages: English, French - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Product Platforms: - -------------------------------------------------------------------------------- Web Server OS Server: Web Browser: OS Client: HTTP Server: RDBMS; - -------------------------------------------------------------------------------- Acknowledgement: Effective the first data set forth below, Licensee's authorized representative, by his or her signature, acknowledges License's binding commitment to pay for the Software and Support Services specified in this Schedule in accordance with the Software End User License Agreement between the parties dated December 17, 2001: and - ----------- Purchase order # will be submitted to - ----------- ------------------------ Documentum within five (5) business days of the execution of this Schedule: or - ----------- Please accept this Schedule in lieu of a purchase order. Our - ----------- Internal references # should appear on all invoicing ---------------- documents related to this Schedule. The United States Department of Commerce has classified Site Delevery Services. WebCache under ECCN No. 50002 and to be exported under licenses exception "ECN". It is the obligation of each Licensee to comply with all relevant import and export regulations of the United States and each applicable country. Licensee: ANAPHARM INC [LOGO] documentum Company Name By: /s/ JACQUES VANDRY By: /s/ Sayed Darwish -------------------------- ------------------------------- Authorized Representative Authorized Representative Sayed Darwish Vice President General Counsel JACQUES VANDRY DIRECTOR IT & Secretory Printed Name and Title Printed Name and Title 2001-12-17 12/21/01 Date Date ========= Bon de commande Numero de Commande 1219244 ==================== ========= INTERDOC CORPORATION Date de Commande ====================
NOM DU FOURNISSEUR Numero de compte A/C# Facture # ========================================================================================== DOCUMENTUM ========================================================================================== ========================================================================================== QUALITY ITEM PRIXUNES NUMERO D ITEM BRIX ========================================================================================== 75 4 Foundation license $ 480.00 $ 36,000.00 - ------------------------------------------------------------------------------------------ 2 Documentum Administrator $ 2,000.00 $ 4,000.00 - ------------------------------------------------------------------------------------------ 2 Developer Studio $ 4,000.00 $ 8,000.00 - ------------------------------------------------------------------------------------------ 1 Reporting Gateway Developer $ 480.00 $ 480.00 - ------------------------------------------------------------------------------------------ 2 Reporting Gateway Consumer $ 80.00 $ 160.00 - ------------------------------------------------------------------------------------------ 1 WebCache $ 2,400.00 $ 2,400.00 - ------------------------------------------------------------------------------------------ 1 Auto Render Pro $10,000.00 $ 10,000.00 - ------------------------------------------------------------------------------------------ 75 DCM Contributor $ 400.00 $ 30,000.00 - ------------------------------------------------------------------------------------------ 25 DCM Consumer $ 320.00 $ 8,000.00 - ------------------------------------------------------------------------------------------ 1 Print Service Module $16,000.00 $ 16,000.00 - ------------------------------------------------------------------------------------------ 1 Annual Maintenance $25,884.00 $ 25,884.00 - ------------------------------------------------------------------------------------------ ********PAYABLE IN U.S. DOLLARS******** - ------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------ TOTAL $140,924,00 ------------------------------- [LOGO] INTERDOC CORPORATION Taxe Federale n/a ------------------------------- Taxe Provincrale n/a ------------------------------- Grand Total $140,924,00 - ------------------------------------------------------------------------------------------
- ----------------------- ----------------------------------- /s/ Danny Boulanger Illegible Danny Boulanger - ----------------------- ----------------------------------- Danny Boulanger Illegible Carole Settano - ----------------------- ----------------------------------- MedICC Master Software Agreement This Master Software Agreement ("Agreement") is entered into by and between MedICC ("MedICC"), a Quebec corporation with principal offices at 300 Marcel-Laurin, Suite 205, Montreal, Quebec, H4M 2L4 and Anapharm Inc. with its Subsidiaries (as defined below)(collectively "Licensee") with principal offices at 2050 Renc-Levesque Blvd, West. Sainte-Foy, Qucbec, GIV 2K8. In consideration of the mutual covenants exchanged herein, and intending to be legally bound hereby, MedICC and Licensee agree as follows: 1. DEFINITIONS 1.1 "Authorized representative" shall mean the person authorized by each party to speak for and bind that party in all oral, email and written communications with the other party. 1.2 "Database" means any database, which contains any or all of the structures that comprise the data storage architecture of the Software. 1.3 "Delivery Date" means the date by which the Software shall be delivered to the Installation Location in the Rider. 1.4 "Documentation" means manuals and other materials related to the Software provided by MedICC to Licensee, and listed in any Rider hereunder. 1.5 "Effective Date" means the date that this Agreement binds the parties, and is listed above the signature block. If no Effective Date is specified, then it shall be the earlier of the date that this Agreement is executed by both parties, or the date that MedICC delivers any Software or its components to Licensee. 1.6 "License Fees" mean the fees payable by Licensee to MedICC for the rights to use the Software. 1.7 "Object Code" means the version of the Software intended that may be executed by computers without compilation or any additional steps, "Object Code" excludes Source Code. 1.8 "Maintenance" shall mean the services provided to maintain the Software hereunder. 1.9 "Maintenance Fees" means the fees paid by Licensee, which entitle Licensee to receive Maintenance. 1.10 "Price List" means one or more lists published by MedICC from time to time, which specify License Fees, Maintenance Fees, and other charges set by MedICC. 1.11 "Rider" means a hard-copy document that, when signed by both parties, is made a part of this Agreement. A sample Rider is attached hereto. 1.12 "Server" means any computer on which the Software, or any other components of the Software, are installed. being understood that the Software may be used on a remote basis by any workstation on the LAN\WAN. 1.13 "Service Fees" means the fees and other expenses charged by MedICC for services hereunder. 1.14 "Software" means computer program know as CESR 3.0. 1.15 "Source Code" means a version of the Software that intended to be read and edited by humans. "Source Code" excludes Object Code. 1.16 "Subsidiary" means all current and future business entities of which a party owns, directly or indirectly, more than fifty percent (50%) of the equity securities or other equity interest granting such party voting rights exercisable in electing the management of the entities, for so long as such ownership exists. 1.17 "User" means a named person who is authorized to use the Software, as specified in a Rider. 2. LICENSE 2.1 MedICC hereby grants to Licensee a perpetual, non-exclusive, non-transferable, right and license to use the Software in Object Code form only, as well as the Documentation, in accordance with the terms and conditions of this Agreement ("License"). No right to sublicense the Software is granted hereunder. The Page 1 of 10 Confidential Software may only be used for Licensee's internal business purposes by certain, named Users, on particular Servers that are located at specific physical addresses. 2.2 Licensee shall not copy or otherwise reproduce any part of the Software or Documentation, except as expressly authorized by this Agreement. In addition. Licensee shall use commercially reasonable efforts to prevent the Software or Documentation from being acquired, copied (except as expressly permitted herein), or otherwise handled by unauthorized persons. Not withstanding the foregoing, Licensee is authorized to make and retain one copy of the Software in Object Code form and Documentation for back-up and disaster recovery purposes. All proprietary notices, logos, copyright notices, and similar marking shall be retained on such copies. 2.3 Licensee shall not (a) make alterations to or modify the Software in any way; (b) combine or merge any part of the Software; (c) use the Software at physical locations other than at the locations set forth in the applicable Rider; (e) make any use of the Software except as expressly authorized by this Agreement; (f) dissemble, decompile, decode or otherwise reverse engineer or attempt to reconstruct or discover any Source Code or underlying algorithms of the Software. 2.4 Except for those rights specifically granted herein, Licensee is granted no other rights in or to the Software or Documentation. Any Software or Documentation delivered pursuant to any Rider hereunder, together with all copyrights, patents, trademarks, trade secrets, intellectual property and other rights therein, are and shall remain the sole property of MedICC. 2.5 Licensee shall permit representatives of MedICC to inspect, on an annual basis, any Server at any location at which the Software is being used at reasonable times and on reasonable notice for the purpose of verifying that Licensee is not in default of this Agreement; provided however that prior to such inspection MedICC execute a confidentiality agreement satisfactory to Licensee. 3. CHANGES TO SERVERS 3.1 The initial Rider, dated September 01, 2001, shall specify the name, model, serial number and physical address of each Server ("Licensee Records"). This information shall be kept and maintained by Licensee's Authorized Representative. 3.2 Licensee's Authorized Representative shall maintain Licensee's Records, including (a) each User's name, title, date of authorization, and date authorization ended: and (b) the name, model, serial number and location of each Server in service. At MedICC's request, Licensee's Authorized Representative shall provide MedICC with a copy of the Licensee's Records. 3.3 Each time that a Server is moved to a new physical location within the same country, or one Server is replaced with another Server , Licensee's Authorized Representative shall notify MedICC of the same promptly before the move or change. 3.4 Should Licensee desire to increase the number of Servers, or should Licensee desire to move or begin use of a Server in a different country. Licensee may request prior, written permission of MedICC ("Change Request"). No such Change Request shall be deemed granted unless placed in a Rider and signed by both parties. 3.5 Within thirty (30) days of the execution by both parties of a Rider that implements a Change Request, Licensee shall pay MedICC the difference between the License Fees on the then-current Price List before and after the approved Change Request. 3.6 Where Licensee desires to move the Software to a different country, approval of a Change Request may be conditioned on Licensee signing a new license agreement with MedICC (or its foreign representative) that may contain terms different from this Agreement that are applicable to the country where the Software will be installed, and Licensee may be Page 2 of 10 Confidential required to agree to different terms, fees and discount rates. 3.7 If Licensee fails to comply with any of its reporting obligations under paragraph 3.4 above, and the Software is the subject of a Change Request entailing a higher fee than that charged for the proceeding configuration, then the Licensee shall pay MedICC, retroactive to the date of such Rider approving the Change Request, the difference between the two fees, plus a penalty in the amount of twenty-five percent of such difference between the two fees. 4. FEES 4.1 Licensee shall pay to MedICC the License Fees and other Fees as set forth in the Price List or any applicable Rider. 4.2 All Fees are payable without offset or deduction of any kind. 4.3 Any Invoices not paid within sixty (60) days of the date of the invoice may be subject to a late payment charge of one-and-one-half percent (1.5%) per month, or the highest legal rate, if less. 4.4 Any failure to pay an invoice within one hundred eighty (180) days of the date of the invoice shall be grounds for MedICC to stop any and all work or services until payment is received. 4.5 All Fees payable under this Agreement are payable in Canadian dollars. All Fees are net of any applicable sales, use, property and other taxes and import or other duties, however designated or levied. Payment of all such taxes and duties (excluding taxes assessed upon the profit or gain of MedICC) shall be the sole responsibility of Licensee. If the Licensee in good faith contests any tax that is so payable or reimbursable by the Licensee, MedICC shall cooperate in the contest at the Licensee's expense. Licensee shall not be required to pay or reimburse MedICC for taxes based upon the net worth, capital, net income, or franchise of MedICC solely by reason of MedICC doing business in or being incorporated in the jurisdiction imposing such taxes. 5. TERM AND TERMINATION 5.1 This Agreement shall commence on the Effective Date, and shall continue until terminated in accordance with this Agreement. 5.2 Upon any material default of any provision of this Agreement by Licensee, MedICC may send Licensee a written notice of termination of this Agreement or any Rider hereunder, which shall automatically be effective thirty (30) days after the date of such notice unless Licensee cures such default within the thirty (30) day period. Material defaults means, (a) any failure to pay MedICC any License Fees when due: (b) any breach of the confidentiality or proprietary rights provisions of this Agreement; (c) Licensee enters into bankruptcy, whether voluntary or involuntary: (d) Licensee has a receiver appointed; (e)Licensee becomes insolvent; (f) Licensee takes or suffers any similar action in consequence of debt, or (g) Licensee ceases or threatens to cease to carry on its business as usual. 5.3 Any Fees due to MedICC for services performed, and any Fees accrued but not yet paid to MedICC, at the termination of this Agreement or any Rider hereunder for any reason shall be due to MedICC immediately upon such termination. Notwithstanding the foregoing, if the Agreement is terminated for reason other than those listed in 5.2 above, MedICC shall reimburse any Fees (except the License Fee) paid by Licensee for services not rendered or, in the case of the Maintenance Fee, an amount equal to the Maintenance Fee less one-twelve (1/12) thereof for each month or portion thereof that this Agreement has been in effect. 5.4 Upon termination of this Agreement pursuant to Section 5.2 only, (a) all of Licensee's Licenses are terminated; (b) Licensee shall immediately cease using the Software; (c) any data accumulated by Licensee while the Software was licensed in compliance with this Agreement may be retained by the Licensee; and (d) Licensee shall return to MedICC all copies of the Software and Documentation. Upon written request from MedICC, an officer to Page 3 of 10 Confidential Licensee shall promptly confirm in writing to MedICC the specific steps taken by Licensee to comply with this provision. 6. MAINTENANCE 6.1 MedICC hereby agrees to provide, and Licensee hereby agrees to purchase Maintenance as described below for at least one (1) year following execution of each Rider for each item of Software and Related Documentation. 6.2 After the first year, Maintenance will automatically renew each year for subsequent one (1) year periods, unless Licensee terminates Maintenance for any or all Software by written notice received by MedICC; at least thirty (30) days prior to the end of the then-current Maintenance period. After five (5) years, either party may terminate maintenance. If a Maintenance Fee is not received by the date due, then MedICC reserves the right to suspend Maintenance until such payment is received. 6.3 Maintenance will begin upon execution of this Agreement, and shall include: (a) Off-site telephone support from MedICC's North American Offices, Monday through Friday, 8:00 am to 5:00 pm Eastern Time, excluding statutory holidays and local MedICC holidays; (b) improvements, application enhancements and updates to the Software that are designated as such by MedICC in support of operating system changes to keep the Software competitive in the marketplace. MedICC will maintain the Software in accordance with MedICC's then-current specifications. 6.4 If during the term of the maintenance program, Licensee encounters a problem in the usage of the Software. Licensee shall notify MedICC and MedICC will acknowledge receipt of Licensee's notification within one (1) business day and start diagnosing said problem, if notification is received during business hours. If notification is made outside business hours, MedICC will acknowledge receipt and start diagnosing said problem as soon as practicable. In the event that MedICC is unable to remedy a major problem using all its best efforts to remediate as soon as feasible, but in no event longer than thirty (30) days after it has received notification on the same, Licensee shall have the right to terminate the Maintenance provisions of this Agreement. Should Licensee elect to terminate Maintenance, MedICC will promptly refund to Licensee the unexpired portion of the Maintenance fees paid by Licensee for the then-current Maintenance period. If it is determined by MedICC that said problem is caused by an error in the Software, MedICC will correct said problem. If it is determined that said problem is not caused by an error in the Software, Licensee shall pay MedICC, in accordance with MedICC then current rates, for all work performed to diagnose and determine the cause of said problem. Maintenance does not include any of the following, which may be available at additional cost pursuant to an additional Rider signed by the parties: Installation, education, training, consulting, programming, special services, customized features, or new or additional Software item not specified on a Rider. 6.5 MedICC shall use its reasonable best efforts to provide a prompt, correct response to telephone inquiries from Licensee. If technically feasible, remedial services in the form of corrections in response to verified problems with the Software will be completed during ordinary business hours in the day on which Licensee reports and verifies the problem. Maintenance services furnished hereunder shall be performed by MedICC at its premises during ordinary business hours employing adequate remote diagnostic procedures, unless through such remote diagnostic procedures MedICC is unable to perform promptly the services required hereunder, in which case MedICC will make such visits to Licensee's sight as necessary to provide such services at the Licensees expense. MedICC represents, warrants and agrees that all support and Maintenance services provided hereunder shall be performed Page 4 of 10 Confidential in a prompt and workmanlike fashion in accordance with good and customary industry standards. 7. CUSTOMIZATION 7.1 Upon request from Licensee, MedICC may agree to customize the Software and Documentation to suit Licensee's particular needs or preferences ("Custom Software"). A Rider shall cover any such agreement under this Agreement and which shall set for the fees, terms, conditions that cover such customization. 7.2 MedICC shall own all right and title in and to any and all such Custom Software, and which shall be deemed to be licensed to Licensee as an additional item of Software under the License. 8. LIMITED WARRANTY 8.1 For each item provided to Licensee by MedICC, the period for any warranties under this Agreement shall commence on the Effective date for CESR 3.0 and on the date of delivery for any other items and shall continue for nonextendable period of one hundred eighty (180) days ("Warranty Period"). 8.2 MedICC represents to Licensee that the Software and related Documentation have tangible value; and that MedICC has the right to license, market and distribute, maintain and support the Software. 8.3 MedICC represents that, to the best of its knowledge, the Software (and the magnetic or other media in which they are embedded) provided by it do not contain any viruses or programming codes or instructions that are constructed to damage, interfere with or otherwise adversely affect Software. 8.4 MedICC warrants that at the time of delivery of the Software and upgrades thereafter, the software and upgrades will perform in substantial accordance with the Documentation and specifications. If the Software does not perform as warranted, Licensee shall notify MedICC of the purported failure to perform and MedICC, at its option and expense, and within a commercially reasonable period of time, undertake to correct the Software, replace the Software free of charge with a software having the same functionality, or, if neither of the foregoing is commercially practicable, terminate this Agreement and refund to Licensee the License Fee and the Maintenance Fee actually paid. 8.5 MedICC's sole obligation under the warranties herein is that MedICC shall use commercially reasonable efforts to remedy or repair the Software or other item, as soon as reasonably practicable. MedICC may, at its sole discretion, provide either an update of the affected item or an alternative method that has substantially the same functionality. 8.6 MedICC's warranty obligation is conditioned upon: (a) Licensee providing MedICC written notice of any substantial malfunction promptly and in any event within the Warranty Period; (b) the said malfunction being repeatedly demonstrable by MedICC's technical representatives; and (c) the Software has not been added to or modified by Licensee or any one other than MedICC. 9. DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY 9.1 EXCEPT AS EXPRESSLY STATED HEREIN, MedICC DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED. INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. 9.2 IN NO EVENT WILL MedICC BE LIABLE TO LICENSEE OR ANY OTHER PARTY FOR ANY REASON WHATSOEVER, WHETHER IN CONTRACT OR IN TORT, FOR ANY LOSS RESULTING FROM THE USE OF THE SOFTWARE OR OTHER ITEM, WHETHER INTENDED OR FORESEEABLE, OR FOR ANY FORM OF INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL, OR INCIDENTAL LOSS, DAMAGE OR EXPENSE Page 5 of 10 Confidential (INCLUDING, BUT NOT LIMITED TO, LOSS DUE TO INABLITY TO OBTAIN DATA, LOSS OF BUSINESS, OR LOSS OF ANTICIPATED PROFITS) IN CONNECTION WITH OR ARISING OF THE FURNISHING, FONCTIONING OR USE OF ANY SOFTWARE OR OTHER ITEM PROVIDED UNDER THIS AGREEMENT OR ANY RIDER ENTERED INTO PURSUANT TO IT, EVEN IF ADVISED OF THE POSSIBILITY THEREOF. 9.3 EXCEPT FOR LIABILITY FOR PATENT OR COPYRIGHT INFRINGEMENT OR FOR ANY DEATH, PERSONAL INJURY OR PROPERTY DAMAGE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF MedICC HEREUNDER, MedICC'S LIABILITY HEREUNDER SHALL NOT IN ANY EVENT EXCEED THE FEES RECEIVED BY MedICC FROM LICENSEE FOR THE PARTICULAR MedICC SOFTWARE PRODUCT OR SERVICES INVOLVED. 9.4 MedICC DOES NOT MAKE ANY WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY HARDWARE OR THIRD PARTY SOFTWARE, EVEN IF SUCH HARDWARE WAS AQUIRED BY MedICC FOR USE BY LICENSEE, ALL WARRANTIES, IF ANY, FOR ANY HARDWARE OF THIRD PARTY SOFTWARE, ARE MADE BY THE VENDORS OF SUCH HARDWARE OR THIRD PARTY SOFTWARE, AND ARE PROVIDED DIRECTLY BY SUCH VENDORS TO LICENSEE. 9.5 IN NO EVENT WILL MedICC HAVE ANY LIABILITY, BASED ON CONTRACT, TORT OR OTHERWISE, FOR DIRECT, INDIRECT, CONSEQUENTIAL, OR ANY OTHER DAMAGES ARISING FROM ANY THIRD PARTY SOFTWARE WITHIN OR MADE PART OF THE LICENSED SOFTWARE. 10. PROPRIETARY RIGHTS 10.1 Without MedICC's prior written consent, Licensee shall not provide to third parties, in whole or in part, in any manner, the original or any copy of software, Documentation or any other item provided by MedICC to Licensee. 10.2 Licensee acquires no right in or to any MedICC trademarks, copyrights, patents, trade secrets or any other intellectual property rights of MedICC or any third parties by entering into this Agreement or any Rider. 10.3 License shall take all responsible precautions to maintain the confidentiality of the Software, which precautions shall be a least equivalent to those precautions Licensee takes to protect its own confidential information, and in no event, less than reasonable precautions. However, Licensee bears no responsibility for safeguarding information that is publicly available, already in Licensee's possession, obtained by Licensee from third parties without restrictions on disclosure, independently developed by Licensee without reference to confidential information, or require to be disclosed by order of a court or other governmental entity. 10.4 Notwithstanding anything herein to the contrary. Licensee may authorize its third party consultants who are hired by Licensee under written agreement to Use the Software in accordance with the terms of this Agreement provided that such third parties sign a Licensee confidentiality agreement. 10.5 MedICC acknowledges that, in the course of its performance of this Agreement, it may become privy to certain information that Licensee deems proprietary and confidential. MedICC agrees to treat all such information in a confidential manner and will not disclose or permit to be disclosed the same, directly or indirectly, to any third party without Licensee's prior written consent. 11. ASSIGNMENT 11.1 Neither this Agreement nor any rights of Licensee hereunder shall be Page 6 of 10 Confidential transferred or assigned, in whole or in part, without the prior written consent of MedICC. 11.2 Notwithstanding the above, Licensee may assign this Agreement (a) pursuant to a spin-off, merger or sale of all or substantially all of its assets or (b) within the Licensee family of companies, in both cases without the prior permission of MedICC and at no additional cost, provided Licensee provides MedICC with written notice within ninety (90) days following any such assignment. 12. INDEMNIFICATION 12.1 MedICC shall, at its expenses, defend or settle any claim, action or allegation brought against Licensee that the Software or item, when used within the scope of this Agreement, infringes any patent, copyright, trade secret or other proprietary or intellectual property right of any third party and shall pay any final judgements awarded or settlements entered into: provided the Licensee gives prompt written notice to MedICC of any such claim, action or allegation of infringement and give MedICC the authority to proceed as contemplated herein, MedICC will have the exclusive right to defend any such claim, action or allegation and make settlements thereof at its own discretion, and Licensee may not settle or compromise such claim, action or allegation, except with prior written consent of MedICC, Licensee shall, at MedICC's expense, give such assistance and information as MedICC may reasonably require to settle or oppose such claims; defend or settle, at its option, any action brought against Licensee arising from any claim brought in a Canadian court that Licensee's use of the software, in the form provided by MedICC to Licensee, and accordance with the terms of this Agreement and the License hereunder, infringes any patent, copyright, trademark, trade secret ("claim"). 12.2 If the Software is the subject of a claim, MedICC may at its option and expense either: (1) obtain an appropriate license for the Licensee to continue using the Software; or (2) replace or modify the Software (or pasts thereof) that is the subject of the claims so that it is functionally equivalent and no longer infringing as alleged. Except for its indemnification obligations set forth above. MedICC shall have no further liability to Licensee. 13. NON-SOLICITATION; NON-HIRING 13.1 The parties agree to pay the NonHiring Party ("NHP") 1.5 times the total of annual salary plus most recent bonus for each NHP employee solicited by the parties, other than any non NHP targeted employment recruitment process, and accepting employment by the parties during the term of this Agreement and the period of 12 months after termination of this Agreement. The wage rate will be determined by the employee's pay rate at the time the employee leaves NHP's employ. Licensee and MedICC agree that such payment will represent fair and reasonable compensation to NHP for the loss of its employee and subsequent recruiting, training and temporary held necessary to replace any such NHP employee. This sum will be considered separate and apart from any and all other payments due under this agreement. 14. SUB-LICENSING THIRD PARTY SOFTWARE 14.1 MedICC may be a value added reseller ("VAR") or perform similar services for certain third party providers of software (the "Third Party Software") into MedICC's Software. In such cases, the provisions of this Section apply. 14,2 License: Use of any Third Party Software is limited to Object Code to the -------- maximum number of Users actually licensed by the Licensee for its own internal data processing as detailed in the Rider. 14.3 Scope of Use: The Third Party Software is licensed for use with MedICC's ------------- Software only and not for any other purpose; no title is intended to pass to the Licensee, and no right is granted to rent, time-share, or reproduce the Third Party Software, Page 7 of 10 Confidential except for temporary transfer in the event of malfunction. 14.4 No Reverse Engineering: The Licensee agrees not to disassemble, decompile, ----------------------- decode, or otherwise reverse engineer or attempt to reconstruct or discover any Source Code or underlying algorithms of any Third Party Software. Duplications are permitted only for a single backup or archival copy. 14.5 No Export or Re-export: The Licensee agrees not to export or re-export any ----------------------- Third Party Software outside of the Canada, except in accordance with all applicable law and regulations. 14.6 No Use of Third Party Name or Trademarks: The Licensee may not use the name ----------------------------------------- or trademarks of any Third Party provider of software without the prior written permissions of such Third Party. 14.7 Third Party Beneficiary: Assignment of Rights: The Third Party provider of ---------------------------------------------- software shall be an intended third party beneficiary of the foregoing provisions; MedICC shall assign to such Third Party whatever rights are necessary to assure that the Third Party obtains the benefit of the foregoing third party provisions of this Agreement. 14.8 No Publication: The Licensee will not publish any results of benchmark --------------- tests run on the Software application programs without first obtaining MedICC's written consent. 14.9 Inherent Dangerous Application: The Software is not specifically developed ------------------------------- licensed for use in any inherently dangerous applications. The Licensee hereby agrees that neither the Third Party nor MedICC shall be liable for any claims or damages arising from such use. 15. INSURANCE 15.1 At all times while performing service, pursuant to this agreement at Licensee's site, MedICC shall maintain, at its sole cost and expense, at least the following insurance, with limits below. Licensee shall have the right to inspect and review the policies in their entirety and shall be provided with copies upon written request. Upon written request of Licensee certificates of insurance shall be delivered to the Licensee prior to the performance of any services hereunder, and any change or cancellation shall not be valid without thirty (30) days prior written notice to the License. (a) Commercial General Liability-combined single limit for bodily injury and property damage of not less than $100,000 for each occurrence and annual aggregate, providing: (i) completed operations coverage, and (ii) contractual liability coverage. (b) Workers Compensation Insurance and Employer's Liability Insurance - with limits or liability for workers compensation, of not less than those required by law. (c) Excess Umbrella Liability Insurance - in the amount of $200,000. 16. GENERAL 16.1 Governing Law: This Agreement and all Riders and other documents under it -------------- shall be governed by and interpreted under the law of the Province of Quebec, and of Canada without resort to its conflict of laws principles. 16.2 MedICC's Role: Licensee acknowledges and accepts that the role of MedICC is -------------- solely that of a supplier of Software and related items and services hereunder and that it is Licensee's responsibility to determine its own data processing requirements and to satisfy itself that the Software meets such requirements. Furthermore, Licensee recognizes it is responsible for the selection, use of and results obtained from any Software or equipment used in conjunction therewith. MedICC software is developed using the standards set forth in the FDA's 21 CFR Part II 16.3 Publicity: Upon execution of this Agreement, MedICC shall have the right to ---------- make press releases regarding the relationship with the Licensee established hereunder and to post such releases on its web site. Provided that MedICC must submit such press release to Licensee and obtain Licensee written approval prior to making or posting the press release: Page 8 of 10 Confidential MedICC and Licensee both shall have the right to make press releases relating to subsequent developments between the parties: provided that the party desiring to make the press release must submit such press release to the other party and obtain the other party's approval prior to making or posting the press release. 16.4 Notices: Any notice required or permitted under the terms of this Agreement -------- or required by law must be in writing and must be (a) delivered in person, (b) sent by first class registered mail, or air mail, as appropriate, (c) sent by overnight air courier, in each case properly posted and fully prepared to the appropriate address set forth below, or (d) sent by facsimile provided that the sending party can confirm that the fax transmission was successfully transmitted to the receiving party and the facsimile is also sent on the same day via first class mail to the receiving party. Either party may change its address for notice by notice to the other party given in accordance with this paragraph. Notices will be considered to have been given at the time of actual delivery in person or by facsimile, three (3) business days after deposit in the mail as set forth above, or one (1) business day after delivery to an overnight air courier service. 16.5 Force Majeur: No party to this Agreement or any Rider hereunder shall be ------------- liable for delay or failure in the performance of its contractual obligations arising from any one or more events beyond it reasonable control. Upon such delay or failure affecting one party, the affected party shall notify the other party and may take all commercially reasonable steps to cure or alleviate the cause of such delay or failure to resume performance of its contractual obligations as soon as reasonably possible. 16.6 Waiver: The failure of any party to enforce or exercise, at any time or for ------- any period of time, any term of any right arising pursuant to this Agreement or any Rider under it does not constitute, and shall not be construed as, a waiver of such term or right and shall in no way affect that party's right to later enforce or exercise it. The waiver by either party of the breach of any provision of this Agreement shall not constitute a waiver of the breach of any other provision or of the subsequent breach of the same or any other provision. 16.7 Severabiiity: The invalidity or unenforceability of any right arising ------------- pursuant to this Agreement or any Ridor shall in no way affect the remaining terms or rights. 16.8 Binding Effect: This Agreement shall be binding upon and inure to the --------------- benefit of the parties hetero and upon, their permitted successors and assigns. 16.9 Amendment: This Agreement may not be amended, waived, terminated or ---------- superseded except by written instrument signed by parties. 16.10 Hierarchy: In the event there is an inconsistency between this Agreement ---------- and any Rider hereunder, the terms of the Rider shall govern and control, unless such Rider expressly provides otherwise. This Agreement and the applicable Rider hereunder shall govern and control in the case of any inconsistency between either of them and any purchase order, written confirmation, or other documentation issued by either party. 16.11 Plural and Singular Usage: As used herein, the singular of any term -------------------------- includes the plural and the plural means the singular, whenever the context so requires. 16.12 Headings: The section headings in this Agreement are inserted for --------- convenience only and are not intended to affect the meaning or interpretation of this Agreement. 16.13 Negotiations: Both MedICC and Licensee acknowledge that they were both ------------- given an equal opportunity to negotiate the terms and conditions of this Agreement and any Riders hereunder and agree that the identity of the interpretation of the terms and conditions or any Rider hereunder. 16.14 Entire Agreement: The entire understanding between the parties is ----------------- contained in this Agreement and any Rider hereunder, This Agreement supersedes all prior statements, Page 9 of 10 Confidential representations, agreements, understandings, and negotiations, whether written or oral, and in all cases takes precedence. 16.15 Language of the Agreement: The parties expressly request that this -------------------------- Agreement as well as all Documents relating thereto be drawn up in English. Les parties on expressement exige que cette convention ainsi que tous les documents s'y rattachant soient rediges en anglais. In Witness Whereof, the parties have executed this Agreement by their authorized representatives. Effective Date: Name MedICC Licensee: Anapharm Signed /s/Anna D'Ulisse Signed /s/ Johane Boucher-Champagne -------------------------------- ---------------------------- Name Anna D'Ulisse Name Johane Boucher-Champagne Title President Title Chief Operating Officer 300 Marcel-Laurin, Suite 205, 2050 Rene-Lcvesque BLVD. Montreal, QC, H4M 2L4 Sainte-Foy, QC. GIV 2K8 Page 10 of 10 Confidential RIDER TO MASTER SOFTWARE LICENSE AGREEMENT Rider Date September 01, 2001 Agreement Date September 01, 2001 Licensee Anapharm Inc. This is a Rider to the Master Software License Agreement entered into by and between Licensee and MedICC (hereinafter the "Agreement"). In the event a discrepancy should arise between the provisions of this Rider and those of the Agreement, the provisions of this Rider shall apply. MedICC agrees to be present on-site at Anapharm's Montreal Facility, situated at 5160 boul Decarie #500, to verify that test versions installed by the persons responsible at Anapharm are functioning properly. The terms of the Agreement not modified by this Rider shall remain in full force and effect. This Rider together with the above referenced Agreement constitutes the entire agreement of the parties and supersedes all prior understanding and agreements, whether written or oral. In Witness Whereof, the parties by their authorized representatives have executed this Rider, which is made a part of Agreement as of the date stated above. Effective Date: September 01, 2001 Name MedICC Licensee: Anapharm Inc. Signed /s/ Anna D'Ulisse Signed /s/ Johane Boucher-Champagne ---------------------------- ----------------------------- Name Anna D'Ulisse Name Johane Boucher-Champagne Title President Title Chief Operating Officer 300 Marcel-Laurin, Suite 205, 2050 Rene-Levesque BLVD. Montreal, QC, H4M 2L4 Sainte-Foy, QC, GIV 2K8 Confidential Page 1 of 1 RIDER TO MASTER SOFTWARE LICENSE AGREEMENT Rider Date September 01, 2001 Agreement Date September 01, 2001 Licensee Anapharm Inc. This is a Rider to the Master Software License Agreement entered into by and between Licensee and MedICC (hereinafter the "Agreement"). In the event a discrepancy should arise between the provisions of this Rider and those of the Agreement, the provisions of this Rider shall apply. MedICC CESRV3 Maintenance - -------------------------------------------------------------------------------- Item Description Total Payment Terms - -------------------------------------------------------------------------------- Annual Maintenance fee for $59,980.00 CDN Due March 01, 2002 Maintenance CESR V3 base package Net 30 Days Year 1 + 20% installed Data Capture modules for period March 01, 2002 to February 28, 2003 - -------------------------------------------------------------------------------- Annual Maintenance fee for $90,000.00 CDN Due March 01, 2003 Maintenance CESR V3 base package + Net 30 Days Year 2 Data Capture modules for period March 01, 2003 to February 28, 2004 - -------------------------------------------------------------------------------- Maintenance agreement is for the Software installed at Anapharm. Inc.'s facility in Sainte-Foy, Quebec on the following servers; Front-End Programs on ANAQC07 Physical Server Address - 172.16.1.14 Back-End SQL Database on ANAQC04 Physical Server Address -172.16.1.16 The terms of the Agreement not modified by this Rider shall remain in full force and effect. This Rider together with the above referenced Agreement constitutes the entire agreement of the parties and supersedes all prior understanding and agreements, whether written or oral. In Witness Whereof, the parties by their authorized representatives have executed this Rider, which is made a part of Agreement as of the date stated above. Effective Date: September 01. 2001 Name MedICC Licensee: Anapharm Inc. Signed /s/ Anna D'Ulisse Signed /s/ Johane Boucher-Champagne ---------------------------- ----------------------------- Name Anna D'Ulisse Name Johane Boucher-Champagne Title President Title Chief Operating Officer 300 Marcel-Laurin. Suite 205, 2050 Rene-Levesque BLVD. Montreal, QC, H4M 2L4 Sainte-Foy, QC, GIV 2K8 Confidential Page 1 of 1 RIDER TO MASTER SOFTWARE LICENSE AGREEMENT Rider Date September 01, 2001 Agreement Date September 01, 2001 Licensee Anapharm Inc. This is a Rider to the Master Software License Agreement entered into by and between Licensee and MedICC (hereinafter the "Agreement"). In the event a discrepancy should arise between the provisions of this Rider and those of the Agreement, the provisions of this Rider shall apply. Anapharm Electronic Data Capture
- ----------------------------------------------------------------------------------------- Item Description Testing Implementation Total - ----------------------------------------------------------------------------------------- Adverse Events AE tracking and 2001-09-25 2001-10-02 $ 50,000.00 CDN reporting module - ----------------------------------------------------------------------------------------- Extended Blood Regeneration 2001-11-16 2001-11-30 $ 40,000.00 CDN Recruiting Dynamic Matchlist 2001-12-18 2001-12-31 E-Mail Notification 2001-09-17 2001-09-21 Mapping/Directions 2001-12-10 2001-12-18 Autodialer (software 2002 2002 only) Questionnaires 2001-09-19 2001-09-28 - ----------------------------------------------------------------------------------------- Extended Labels 2001-10-20 2001-10-28 $ 50,000.00 CDN Screening Letters to Subjects 2001-09-19 2001-09-28 Questionnaires 2001-11-18 2001-11-30 Repeats Process 2001-11-18 2001-11-30 Test Profiles 2001-10-16 2001-10-26 Link to Diagnostic Lab 2002 2002 - ----------------------------------------------------------------------------------------- Raw Data Screening Package 2001-08-31 2001-09-12 $ 20,000.00 CDN Pre-Study ICF 2001-08-31 2001-09-12 - ----------------------------------------------------------------------------------------- Raw Data Data Capture May 2002 May 2002 $ 50,000.00 CDN On-Study - ----------------------------------------------------------------------------------------- Timepoints On-Study labels/Cards 2001-08-31 2001-09-12 $150,000.00 CDN Questionnaires April 2002 April 2002 Sample Tracking 2002 2002 Matrix Processing 2002 2002 Shipping 2002 2002 On-Study Data May 2002 May 2002 Generation On-Study Reporting May 2002 May 2002 Final Reports 2002 2002 - ----------------------------------------------------------------------------------------- Instrumentation Vital Signs Monitor 2001-12-10 2001-12-20 $ 40,000.00 CDN Interface (Welch Allyn blood pressure, sphygmometer, thermometer) ECG 2002 2002 - -----------------------------------------------------------------------------------------
Confidential Page 1 of 2 Payment Schedule Anapharm Inc. has agreed to purchase the entire Data Capture system but has requested that the Data Capture system be installed on a modular basis. - ------------------------------------------------------ Total Payment Terms - ------------------------------------------------------ $ 83,300.00 Due September 01, 2001 Net 30 days - ------------------------------------------------------ $ 83,300.00 Due December 01, 2001 Net 30 Days - ------------------------------------------------------ $ 83,300.00 Due March 02, 2002 Net 30 days - ------------------------------------------------------ $150,000.00 Due May 01, 2002 Net 30 days - ------------------------------------------------------ If the contract is cancelled before all modules are installed, a penalty of 50% of the remaining modules is due at the time of cancellation The Installation for the Software is Anapharm. Inc.'s facility in Sainte-Foy, Quebec on the following servers; Front-End Programs on ANAQC07 Physical Server Address - 172.16.1.14 Back-End SQL Database On ANAQC04 Physical Server Address - 172.16.1.16 The terms of the Agreement not modified by this Rider shall remain in full force and effect. This Rider together with the above referenced Agreement constitutes the entire agreement of the parties and supersedes all prior understanding and agreements, whether written or oral. In Witness Whereof, the parties by their authorized representatives have executed this Rider, which is made a part of Agreement as of the date stated above. Effective Date: September 01. 2001 Name MedICC Licensee: Anapharm Inc. Signed /s/ Anna D'Ulisse Signed /s/ Johane Boucher-Champagne ---------------------------- ----------------------------- Name Anna D'Ulisse Name Johane Boucher-Champagne Title President Title Chief Operating Officer 300 Marcel-Laurin, Suite 205, 2050 Rene-Levesque BLVD. Montreal. QC, H4M 2L4 Sainte-Foy, QC, GIV 2K8 Confidential Page 2 of 2 INNAPHASE CORPORATION MASTER SOFTWARE AGREEMENT This Master Software Agreement ("Agreement") is entered into by and between InnaPhase Corporation ("InnaPhase"), a Delaware corporation with principal offices at 1700 Race Street, Philadelphia, Pennsylvania 19103 and Anapharm Inc. with its Subsidiaries (as defined below) (collectively "Licensee") with principal offices at 2050 Rene-Levesque Blvd. West, Sainte-Foy, Quebec (Canada), GIV 2K8. In consideration of the mutual covenants exchanged herein, and intending to be legally bound hereby. InnaPhase and Licensee agree as follows: 1. DEFINITIONS 1.1 "Authorized Representative" shall mean the person authorized by each party to speak for and bind that party in all oral, email and written communications with the other party. 1.2 "Database" means any database which contains any or all of the structures that comprise the data storage architecture of the Software. 1.3 "Delivery Date" means the date by which the Software shall be delivered to the [Installation Location as given in the Rider 1.4 "Documentation" means manuals and other materials related to the Software provided by InnaPhase to Licensee, and listed in any Rider hereunder. 1.5 "Effective Date" means the date that this Agreement binds the parties, and is listed above the signature block. If no Effective Date is specified, then it shall be the earlier of the date that this Agreement is executed by both parties, or the date that InnaPhase delivers any Software or its components to Licensee. 1.6 "License Fees" means the fees payable by Licensee to InnaPhase for the right to use the Software. 1.7 "Object Code" means the version of the Software intended that may be executed by computers without compilation or any additional steps. "Object Code" excludes Source Code. 1.8 "Maintenance" shall mean the services provided to maintain the Software hereunder. 1.9 "Maintenance Fees" means the fees paid by Licensee, which entitle Licensee to receive Maintenance. 1.10 "Price List" means one or more lists published by InnaPhase from time to time which specify License Fees, Maintenance Fees, and other charges set by InnaPhase. 1.11 "Rider" means a hard-copy document that, when signed by both parties, is made a part of this Agreement. A sample Rider is attached hereto. 1.12 "Server" Means any computer on which the Software, or any components of the Software, are installed, being understood that the Software may be used on a remote basis by any workstation on the LAN/WAN up to the applicable number of Users. 1.13 "Service Fees" means the fees and other expenses charged by InnaPhase for services hereunder. 1.14 "Software" means the computer programs known as "Watson LIMS" version 6.2 and any future upgrades, and "OQ Scripts" version 6.2 and any future upgrades. 1.15 "Source Code" means a version of the Software that intended to be read and edited by humans. "Source Code" excludes Object Code. 1.16 "Subsidiaries" means all current and future business entities of which a party owns, directly or indirectly, more than fifty percent (50%) of the equity securities or other equity interest granting such party voting rights exercisable in electing the management of the entities, for so long as such ownership exists. 1.17 "User" means a named person who is authorized to use the Software, as specified in a Rider. 2. LICENSCE 2.1 InnaPhase hereby grants to Licensee a perpetual, non-exclusive, non-transferable, right and license to use the Software in Object Code form only, as well as the Documentation, in accordance with the terms and conditions of this Agreement ("License"). No right to sublicense the Software is granted hereunder. The Software may only be used for Licensee's internal business purposes by certain, named Users, on particular Servers that are located at specific physical addresses. 2.2 Licensee shall not copy or otherwise reproduce any part of the Software or Documentation, except as expressly authorized by this Agreement. In addition, Licensee shall use commercially reasonable efforts to prevent the Software or Documentation from being acquired, copied (except as expressly permitted herein), or otherwise handled by unauthorized persons. Notwithstanding the foregoing, Licensee is authorized to make and retain one copy of the Software in Object Code form and Page 1 Confidential Documentation for back-up and disaster recovery purposes. All proprietary notices, logos, copyright notices, and similar markings shall be retained on such copies. 2.3 Licensee shall not (a) make alterations to or modify the Software in any way; (b) combine or merge any part of the Software with any other computer programs; (c) grant sub-licenses, leases, or other rights in or to the Software; (d) use the Software at physical locations other than at the locations set forth in the applicable Rider, as amended; (e) permit use of Software by more than the authorized number of Users set forth in the applicable Rider; (f) permit use of the Software by any Users not named in the applicable Rider, as amended; (g) make any use of the Software except as expressly authorized by this Agreement; nor, (h) disassemble, decompile, decode or otherwise reverse engineer or attempt to reconstruct or discover any Source Code or underlying algorithms of the Software. 2.4 Except for those rights specifically granted herein, Licensee is granted no other rights in or to the Software or Documentation. Any Software or Documentation delivered pursuant to any Rider hereunder, together with all copyrights, patents, trademarks, trade secrets, intellectual property and other rights therein, are and shall remain the sole property of InnaPhase. 2.5 Licensee shall permit representatives of InnaPhase to inspect, on an annual basis, any Server at any location at which the Software is being used at reasonable times and on reasonable notice for the purpose of verifying that Licensee is not in default of this Agreement; provided however that prior to such inspection InnaPhase execute a confidentiality agreement satisfactory to Licensee. InnaPhase does not provide or license any Source Code to Licensee under this Agreement. InnaPhase agrees to deposit a current copy of the Source Code with an escrow agent for Licensee's benefit within fifteen (15) business days following Licencee's full payment of the License Fee due under this Agreement. During the term of this Agreement. InnaPhase shall keep the Source Code in escrow fully current by depositing the listings and all supporting documentation and related materials for each days after the date of such release to Licensee of the Software InnaPhase will notify the escrow agent that Licensee is a party to the escrow agreement. If at any time InnaPhase shall (i) become subject to any bankruptcy or insolvency proceeding under federal or state statutes, or (ii) discontinue support of the Software, except under circumstances where satisfactory provision shall have been made for the continued support of Licensee or where the cessation of support services is due to circumstances caused by Licensee, then at the request of Licensee the escrow agent shall deliver to Licensee a copy of the most recent version of the Source Code. [The Escrow Agreement shall be with DSI Technology Escrow Services, of Norcross. Georgia, and such Escrow Agreement will control any access to or use of Source Code; 3. CHANGES TO USERS AND SERVERS 3.1 The initial Rider shall specify the name and title of each authorized User, and the name, model, serial number and physical address of each Server ("Licensee Records"). This information shall be kept and maintained by Licensee's Authorized Representative. 3.2 Licensee's Authorized Representative shall maintain Licensee's Records, including (a) each User's name, title, date of authorization, and date authorization ended; and (b) the name, model, serial number and location of each Server, and the start and stop dates such Server is in service. At InnaPhase's request, Licensee's Authorized Representative shall provide InnaPhase with a copy of Licensee's Records. 3.3 Each time that a Server is moved to a new physical location within the same country, or one Server is replaced with another Server in a different physical location, Licensee's Authorized Representative shall notify InnaPhase of the same promptly after the move or change. 3.4 Should Licensee desire to increase the number of Users or the number of Servers, or should Licensee desire to move or begin use of a Server in a different country. Licensee may request prior, written permission of InnaPhase("Change Request"). No such Change Request shall be deemed granted unless placed in a Rider and signed by both parties. 3.5 Within thirty (30) days of the execution by both parties of a Rider that implements a Change Request, Licenses shall pay to InnaPhase the difference between the Licensce Fees on the then-current Price List before and after the approved Change Request. 3.6 Where Licensee desires to move the Software to a different country, approval of a Change Request may be conditioned on Licensee signing a new licensce agreement with InnaPhase(or its Page 2 Confidential foreign representative) that may contain terms different from this Agreement that are applicable to the country where the Software will be installed, and Licensee may be required to agree to different terms, fees and discount rates. 3.7 If Licensee fails to comply with any of its reporting obligations under paragraph 3.4 above, and the Software is the subject of a Change Request entailing a higher fee than that charged for the preceding configuration, then Licensee shall pay to InnaPhase, retroactive to the date of such Rider approving the Change Request, the difference between the two fees, plus a penalty in the amount of twenty-five percent of such difference between the two fees. 4. FEES 4.1 Licensee shall pay to InnaPhase the License Fees and other Fees as set forth in the Price List or any applicable Rider. 4.2 All Fees are payable without offset or deduction of any kind. 4.3 Any invoices not paid within thirty (60) sixty days of the date of the invoice may be subject to a late payment charge of one-and-one-half percent (1.5%) per month, or the highest legal rate, if less. 4.4 Any failure to pay an invoice within one hundred eighty (180) days of the date of the invoice shall be grounds for InnaPhase to stop any and all work or services until payment is received. 4.5 All Fees payable under this Agreement are payable in United States dollars. All Fees are net of any applicable sales, use, property and other taxes and import or other duties, however designated or levied. Payment of all such taxes and duties (excluding taxes assessed upon the profit or gain of InnaPhase) shall be the sole responsibility of Licensee. If the Licensee in good faith contests any tax that is so payable or reimbursable by the Licensee, InnaPhase shall cooperate in the contest at the Licensee's expense. Licensee shall not be required to pay or reimburse InnaPhase for taxes based upon the net worth, capital, net income, or franchise of InnaPhase, nor taxes imposed upon InnaPhase solely by reason of InnaPhase doing business in or being incorporated in the jurisdiction imposing such taxes. 5. TERM AND TERMINATION 5.1 This Agreement shall commence on the Effective Date, and shall continue until terminated in accordance with this Agreement. 5.2 Upon any material default of any provision of this Agreement by Licensee. InnaPhase may send Licensee a written notice of termination of this Agreement or any Rider hereunder, which shall automatically be effective thirty (30) days after the date of such notice, unless Licensee cures such default within the thirty (30) day period. Material defaults means, (a) any failure to pay InnaPhase any License Fees when due; (b) any breach of the confidentiality or proprietary rights provisions of this Agreement: (c) Licensee enters into bankruptcy, whether voluntary or involuntary; (d) Licensee has a receiver appointed; (e) Licensee becomes insolvent: (f) Licensee takes or suffers any similar action in consequence of debt, or (g) Licensee ceases or threatens to cease to carry on its business as usual. 5.3 Any Fees due to InnaPhase for services performed, and any Fees accrued but not yet paid to InnaPhase, at the termination of this Agreement or any Rider hereunder for any reason shall be due InnaPhase immediately upon such termination. Notwithstanding the foregoing, if the Agreement is terminated for reason other than those listed in 5.2 above. InnaPhase shall reimburse any Fees (except the License Fee) paid by License for services not rendered or, in the case of the Maintenance Fee, an amount equal to the Maintenance Fee less one-twelve (1/12) thereof for cash month or portion thereof that this Agreement has been in effect. 5.4 Upon termination of this Agreement pursuant to Section 5.2 only, (a) all of Licensee's Licenses are terminated; (b) Licensee shall immediately cease using the Software: (c) any data accumulated by Licensee while the Software was licensed in compliance with this Agreement may be retained by the Licensee: and (d) Licensee shall return to InnaPhase all copies of the Software and Documentation. Upon written request from InnaPhase, an officer of Licensee shall promptly confirm in writing to InnaPhase the specific steps taken by Licensee to comply with this provision. 6. MAINTENANCE 6.1 InnaPhase hereby agrees to provide, and Licensee hereby agrees to purchase Maintenance as described below for at least one (1) year following execution of each Rider for each item of Software and related Documentation. 6.2 After the first year, Maintainence will automatically renew each year for subsequent one (1) year periods, unless Licensee terminates Page 3 Confidential Maintenance for any or all Software by written notice received by InnaPhase at least thirty (30) days prior to the end of the then-current Maintenance period. After (5) five years, either party may terminate maintenance. If InnaPhase terminates its maintenance Program for Licensee at anytime, Licensee shall have the immediate right to have the Source Code for the then current version of the Software handed over to it under the escrow agreement. If a Maintenance Fee is not received by the date due, then InnaPhase reserves the right to suspend Maintenance until such payment is received. 6.3 For the first three (3) years the Maintenance Fee for the Software shall be seventy-five thousand dollars ($75,000) per year and thereafter, for each subsequent years, InnaPhase may once a year, upon 30 days notice, increase the annual Maintenance Fee by the percentage increase in the Consumer Price Index applicable to the greater Montreal Region published by Statistics Canada (1992=100.0) applied to the last Maintenance Fee charged to Licensee for each of the Software the previous year. 6.4 Maintenance will begin upon execution of this Agreement, and shall include: (a) Off-site telephone support from InnaPhase's North America offices, Monday through Friday, 8:00 am to 5:00 pm Eastern Time, and off-site telephone support at InnaPhase's France offices, Monday through Friday, 9:00 am to 5:30 pm CET, excluding statutory holidays and local InnaPhase holidays; (b) twenty-four (24) hours per day, seven (7) days a week resources that Licensee may also contact at InnaPhase for emergency support outside hours mentioned in (a); and, (c) improvements, application enhancements and updates to the Software that are designated as such by InnaPhase in support of operating system changes to keep the Software competitive in the marketplace. InnaPhase will maintain the Software in accordance with InnaPhase's then-current specifications. 6.5 If during the term of the maintenance program, Licensee encounters a problem in the usage of the Software, Licensee shall notify InnaPhase and InnaPhase will acknowledge receipt of Licensee's notification within four (4) hours and start diagnosing said problem, if the notification is received (during business hours. If notification is made outside business hours. InnaPhase will acknowledge receipt and start diagnosing said problem as soon as practicable, but no later than the next business day. In the event that InnaPhase is unable to remedy a major problem using all best efforts to remediate as soon as feasible, but in no event longer than thirty (30) days after it has received notification of the same, Licensee shall have the right to terminate the Maintenance provisions of this Agreement. Should Licensee elect to terminate Maintenance, InnaPhase will promptly refund to Licensee the unexpired portion of the Maintenance fees paid by Licensee for the then-current Maintenance period. If it is determined by InnaPhase that said problem is caused by an error in the Software. InnaPhase will correct said problem. If it is determined that said problem is not caused by an error in the Software, Licensee shall pay InnaPhase, in accordance with InnaPhase then current rates, for all work perform to diagnose and determine the cause of said problem. Maintenance does not include any of the following, which may be available at additional cost pursuant to an additional Rider signed by the parties: Installation, education, training, consulting, programming, special services, or customized features, or new or additional Software items not specified on a Rider. 6.6 InnaPhase shall use its reasonable best efforts to provide a prompt, correct response to telephone inquiries from Licensee. If technically feasible, remedial services in the form of corrections in response to verified problems with the Software will be completed during ordinary business hours in the day on which Licensee reports and verifies the problem. Maintenance services furnished hereunder shall be performed by InnaPhase at its premises during ordinary business hours employing adequate remote diagnostic procedures, unless through such remote diagnostic procedures InnaPhase is unable to perform promptly the services required hereunder, in which case InnaPhase will make such visits to Licensee's sight as are necessary to provide such services. InnaPhase represents, warrants and agrees that all support and Maintenance services provided hereunder shall be performed in a prompt and workmanlike fashion in accordance with good and customary industry standards. 7. CUSTOMIZATION 7.1 Upon request from Licensee, InnaPhase may agree to customize the Software and Documentation to suit Licensee's particular needs or preferences ("Custom Software"). Any such arrangement shall be covered by a Rider under this Agreement and which shall set for the fees, terms, conditions which cover such customization. Page 4 Confidential 7.2 Unless the Rider expressly provides otherwise, InnaPhase shall own all right and title in and to any and all such Custom Software, and which shall be deemed to be licensed to Licensee as an additional item of Software under the License. 8. LIMITED WARRANTY 8.1 For each item provided to Licensee by InnaPhase, the period for any warranties under this Agreement shall commence on the Effective date for Watson LIMS version 6.2 and on the date of delivery for any other items and shall continue for a non-extendable period of one hundred eighty (180) days ("Warranty Period"). 8.2 InnaPhase represents to Licensee that the Software and related Documentation have tangible value: and that InnaPhase has the right to license, market and distribute, maintain and support the Software. 8.3 InnaPhase represents that, to the best of in knowledge, the Software (and the magnetic or other media in which they are embedded) provided by it do not contain any viruses or programming codes or instructions that are constructed to damage, interfere with or otherwise adversely affect the Software. 8.4 InnaPhase warrants that at the time of delivery of the Software and upgrades thereafter, the Software and upgrades will perform its substantial accordance with the Documentation and specifications. If the Software does not perform as warranted. Licensee shall notify InnaPhase of the purported failure to perform and InnaPhase shall, at its option and expense, and within a commercially reasonable period of time, undertake to correct the Software, replace the Software free of charge with a software having the same functionality, or, if neither of the foregoing is commercially practicable, terminate this Agreement and refund to Licensee the License Fee and Maintenance Fee actually paid. 8.5 InnaPhase's sole obligation under the warranties herein is that InnaPhase shall use commercially reasonable efforts to remedy or repair the Software or other item, as soon as reasonably practicable. InnaPhase may, at its sole discretion, provide either an update of the affected item or an alternative method that has substantially the same functionality. 8.6 InnaPhase's warranty obligation is conditioned upon: (a) Licensee providing InnaPhase written notice of any substantial malfunction promptly and in any event within the Warranty Period; (b) the said malfunction being repeatedly demonstrable by InnaPhase's technical representatives: and (c) the Software has not been added to or modified by Licensee or any one other than InnaPhase. 9. DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY 9.1 EXCEPT AS EXPRESSLY STATED HEREIN, INNAPHASE DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. 9.2 IN NO EVENT WILL INNAPHASE BE LIABLE TO LICENSEE OR ANY OTHER PARTY FOR ANY REASON WHATSOEVER, WHETHER IN CONTRACT OR TORT, FOR ANY LOSS RESULTING FROM THE USE OF THE SOFTWARE OR OTHER ITEM, WHETHER INTENDED OR FORESEEABLE, OR FOR ANY FORM OF INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL, OR INCIDENTAL LOSS, DAMAGE OR EXPENSE (INCLUDING, BUT NOT LIMITED TO, LOSS DUE TO INABILITY TO OBTAIN DATA, LOSS OF BUSINESS, OR LOSS OF ANTICIPATED PROFITS) IN CONNECTION WITH OR ARISING OUT OF THE FURNISHING, FUNCTIONING OR USE OF ANY SOFTWARE OR OTHER ITEM PROVIDED UNDER THIS AGREEMENT OR ANY RIDER ENTERED INTO PURSUANT TO IT, EVEN IF ADVISED OF THE POSSIBILITY THEREOF. 9.3 EXCEPT FOR LIABILITY FOR PATENT OR COPYRIGHT INFRINGEMENT OR FOR ANY DEATH, PERSONAL INJURY OR PROPERTY DAMAGE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF INNAPHASE HEREUNDER, INNAPHASE's LIABILITY HEREUNDER SHALL NOT IN ANY EVENT EXCEED THE FEES RECEIVED BY INNAPHASE FROM LICENSEE FOR THE PARTICULAR INNAPHASE SOFTWARE PRODUCT OR SERVICES INVOLVED. 9.4 INNAPHASE DOES NOT MAKE ANY WARRANTIES, AND HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY HARDWARE OR THIRD PARTY Page 5 Confidential SOFTWARE, EVEN IF SUCH HARDWARE OR THIRD PARTY SOFTWARE WAS ACQUIRED BY INNAPHASE FOR USE BY LICENSEE. ALL WARRANTIES, IF ANY, FOR ANY HARDWARE OR THIRD PARTY SOFTWARE, ARE MADE BY THE VENDORS OF SUCH HARDWARE OR THIRD PARTY SOFTWARE, AND ARE PROVIDED DIRECTLY BY SUCH VENDORS TO LICENSEE. 9.5 IN NO EVENT WILL INNAPHASE HAVE ANY LIABILITY, BASED ON CONTRACT, TORT OR OTHERWISE, FOR DIRECT, INDIRECT, CONSEQUENTIAL, OR ANY OTHER DAMAGES ARISING FROM ANY THIRD PARTY SOFTWARE WITHIN OR MADE A PART OF THE LICENSED SOFTWARE. 10. PROPRIETARY RIGHTS 10.1 Without InnaPhase's prior written consent, Licensee shall not provide to third parties, in whole or in part, in any manner, the original or any copy of Software. Documentation or any other item provided by InnaPhase to Licensee. 10.2 Licensee acquires no right in or to any InnaPhase trademarks, copyrights, patents, trade secrets or any other intellectual property rights of InnaPhase or any third parties by entering into this Agreement or any Rider. 10.3 Licensee shall take all reasonable precautions to maintain the confidentiality of the Software, which precautions shall be at least equivalent to those precautions Licensee takes to protect its own confidential information, and in no event, less than reasonable precautions. However, Licensee bears no responsibility for safeguarding information that is publicly available, already in Licensee's possession, obtained by Licensee from third parties without restrictions on disclosure, independently developed by Licensee without reference to confidential information, or required to be disclosed by order of a court or other governmental entity. 10.4 Notwithstanding anything herein to the contrary, Licensee may authorize its third party consultants who are hired by Licensee under written agreement to Use the Software in accordance with the terms of this Agreement, provided that such third party consultants sign a Licensee confidentiality agreement, 10.5 InnaPhase acknowledges that, in the course of its performance of this Agreement, it may become privy to certain information that Licensee deems proprietary and confidential. InnaPhase agrees to treat all information in a confidential manner and will not disclose or permit to be disclosed the same, directly or indirectly, to any third party without Licensees prior written consent. 11. ASSIGNMENT 11.1 Neither this Agreement nor any rights of Licensee hereunder shall be transferred or assigned, in whole or in part, without the prior written consent of InnaPhase. 11.2 Notwithstanding the above, Licensee may assign this Agreement (a) pursuant to a spin-off, merger or sale of all or substantially all of its assets or (b) within the Licensee family of companies, in both cases without the prior permission of InnaPhase and at no additional cost, provided Licensee provide InnaPhase with written notice within ninety (90) calendar days following any such assignment. 12. INDEMNIFICATION 12.1 InnaPhase shall, at its expense, defend or settle any claim, action or allegation brought against Licensee that the Software or item, when used within the scope of this Agreement, infringes any patent, copyright, trade secret or other proprietary or intellectual property right of any third party and shall pay any final judgments awarded or settlements entered into; provided that Licensee gives prompt written notice to InnaPhase of any such claim, action or allegation of infringement and gives InnaPhase the authority to proceed as contemplated herein. InnaPhase will have the exclusive right to defend any such claim, action or allegation and make settlements thereof at its own discretion, and Licensee may not settle or compromise such claim, action or allegation, except with prior written consent of InnaPhase. Licensee shall, at InnaPhase expense, give such assistance and information as InnaPhase may reasonably require to settle or oppose such claims, defend or settle, at its option, any action brought against Licensee arising from any claim brought in a United States court that Licensee's use of the Software, in the form provided by InnaPhase to Licensee, and in accordance with the terms of this Agreement and the License hereunder, infringes any patent, copyright, trademark, trade secret ("Claim"). 12.2 If the Software is the subject of a Claim, InnaPhase may at its option and expense either: (1) obtain an appropriate license for Licensee to continue using the Software: or (2) replace or modify the Software (or parts thereof) that is the subject of the Claim so that it is functionally Page 6 Confidential equivalent and no longer infringing as alleged. Except for its indemnification obligations set forth above, InnaPhase shall have no further liability to Licensee. 13. NON-SOLICITATION; NON-HIRING 13.1 The parties agree to pay to the Non-Hiring Party ("NHP") 1.5 times the total of annual salary plus most recent bonus for each NHP employee solicited by the parties, other than any non NHP targeted employment recruitment process, and accepting employment by the parties during the term of this Agreement and for a period of 12 months after termination of this Agreement. The wage rate will be determined by the employee's pay rate at the time the employee leaves NHP's employ. Licensee and InnaPhase agree that such payment will represent fair and reasonable compensation to NHP for the loss of its employee and subsequent recruiting, training and temporary held necessary to replace any such NHP employee. This sum will be fully due and payable upon the employee's notice of resignation to NHP and will be considered separate and apart from any and all other payments due under this Agreement. 14. SUB-LICENSING THIRD PARTY SOFTWARE 14.1 InnaPhase may be a value added reseller ("VAR") or perform similar services for certain third party providers of software, incorporating their software (the "Third Party Software") into InnaPhase's Software. In such cases, the provisions of this Section apply. 14.2 License. Use of any Third Party Software is limited to Object Code to ------- the maximum number of Users actually licensed by the Licensee for its own internal data processing as detailed in the Rider. 14.3 Scope of Use. The Third Party Software is licensed for use with ------------ InnaPhase's Software only and not for any other purpose; no title is intended to pass to the Licensee, and no right is granted to rent, time-share, or reproduce the Third Party Software, except for temporary transfer in the event of malfunction. 14.4 No Reverse Engineering. The Licensee agrees not to disassemble, ---------------------- decompile, decode, or otherwise reverse engineer or attempt to reconstruct or discover any source code or underlying algorithms of any Third Party Software. Duplication is permitted only for a single backup or archival copy. 14.5 No Export or Re-Export. The Licensee agrees not to export or re-export ---------------------- any Third Party Software outside of the United States, except in accordance with all applicable law and regulations. 14.6 No Use of Third Party Name or Trademarks. The Licensee may not use the ---------------------------------------- name or trademarks of any Third Party provider of software without the prior written permission of such Third Party. 14.7 Third Party Beneficiary; Assignment of Rights. The Third Party --------------------------------------------- provider of software shall be an intended third party beneficiary of the foregoing provisions; InnaPhase shall assign to such Third Party whatever rights are necessary to assure that the Third Party obtains the benefit of the foregoing third party provisions of this Agreement. 14.5 No Publication. The Licensee will not publish any results of benchmark -------------- tests run on the Software application programs without first obtaining InnaPhase's written consent. 14.9 Inherently Dangerous Application. The Software is not specifically -------------------------------- developed or licensed for use in any inherently dangerous applications. The Licensee hereby agrees that neither the Third Party nor InnaPhase shall be liable for any claims or damages arising from such use. 15. INSURANCE 15.1 At all times while performing services pursuant to this Agreement at Licensee's site, InnaPhase shall maintain, at its sole cost and expense, at least the following insurance, with limits of liability not less than stated below. Licensee shall have the right to inspect and review the policies in their entirety and shall be provided with copies upon written request. Upon the written request of Licensee, certificates of insurance shall be delivered to the Licensee prior to performance of any services hereunder, and any change or cancellation shall not be valid without thirty (30) days prior written notice to the Licensee. (a) Commercial General Liability - combined single limit for bodily injury and property damage of not less than $1,000,000 for each occurrence and annual aggregate, providing: (i) completed operations coverage, and (ii) contractual liability coverage. (b) Workers' Compensation Insurance and Employer's Liability Insurance - with limits or liability for workers' compensation, of not less than those required by law. (c) Excess Umbrella Liability Insurance - in the amount of $2,000,000. 16. GENERAL Page 7 Confidential 16.1 Governing Law. This Agreement and all Riders and other documents under ------------- it shall be governed by and interpreted under the law of the State of Delaware, without resort to its conflict of laws principles. 16.2 InnaPhase's Role. Licensee acknowledges and accepts that the role of ---------------- InnaPhase is solely that of a supplier of Software and related items and services hereunder and that it is Licensee's responsibility to determine its own data processing requirements and to satisfy itself that the Software meets such requirements. Furthermore, Licensee recognizes it is responsible for the selection, use of and results obtained from any Software or equipment used in conjunction therewith. 16.3 Publicity. Upon execution of this Agreement, InnaPhase shall have the --------- right to make press releases regarding the relationship with the Licensee established hereunder and to post such releases on its web site; provided that InnaPhase must submit such press releases to Licensee and obtain Licensee written approval prior to making or posting the press release. InnaPhase and the Licensee both shall have the right to make press releases relating to subsequent developments between the parties; provided that the party desiring to make the press release must submit such press release to the other party and obtain the other party's approval prior to making of posting the press release. 16.4 Notices. Any notice required or permitted under the terms of this ------- Agreement or required by law must be in writing and must be (a) delivered in person, (b) sent by first class registered mail, or air mail, as appropriate, (c) sent by overnight air courier, in each case properly posted and fully prepaid to the appropriate address set forth below, or (d) sent by facsimile provided that the sending party can confirm that the fax transmission was successfully transmitted to the receiving party and the facsimile is also sent on the same day via first class mail to the receiving party. Either party may change its address for notice by notice to the other party given in accordance with this paragraph. Notices will be considered to have been given at the time of actual delivery in person or by facsimile, three (3) business days after deposit in the mail as set forth above, or one (1) business day after delivery to an overnight air courier service. 16.5 Force Majeure. No party to this Agreement or any Rider hereunder shall ------------- be liable for delay or failure in the performance of its contractual obligations arising from any one or more events beyond its reasonable control. Upon such delay or failure affecting one party, the affected party shall notify the other party and may take all commercially reasonable steps to cure or alleviate the cause of such delay or failure to resume performance of its contractual obligations as soon as reasonably possible. 16.6 Waiver. The failure of any party to enforce or exercise, at any time ------ or for any period of time, any term of or any right arising pursuant to this Agreement or any Rider under it does not constitute, and shall not be construed as, a waiver of such term or right and shall in no way affect that party's right to later enforce or exercise it. The waiver by either party of the breach of any provision of this Agreement shall not constitute a waiver of the breach of any other provision or of the subsequent breach of the same or any other provision. 16.7 Severability. The invalidity or unenforceability of any term of or any ------------ right arising pursuant to this Agreement or any Rider shall in no way affect the remaining terms or rights. 16.8 Binding effect. This Agreement shall be binding upon and inure to the -------------- benefit of the parties hereto and upon, their permitted successors and assigns. 16.9 Amendment. This Agreement may not be amended, waived, terminated or --------- superseded except by a written instrument signed by the parties. 16.10 Hierarchy. In the event of there is an inconsistency between this --------- Agreement and any Rider hereunder, the terms of the Rider shall govern and control, unless such Rider expressly provides otherwise. This Agreement and the applicable Rider hereunder shall govern and control in the case of any inconsistency between either of them and any purchase order, written confirmation, or other document issued by either party. 16.11 Plural and Singular Usage. As used herein, the singular of any term ------------------------- includes the plural and the plural means the singular, whenever the context so requires. 16.12 Headings. The section headings in this Agreement are inserted for -------- convenience only and are not intended to affect the meaning or interpretation of this Agreement. 16.13 Negotiations. Both InnaPhase and Licensee acknowledge that they were ------------ both given an equal opportunity to negotiate the terms and conditions of this Agreement and any Riders hereunder and agree that the identity of the drafter of this Agreement is not relevant to the interpretation of the terms and conditions of this Agreement or any Rider hereunder. Page 8 Confidential 16.14 Arbitration. All disputes between the parties to this Agreement shall ----------- be submitted to one arbitrator in binding arbitration in accordance with the Commercial Rules of the American Arbitration Association ("AAA"). Three arbitrators familiar with the computer software industry shall be appointed: one by InnaPhase, one by Licensee, and a third selected by the two arbitrators selected by InnaPhase and Licensee. In the event the first two arbitrators can not agree on the selection of a third, such third arbitrator shall be appointed by the American Arbitration Association. All decisions and awards shall be made by a majority of the three arbitrators. Notice of a demand for arbitration of any dispute subject to arbitration by one party shall be filed in writing with the other party and with the American Arbitration Association. Each party shall advise the other of its selected arbitrator within 10 days of the date of notice. A stenographic record shall be made of all arbitration hearings. The parties shall share all costs of arbitration, and shall be responsible for their respective attorneys fees and costs. Evidence and argument may be entered in person or by telephone, fax, postal mail, electronic mail, and any other methods of communication approved by the arbitrator. The arbitrators shall conduct the arbitration proceeding and issue a written award within 180 days of the arbitrator's appointment. Judgment upon the award may be entered and enforced in any court of competent jurisdiction. 16.15 Entire Agreement. The entire understanding between the parties is ---------------- contained in this Agreement and any Rider hereunder. This Agreement supersedes all prior statements, representations, agreements, understandings, and negotiations, whether written or oral, and in all cases takes precedence. In Witness Whereof, the parties have executed this Agreement by their authorized representatives. Effective Date: 30th March 2001 InnaPhase: Licensee: Name InnaPhase Corporation Name Signed /s/ Fred M. Powell Signed /s/ FRANCOIS VALLEE ---------------------- -------------------------------------- Name Fred M. Powell Name FRANCOIS VALLEE Title SVP Finance & Admin Title Vice-President, Bioanalytical Division Address 1700 Race Street Address 2850 Boul Reve-Levesque Quest Philadelphia. PA 19103 Ste-Foy Quebec GIV 2K8 Page 9 Confidential RIDER TO MASTER SOFTWARE LICENSE AGREEMENT Rider Date 01-03-30 Agreement Date 01-03-30 Licensee Anapharm Inc This is a Rider to the Master Software License Agreement entered into by and between Licensee and InnaPhase Corporation (hereinafter the "Agreement"). In the event a discrepancy should arise between the provisions of this Rider and those of the Agreement, the provisions of this Rider shell apply. InnaPhase Watson LIMS Licenses, Test Scripts, and Maintenance
- ----------------------------------------------------------------------------------------------------------------- Part QTY Item Description Total Payment Terms Number - ----------------------------------------------------------------------------------------------------------------- IPWL1 400 Watson(R) 400 User Watson $300,000US $150,000 due March 31, 2001 net 30 days LIMS LIMS License $150,000 due June 1, 2001 net 30 days - ----------------------------------------------------------------------------------------------------------------- ISVDOQ 1 OQ Scripts Comprehensive OQ $20,000US $ 10,000 due March 31, 2001 net 30 days test Scripts for $ 10,000 due May 1, 2001 net 30 days Watson LIMS - ----------------------------------------------------------------------------------------------------------------- ISM01 3 Annual Maintenance Fee for $75,000US/yr $ 75,000 due on June 29, 2001 net 30 days Years Maintenance Watson LIMS, for period April 1, 2001 to March 31, 2004 - -----------------------------------------------------------------------------------------------------------------
InnaPhase EP2 Licenses and Maintenance
- ----------------------------------------------------------------------------------------------------------------- Part QTY Item Description Total Payment Terms Number - ----------------------------------------------------------------------------------------------------------------- IPEP2 10 EP2 10 User EP2 $200,000US $200,000 due December 1, 2001 net 30 License days, or notification of Intent to not purchase. If intend to not purchase, $100,000 due December 1, 2001 net 30 days - ----------------------------------------------------------------------------------------------------------------- 1 EP2 Annual Maintenance $34,000 $34,000 due December 1, 2001 net 30 days Maintenance Fee for EP2 if EP2 licenses are purchased - -----------------------------------------------------------------------------------------------------------------
The Installation location for the Software is Anapharm, Inc.'s facility in Sainte-Foy, Quebec. Page 1 Confidential The terms of the Agreement not modified by this Rider shall remain in full force and effect. This Rider together with the above referenced Agreement constitutes the entire agreement of the parties and supersedes all prior understanding and agreements, whether written or oral. In Witness Whereof, the parties by their authorized representatives have executed this Rider, which is made a part of the Agreement as of the date stated above. InnaPhase Corporation Licensee (Name): Anapharm /s/ Fred M. Powell /s/ Francois Vallee - ---------------------------------------- -------------------------------------- Signature Signature Fred M. Powell - SVP Finance & Admin Vice-President, Bioanalytical Division Name/Title Name/Title 2050 Boul. Rene-Levesque Quest, Ste-Foy, Quebec 1700 Race Street, Philadelphia, PA 19103 GIV 2K8 Address Address Page 2 Confidential RIDER TO MASTER SOFTWARE LICENSE AGREEMENT Rider Date 30th March 2001 Agreement Date 30th March 2001 Licensee Anapharm Inc This is a Rider to the Master Software License Agreement entered into by and between Licensee and InnaPhase Corporation (hereinafter the "Agreement"). In the event a discrepancy should arise between the provisions of this Rider and those of the Agreement, the provisions of this Rider shall apply. ADDITIONAL SERVICES InnaPhase undertake to provide after the delivery of the Watson LIMS version 6.3, and represent to Anapharm Inc. that InnaPhase has all the resources to do so within AnnaPharm Inc.'s validation schedule for the Watson LIMS, the following Watson LIMS Services upon request from Anapharm Inc. within a reasonable delay but not exceeding thirty (30) days after the request:
- ----------------------------------------------------------------------------------------------- Part QTY Item Description Total Number - ----------------------------------------------------------------------------------------------- ISV003 5 Days Operational Assistance in the execution of OQ Scripts $10,000* Qualification - ----------------------------------------------------------------------------------------------- IST001 1 Watson Training Onsite hands-on user training. 10 attendees max. $ 9,000* - ----------------------------------------------------------------------------------------------- ISI001 1 Day Installation Installation Service for Watson LIMS $ 2,000* - ----------------------------------------------------------------------------------------------- ISIO02 5 Days Consulting Consulting service $10,000* - -----------------------------------------------------------------------------------------------
*Price does not include reasonable travel expenses. In Witness Whereof, the parties by their authorized representatives have executed this Rider, which is made a part of the Agreement as of the date stated above. InnaPhase Corporation Licensee (Name): Anapharm /s/ Fred M. Powell /s/ Francois Vallee - ---------------------------------------- -------------------------------------- Signature Signature Fred M. Powell SVP - Finance and Admin Vice-President, Bioanalytical Division Name/Title Name/Title 2050 Boul. Rene-Levesque Quest, Ste-Foy, Quebec 1700 Race Street, Philadelphia, PA 19103 GIV 2K8 Address Address [LOGO] InnaPhase December 21, 2001 Ms. Claudine Gosselin 2050 Rene-Levesque Blvd. West Sainte-Foy, Quebec G1V 2K8 Dear Ms. Gosselin: InnaPhase Corporation is pleased to provide this quotation for the acquisition of our EP2 technology. Per the terms of our existing agreement, Anapharm may purchase 10 users of EP2 for a discounted price of $100,000US. Note that this amount is in addition to the deferred $100,000US due for the acquisition of the Watson technology which occurred in March 2001. While the payment of the deferred $100,000 is due in full, the fee for the EP2 software will be split, with $50,000US due at time of order, and $50,000US due on June 30, 2002. During our meeting of December 13, we also discussed the provision of EP2 validation services. A quotation for these services is included. Note that these services are being offered on a lump sum basis. A description of the service work to be performed is included in Attachment A. In order to accomplish a timely implementation of EP2, Anapharm may elect to take advantage of InnaPhase's expert consulting services and training program. A quotation for these services is included below. InnaPhase EP2 Software and Maintenance
- ------------------------------------------------------------------------------------------- Part QTY Item Description Total Payment Terms No. - ------------------------------------------------------------------------------------------- IL003 10 users EP2 EP2 Pharmacokinetic $100,000US $50,000US net 30 days Database technology $50,000US due June 30, 2002 net 30days - ------------------------------------------------------------------------------------------- IM003 1 year Maintenance Annual Maintenance for December 31, $ 34,000 Net 30 days 2001 through March 30, 2003 Based on 17% of the undiscounted license fee - -------------------------------------------------------------------------------------------
InnaPhase EP2 Services
- --------------------------------------------------------------------------------------------------- Part QTY Item Description Total Payment Terms No. - --------------------------------------------------------------------------------------------------- ISV003 1 project EP2 Validation Given in Attachment A $150,000US Net 30 days following Includes OQ test completion of service scripts milestones - ---------------------------------------------------------------------------------------------------- ISI002 20 days Consulting Onsite services $ 40,000US Net 30 days following Services relating to installation completion of service and implementation milestones - ---------------------------------------------------------------------------------------------------- IST002 4 Days EP2 Training Onsite hands-on user $ 12,000US Net 30 days following training. 10 attendees completion of training - ----------------------------------------------------------------------------------------------------
Terms and Conditions - -------------------- EP2 Annual Maintenance Fee of $34,000 will be held constant for 3 years and will not be subject to escalation until March 31, 2005. For additional licenses of EP2, the following pricing is offered: . Additional single registered users can be purchased for $10,000US per user until December 31, 2003. All maintenance associated with additional EP2 licenses will be calculated at $3,400US per user per year, prorated as required, and will not be subject to escalation until March 31, 2005. All services are provided on a time and materials basis. Price does not include travel expenses, which are billed at cost. The purchase of the EP2 software is subject to the terms and conditions of the Master Software Agreement, previously executed between Anapharm and InnaPhase Corporation. All pricing is contingent on receipt of a purchase order by December 21, 2001. We are pleased to provide this quotation, and look forward to our continued work with Anapharm. Best Regards, Ann L.Casaday Director - Enterprise Sales Attachments: Attachment A - Validation Services -5- SCHEDULE 4.30 LEASED REAL PROPERTY [Summary of French Written Documents] The French attached document titled "Convention de partage de propriete" as already been summarized in this schedule as follows: APARTMENTS LOCATED AT: - 9, Dupont Street, St. Romuald (Quebec) Lessor: Jacques Dufour; Lessee: Anapharm inc., 2050, West Rene-Levesque Blvd, Quebec (Quebec);. Term: April 1, 2002 to June 30, 2004; Space: 3 1/2 rooms; Rent: $ 750 for the months of April, May and June; $ 650 from July 2002 to July 2003; and $ 675 from July 2003 to July 2004. Renewal notice:Renewal 4 months before July 2003 or July 2004. The French lease form titled in a black rectangle "Bail" as already been summarized in this schedule as follows: - 817, Rochette Street, Ste.Foy (Quebec) Lessor: Isabelle A. Vandandaigue and Benoit Giguere Lessee: Anapharm inc., 2050, West Rene-Levesque Blvd, Quebec (Quebec);. Term: February 1, 2002 to June 30, 2003; Space: 3 1/2 rooms; Rent: $ 450 for the months of April, May and June; $ 650 from July 2002 to July 2003; and $ 675 from July 2003 to July 2004. SCHEDULE 4.30 LEASED REAL PROPERTY BUILDINGS LOCATED AT: - 90, Des Forges Blvd, Trois-Rivieres (Quebec): see lease summary attached hereto; - 60, Decarie Blvd, Montreal (Quebec): see lease summary attached hereto; - 2050, West Rene-Levesque Blvd, Quebec (Quebec): see lease summary attached hereto. APARTMENTS LOCATED AT: - 2350, West Rene-Levesque Blvd, Quebec (Quebec) Lessor: Le Mistral, s.e.n.c., 390, Ste.Foy Road, app. 1804, Quebec (Quebec) Lessee: Anapharm inc., 2050, West Rene-Levesque Blvd, Quebec (Quebec);. Term: Until March 31, 2002 and will not be subject of a renewal; Space: 4 1/2rooms; Miscellaneous: furniture included; 2 external parking lots; electricity, heating and hot water paid by lessor; common area maintenance by lessor; Rent: $1,000 per month. Cancellation: lessee may cancel the lease, at any time after July 31, 2000, by a one month notice. - 9, Dupont Street, St. Romuald (Quebec) Lessor: Jacques Dupont; Lessee: Anapharm inc., 2050, West Rene-Levesque Blvd, Quebec (Quebec) Term: April 1, 2002 to June 30, 2004. Space: 3 1/2rooms; Rent: $750 for the months of April, May and June; $650 from July 2002 to July 2003; and $675 from July 2003 to July 2004. Renewal notice: Renewal 4 months before July 2003 or July 2004. -24- - 817, Rochette Street, Ste.Foy (Quebec) Lessor: Isabelle A. Vandandaigue and Benoit Giguere Lessee: Anapharm inc., 2050, West Rene-Levesque Blvd, Quebec (Quebec); Term: February 1, 2002 to June 30, 2003; Space: 3 1/2 rooms Rent: $450 for the months of April, May and June; $650 from July 2002 to July 2003; and $675 from July 2003 to July 2004. Renewal notice: Les see may cancel the lease at any time, subject however to a 3 month notice and one month of rent as penalty. -25- ANAPHARM INC LEASE SUMMARY AT 5160 BOUL DES FORGES, TROIS-RIVIERES, QUE. Address of lessee Address of Lessor 5190 Boul des Forges Groupe Champagne s.e.n.c. Trois-Rivieres 4905 Herve Biron Trois-Rivieres G8Y 4X6 Term: April 1, 2001 to Mars 31, 2003 2 years Area: 1300 sq. ft. Parking: Some spots available without fees Gross lease: $14.50 par sq. ft. ANAPHARM INC LEASE SUMMARY AT 5160 DECARIE, MONTREAL Address of lessee Address of Lessor 5160 boulevard Decarie Societe 5160 boulevard Decarie 5th floor 1002 rue Sherbrooke ouest, sut. 2625 Montreal, Que Montreal, Que, H3X 2H9 H3A 3L6 Term: August 1, 2000 to March 31, 2008 7 years and 8 months Area: 3,900 sq. ft - ground floor 16,455 sq. ft. - 5th floor -1/08/2000 24,582 sq. ft. in total 4,027 sq. ft. - 5th floor - 01/12/2000 XXX sq. ft. - storage area (parking floor) $150/month Parking: Possibility of 18 not allocated internal spots max. $95/mo. + tx 2 allocated internal spots $95/mo. + tx 3 external spots $65/mo. + tx Minimum rent net: Years 1 to 5 and 8 months $8,25 + opening costs + 15 % 24 following months $10,00 + operating costs + 15% 3 years if option exercised $10,00 + operating costs + 15% Operating costs: (estimated at $7.36 per sq. ft. with a maximum of $8 for year 1) Insurance + taxes + electricity = real costs + 15% Tax on capital = real cost with a maximum of $0.48 per sq. ft. Other costs = real cost with max. increase of the City of Montreal's CIP Renewal option: 1 option for 3 years with 6-month notice Deposit: Bank letter of credit of $125,000 First right of refusal (repetitive if necessary): On the 7th floor with 10-day response time (deadline) ANAPHARM INC LEASE SUMMARY AT 2050 RENE LEVESQUE, QUEBEC, QUE. Address of lessee Address of Lessor 2050 Rene Levesque Casor Ltee Quebec, Que 440 Pere Marquette G1V 2K8 Quebec, Que. G1S 4M2 Term: July 1, 1996 to May 31, 2001 4 years and 11 months Area: 1 - 13,705 sq. ft. on a fifth floor 2 - 35,332 sq. ft. on a first, second, third and fifth floor 3 - 6,027 sq. ft. on a third floor 4 - 2,724 ground floor (archives, biological waste, stock rooms) Parking: 115 spots free (110 internal and 5 external) $ 0/mo. + tx 19 spots internal and external $35/mo. + tx 22 spots internal and external (night and WE restrictions) $20/mo. + tx Minimum rent net net: (on...sq. ft.) 1 - From now up to the end $11,59 + operating costs + 15% 2 - From now up to the end $ 8,09 + operating costs + 15% 3 - From now up to the end $ 8,27 + operating costs + 15% Gross lease: 4 - From now up to the end $10,00 Operating costs: 1 - Operating cost, including taxes = real costs + 15% 2 - Operating cost, including taxes = real costs + 15% 3 - Increase of operating cost is based on CIP Renewal option: 1 option for 5 years (from June 2001 up to May 2007) First right of refusal (repetitive if necessary) On all spaces of the building, if the actual lessee doesn't renewal Convention de partage de propriete Objectifs et contexts gendraux Los signataires conviennent de partager la propriete du signataire proprietaire. Les signataires sont responsables due respect de la convention par leurs visiteurs, parents, amis, etc. La propriete ne servira qu`a des fine d'habitation. Pas question, par example, de recevoir des gens aux fine du travail, comme si la propriete servait de cabinet d'avocat ou autre. Nul element de type photo, dispositive, film dessin, oroquis, schema, illustration, peinture, etc., etc., pris ou produit a partir da la propriete ou pris ou produit de la propriete par les non proprietaires et leurs vistiteurs, amis, parents, etc. ne peut servir a des fina de reproduction et/ou de diffusion, a des fine lucratives, commerciales, touristiques, artistiques, d'exposition, etc. Strictement prive of roservo au proprietaire et a ses droits d'auteur. Le meme principe a'applique a la conception de la propriete et de co qui s'y trouve les plans, mosures, dimensions, l'originalite, l'orientation, etc., etc. Le signataire non proprietiare ne laissera les clefs da la maison at du garago a personne d'autre. Les autres details du contexte et du modus vivandi a respecter sonr saux affihes a l'cabro da la maison. Principales modalites financiers De facon generale, le proprietaire assume toutes les depenses de proprietaire, incluant celles pour l'enlevement meoanise da la neige dans le stationnement et devant le garage, enlevernent qu'il a'engage a assurer. En compensation pour es jouiassance de la propriete a partir du 1st avril 2002, le signataire non proprietaire verse la somme de 750,00 $ lors de la signature de la Convention au plus tard lo 15 fevrier. Il verse onsuite la somme de 750,00$ le 1st mai 2002, de 750,00$ ls 1st juin, de 650,00$ le premier de chaque mois suivant juaqu'au 1st juin 2003 inclusivement, puis de 675,00$ le premier de chaque mois suivant juaqu'au 1st juin 2004 inclusivement. Le proprietaire doit prevenix le signataire non proprietaire au plus tard 6 mois avant le 1st juillet 2004 a'il cesse le partage de sa propriete a partir de cette date. Le signataire non proprietaire doir prevenir le proprietaire 4 roots avant le 1st juillet 2003, ou 4 mois avant le 1st juillet 2004, s'il veur cesser de partager la propriete a partir du 1st juillet 2003 ou a partir du 1st juillet 2004. Pour les periodes ulterieures au 30 juin 2004, les parties renegncieront entierement les mensualites su plus tard 4 mois avant le 1st juillet, 2004. Assurances: Preuves de responsabilite civile de 3 millions $ + couverure biens personnels, a etre fournies au proprietaire dans les meilleurs delais apre la signature. Le signataire non proprietaire ne reclame pas do remboursement d'impots fanciers, ni de credit ou deduction pour personne vivant seule, ni de feuillet la-dessus, etc. Les frais de modifications a la ligne telephonique actuelle au profit du signataire non proprietaire sont a ses frais. Videotron de base est assume par le proprietaire . Ons signe A Saint-Remuald le 18 fevrier 2002: /s/ Jacques DuFour ---------------------------------------- Jacques DuFour, proprietaire du 97. rue Dupent, Saint-Romuald QC G6W 3T8 A Quebec le 18 Uevrier 2002: /s/ Guylan Perron ---------------------------------------- Guylan Perron Direcrico dcs financee Anapharm inc 2050 boul. Rene-Levesque Quest Saint-Fay QC G1V 2K8 Telephone: 527-4000 Fax: 527-3456 Employe d'Anapharm inc qui partagera la propriete selon l'entente deonces plus haut: Nick D'Ullese N.A.S.: 261 763 478 Peermie conduire: D4206-230864-00 Adresse du domiciles artuel: 942 Radison St. Lazare QC J7T2A5 [ILLEGIBLE FORM] [ILLEGIBLE FORM] [ILLEGIBLE FORM] [ILLEGIBLE FORM] -7- SCHEDULE 4.32 ENVIRONMENTAL MATTERS [Summary of French Written Documents] The attached document is a notice of infraction that has been sent by the Department of Environment as of August 30, 1999, reproaching Anapharm, Inc. to have made the following infringements to the provincial "Regulations respecting Biomedical Waste", to wit: . Absence of a daily register containing, on a weekly basis, the type and quantity of biomedical waste generated; . The site at which the biomedical waste is stored is neither padlocked or bolted nor its access is prohibited; . Biomedical waste is in contact with other types of residual materials; . Biomedical waste is not kept refrigerated at less than 4(degree)C. The other documents refer to correspondence between the Department of Environment and Anapharm Inc. whereby it is written that the latter would have corrected the above mentioned infringements. SCHEDULE 4.32 ENVIRONMENTAL MATTERS See Schedule 4.25 "Governmental Authorizations" for all environmental authorizations. See attached document regarding a remedial order. CERTIFIE Charlesbourg le 30 aout 1999 AVIS D'INFRACTION Anapharm inc. 2050, boulevard Rene-Levesque ouest Sainte-Foy (QUEBEC) G1V 2K8 Objet: Entreposage de dechets biomedicaux au 2050, boulevard Rene-Levesque ouest dans la ville de Sainte-Foy N/Ref.: 7610-03-01-02322-0A N/Intervention: 030004436 - -------------------------------------------------------------------------------- Mesdames, Messieurs, A la suite de l'inspection effectuee le 29 juillet 19999 par un fonctionnaire dument autorisee de notre direction regionale, nous avons constate les infractions ci-apres et ce, en derogation au reglement: 1. L'absence de register indiquant chaque semaine, la nature et la quantite des dechets biomedicaux produits: - Reglement sur les dechets biomedicaux; - Article 12; 2. Le lieu d'entreposage des dechets biomedicaux n'est pas cadenasse ou verrouille ni son acces interdit; - Reglement sur les dechets biomedicaux; - Article 17; 9530, rue de la Faune Telephone (418) 644-8844 Charlesbourg (Quebec) G1G 5H9 Telecopieur (418) 622-3014 AVIS D'INFRACTION - 2 - N/Ref.: 7610-03-01-2311-OA Charlesbourg, le 30 aout 1999 3. Les dechets biomedicaux sont en contact avec d'autres types de dechets; - Reglement sur les dechets biomedicaux; - Article 21; 4. Les dechets biomedicaux ne sont pas maintenus dans un lieu refrigere a une temperature inferieure a 4(0) C; - Reglement sur les dechets biomedicaux; - Article 22. Nous vous demandons donc de proceder IMMEDIATEMENT aux corrections qui s'imposent. Pour toute information additionnelle, vous pouvez communiquer avec M. Carol Pageau au (418) 644-8844, poste 260. A defaut de vous conformer a cet avis d'infraction, nous aurons a prendre les mesures appropriees. Le present avis, ni le fait de vous y conformer, ne nous prive du droit d'exercer les recours disponibles a l'egard des infractions qui ont ete observees. /s/ Michael Vallieres Michael Vallieres, ing. Chef du Service industrial MV/CP/sr ANAPHARM 2050, boul. Rene-Levesque Quest, 5eme etage, Sainte-Foy (Quebec), Canada G1V 2K8 Tel: (418) 527-1000 Fax: (418) 527-3456 E-mail: anapharm@accent.net - -------------------------------------------------------------------------------- Date de transmission / Date of transmission: 99-11-09 --------------- Nombre de pages (incluant celle-ci); / Number of pages (including cover page): 2 --------------- Si coche, un document vous sera expedie par la poste / If checked, a document will be sent to you by mail: [_] EXPEDITEUR / SENDER Nom / Name: Claudine Gosselin ------------------------------------------- DESTINATAIRE / RECIPIENT Nom / Name: M. Carol Pageau ------------------------------------------- Compagnie / Company: Ministere de l'environnement et de la faune ------------------------------------------- Tel / Tel: 644-8844 ------------------------------------------- Telecopieur / Fax: 622-3014 ------------------------------------------- - -------------------------------------------------------------------------------- Message: M. Pageau, Je reponds aujourd'hui a votre demande de rendez-vous ayant pour but d'inspecter les correctifs apportes concernant votre avis d'infraction portant le no de reference 7610-03-01-02322-OA. Nous avons bel et bien recu cet avis d'infraction le 3 septembre dernier. Depuis, les demarches necessaries en vue d'apporter les correctifs qui s'imposent ont ete entreprises. Vous savez certainement que plusieurs intervenants agissent dans ce dossier. Il faut laisser a chacun le temps de bien faire son travail. Dans l'immediat, je peux vous dire que nos ingenieurs auront les dessins d'atelier aujourd'hui ainsi que les specifications de mecanique. Des qu'il auront fait les plans necessaires, nous procederons a l'embauche de specialistes des differents corps de metier impliques. Des que ces derniers seront en mesure d'estimer une date de fin des travaux, c'est avec grand plaisir que je vous la communiquerai afin que nous puissions prendre rendez-vous pour une inspection. Si vous avez des questions, n' hesitez pas a me telephoner au 527-4000 ext. 256. Veuillez agreer, M. Pageau, l'expression de mes sentiments les meilleurs, /s/ Claudine Gosselin Claudine Gosselin, Acheteur [Logo Omitted] Gouvernement du Quebec Ministere de l'Environnement Direction regionale de Quebec Charlesbourg, le 11 novembre 1999 Madame Claudine Gosselin Anapharm inc. 2050, boul. Rene-Levesque ouest Sainte-Foy (QUEBEC) G1V 2K8 Objet: Entreposage de dechets biomedicaux au 2050, boulevard Rene-Levesque ouest dans la ville de Sainte-Foy N/Ref.: 7610-03-01-02322-OA N/Intervention: 030004436 - -------------------------------------------------------------------------------- Madame, En reponse a votre correspondance du 9 novembre courant, la presente a pour but de vous informer qu'un delai additionnel vous est accorde, soit jusqu'au 28 fevrier 2000, afin de vous permettre de completer de facon definitive, les travaux requis au regard de l'objet mentionne en rubrique et co, afin que la Loi sur la qualite de l'environnement et les reglements qui s'y rattachent soient respectes. Nous comptons sur votre collaboration et recevez, Madame, nos salutations les meilleures. /s/ Michel Vallieres MICHEL VALLIERES, ing. Chef du Service industriel MV/CP/sr cc.: Mme Johanne Boucher Champagne 9530, rue de la Faune Telephone (418) 644-8844 Charlesbourg (Quebec) G1G 5H9 Telecopieur (418) 622-3014 [DIAGRAM OMITTED] ANAPHARM PECHETS BIO MEDICAUX V99-5510 echelle=1:50 ANAPHARM 2050, boul. Rene-Levesque Quest, 5eme etage, Sainte-Foy (Quebec), Canada G1V 2KB Tel: (418) 527-1000 Fax: (418) 527-3456 E-mail: anapharm@accent.net - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Date de transmission / Date of transmission: 99-12-09 --------------- Nombre de pages (incluant celle-ci); / Number of pages (including cover page): 1 --------------- Si coche, un document vous sera expedie par la poste / If checked, a document will be sent to you by mail: [_] EXPEDITEUR / SENDER Nom / Name: Claudine Gosselin ------------------------------------------- DESTINATAIRE / RECIPIENT Nom / Name: M. Carol Pageau ------------------------------------------- Compagnie / Company: Ministere de l'environnement et de la faune ------------------------------------------- Tel / Tel: 644-8844 ------------------------------------------- Telecopieur / Fax: 622-3014 ------------------------------------------- - -------------------------------------------------------------------------------- Message: M. Pageau, Je vous soumets la proposition d'amenagement suivante afin que, si vous le pouvez, vous me confirmiez si oui ou non de telles installations seraient conformes aux exigences. Donc, afin d'optimiser l'occupation de l,espace qui nous a ete accorde par le proprietaire de la batisse, nous utiliserions la piece existante sur 12 pieds de long, sur toute sa longueur de 8 pieds 4 pouces et toute sa hauteur de 8 pieds et 9 pouces. Une isolation rigide double de 1 1/2 pouce et une finition d'entretien facile (glassboard) recouvrirait les murs et le plafond. Le placher de beton serait repare et recevrait un fini corlon a joints soudes et remontes jusqu'aux murs. La porte recevrait une quincaillerie anti-vandalisme et une serrure en fonction du contenu a proteger. Un equipement de refrigeration serait installe afin de maintenir la temperature de la piece a +4 degres celcius. Dans l,attente de vos commentaires, veuillez agreer, M. Pageau, l'expression de mes sentiments les meilleurs... /s/ Claudine Gosselin Claudine Gosselin, Acheteur ANAPHARM Sainte-Foy, le 7 mars 2000 M. Carol Pageau Ministere de l'Environnement et de la Faune 9530, de la Faune Charlesbourg (Quebec) G1G 5H9 Re: Chambre a dechets bio-medicaux Cher M. Pageau, Nous avons pris en consideration les remarques que vous avez faites a la suite de l'inspection de nos installations au mois d'aout 99. Nous avons donc sollicite l'aide de professionnels en la matiere afin de nous conformer aux demandes de modifications concernant l'entreposage de nos dechets biomedicaux, tel que stipule dans votre avis d'infraction date du 30 aout 99. Nous concluons donc qu'a la suite de votre visite du 3 mars dernier, nos nouvelles installations pour l'entreposage de nos dechets biomedicaux ont corrige la situation initiale rapportee dans votre avis ci-haut mentionne. Sauf avis contraire de la part de votre ministere, nous considerons ce dossier comme etant clos. Veuillez agreer, M. Pageau, l'expression de mes sentiments les meilleurs. /s/ Claudine Gosselin /s/ Johane Boucher-Champagne Claudine Gosselin Johane Boucher-Champagne Acheteur Directrice generale Quebec [Logo omitted] Ministere de l'Environnement Charlesbourg, le 17 mars 2000 Madame Johane Boucher-Champagne Directrice generale Anapharm inc. 2050, boul. Rene-Levesque ouest Sainte-Foy (QUEBEC) G1V 2K8 Objet: Entreposage de dechets biomedicaux au 2050, boulevard Rene-Levesque ouest dans la ville de Sainte-Foy N/Ref.: 7610-03-01-02322-OA N/Intervention: 030004914 - -------------------------------------------------------------------------------- Madame, En reponse a votre letter du 7 mars 2000 et suite a l'inspection qui a ete effectuee le 3 mars 2000 par un fonctionnaire dument autorise de notre direction regionale a l'endroit cite en rubrique, nous desirons vous informer qu'aucune infraction au Reglement sur les dechets biomedicaux n' a ete constatee. Cependant, des visites ulterieures pourront etre effectuees afin de s'assurer que la Loi sur la qualite de l'environnement et les reglements qui s'y rattachent soient respectes. Veuillez agreer, Madame, l'expression de nos sentiments distingues. /s/ Michel Vallieres MV/CP/sr MICHEL VALLIERES, ing. Chef du Service industriel SALLE DECHETS BIOMEDICAUX SUIVI DES DEMARCHES Fin septembre 99: On demande les premieres soumissions pour des chambres froides 21 octobre: Sous la base des volumes des 6 derniers mois obtames par Pyrovol, on determine les format adequate de chambre froide. 5 novembre: On place la commande pour la chambre froide 9 novembre: Le fabricant vient prendre les mesures afin de produire les derniers d atelier 9 novembre: Carol Pageau demande a venir visites nos nouvelles installation Je lui envoie un fax qui expliques que nous nu sommes pos prets 9 novembre 15 h30: Carol Pageau confirmes que le plancher de leton du sous - sol convient comme plancher de la salle refrigeree a condition qu'il y ait un joint d'etanchartre -9- SCHEDULE 4.35 PENSION AND BENEFIT PLANS [Summary of French Written Documents] The letter of Industrielle Alliance attached hereto refers to the capital gain regarding the disposition by Anapharm of Industrielle Alliance's shares. SCHEDULE 4.35 PENSION AND BENEFIT PLANS (a) Benefit Plans: see document attached hereto; (b) See letter of Industrielle Alliance attached hereto. [LOGO OF ANAPHARM INC] - ---------------------------------- 00.15.01581 Actions de l'Industrielle Alliance - ---------------------------------- Solde au 30 avril 2000 8,195 $ representant 745 actions a 11 $/actions Dispositions au cours de l'exercise produit de disposition 21,651.52 $ cout (8,195.00) (8,195) ----------- Gain sur disposition 13,456.52 $ =========== Solde au 30 avril 2001 -- ======== TRANSACTION AUTORISEE PAR LE CONSEIL D'ADMINISTRATION VOIR MINUTES DUI 5 AOUT 2000 Guylaine Perron, c.a. le 23 mai 2001 [LOGO OF L'INDUSTRIELLE ALLIANCE COMPANY] 2838-00013215 - -------------------------------------------------------------------------------- JOUR MOIS ANNEE NO. DE CHEQUE 00013215 MONTREAL 05 / 09 / 00 CHEQUE NO. DAY MONTH YEAR PAYEZ PAY ********21,647 DOLLARS 77 CENTS$ $21,647.77 A L'ORDRE DE TO THE ORDER OF ANAPHARM INC. A/S M. PIERRE BOUTIN COMPAGNIE MONTREAL TRUST 2050 BOUL RENE-LEVESQUE MONTREAL TRUST COMPANY SIEME ETAGE STE-FOY QC GIV 2K8 AGENT PAYOR/PAYING AGENT /s/ illegible ------------------------ LA BANQUE DE NOUVELLE SCOSEE SIGNATURE AUTHORISE THE BANK OF NOVA SCOTIA AUTHORIZED OFFICER MONTREAL, QUEBEC - -------------------------------------------------------------------------------- "00013215" 1:20701 002 : 00017 16" [LOGO OF L'INDUSTRIELLE ALLIANCE COMPANY] CHEQUE DATE 05/09/00 2838-00013215 - -------------------------------------------------------------------------------- PROGRAMME DE VENTE ASSISTEE ASSISTED SALES PROGRAM PAIEMENT . PAYMENT - -------------------------------------------------------------------------------- PRODUIT DE LA VENTE DE 745 ACTIONS ORDINAIRES DE L'INDUSTRIELLE-ALLIANCE A $29.0960 L'ACTION $21,676.52 MOINS FRAIS ADMISTRATIFS $ 25.00 MOINS TPS (TPS# R103755641) $ 1.75 MOINS TVQ (TVQ# 1002974319) $ 2.00 - -------------------------------------------------------------------------------- A/C REF: ANAPHA INC...000 TOTAL $21,647.77 ------------------ [LOGO OF GROUP INSURANCE] PLAN DESCRIPTION GROUP INSURANCE PLAN Policyholder: ANAPHARM INC. Policy No.: 96,054 TABLE OF CONTENTS page ---- SUMMARY OF BENEFITS 1 GENERAL PROVISIONS Definitions 12 Particulars 15 Insurance 17 Benefits 23 COVERAGE Participant's Life Insurance 26 Dependents' Life Insurance 31 Participant's Accidental Death and Dismemberment Insurance 32 Short-term Disability Income Insurance 35 Long-term Disability Income Insurance 41 Supplemental Health Insurance 48 Medical Assistance Outside Canada 59 Dental Care Insurance 69 ANNEX Basic Prescription Drug Insurance Plan (i) ANNEX TO YOUR GROUP INSURANCE PLAN FOLLOWING THE INTRODUCTION IN QUEBEC OF THE ACT RESPECTING PRESCRIPTION DRUG INSURANCE EFFECTIVE DATE: JANUARY 1, 1997 Coverage provided under the BASIC PRESCRIPTION DRUG INSURANCE PLAN for the cost of pharmaceutical services and medications provided in Quebec, for every person who is a resident of Quebec and who is duly registered with the Regie de l'assurance-maladie du Quebec (hereafter referred to as the Board), is part of the present plan, unless otherwise specified hereafter. Coverage offered is in accordance with relevant provisions of the Act respecting prescription drug insurance. Any modification to the Act respecting prescription drug insurance which relates to the basic plan will also modify the relevant provisions of the present plan. This coverage is mandatory for all employees or retirees and their dependents who are eligible to the present plan, subject to the provisions of the Act respecting prescription drug insurance. SPECIAL PROVISIONS FOR ----------------------S PERSONS OF AGE 65 AND OVER -------------------------- The person's choice to be covered by the Board for the BASIC PRESCRIPTION DRUG INSURANCE PLAN is irrevocable. For the purpose of the present plan, persons of age 65 and over are presumed to be covered with the Board for the BASIC PRESCRIPTION DRUG INSURANCE PLAN, as well as dependents of a participant who is 65 years of age or over, regardless of their age, unless otherwise specified in the present plan. For any person aged 65 and over, who is eligible for insurance and who chooses to be insured for the part of coverage corresponding to the BASIC PRESCRIPTION DRUG INSURANCE PLAN under the present plan, this benefit provides no termination with regard to the participant's age or the dependent's age. - -------------------------------------------------------------------------------- SUPPLMENTAL HEALTH INSURANCE - -------------------------------------------------------------------------------- All provisions related to "drugs or medicine" of the Supplemental Health Insurance benefit remain in force, except for that part of coverage corresponding to the BASIC PRESCRIPTION DRUG INSURANCE PLAN, described hereafter. PART OF COVERAGE CORRESPONDING TO --------------------------------- THE BASIC PRESCRIPTION DRUG INSURANCE PLAN ------------------------------------------ o Covered expenses and maximum contribution: ------------------------------------------ The insurer will reimburse the cost of pharmaceutical services and eligible medications as per the list of medications covered by the Board and up to the maximum contribution, per adult and per calendar year, provided under the Act respecting prescription drug insurance. The maximum contribution is the total amount payable per adult for deductible and coinsurance. For the purpose of the present plan, the participant's maximum contribution also includes any amounts paid as a deductible and coinsurance for a dependent child, if applicable. (Maximum contribution of $750 per adult per calendar year as of 01-01-97) o Deductible: ----------- As provided in the Supplemental Health Insurance benefit (one deductible for the benefit), subject to any maximum provided under the Act respecting prescription drug insurance. (ii) o Reimbursement by the insurer: ----------------------------- As provided in the Supplemental Health Insurance benefit. However, if the reimbursement is inferior to the one provided by the Act respecting prescription drug insurance, the reimbursement will be as per the minimum reimbursement allowed. (Minimum reimbursement of 75% as of 01-01-97) Beyond the maximum contribution, per adult and per calendar year, the insurer's reimbursement for eligible medications as per the list of the Board will be 100%. o Maximum ------- None. o Exclusion: ---------- None, except if provided under the Act respecting prescription drug insurance or its regulations. This benefit terminates on the participant's 65th birthday or upon retirement, if earlier, subject to the SPECIAL PROVISIONS FOR PERSONS OF AGE 65 AND OVER included in this annex. (iii) SUMMARY OF BENEFITS - -------------------------------------------------------------------------------- The SUMMARY OF BENEFITS briefly describes the coverage of the group insurance plan, based on the class the participant belongs to. The following pages give a full description of the GENERAL PROVISIONS and of each BENEFIT. SPECIAL PROVISIONS For the purposes of this plan, the masculine form includes the feminine unless a different meaning is plainly to be taken from the context. Participants are identified under the following classes: Classes - ------- 100 - Employees with dependents 110 - Employees without dependent - -------------------------------------------------------------------------------- page 1 GENERAL PROVISIONS ELIGIBILITY DATE Subject to all other provisions, each employee shall become eligible on one of the following dates: . on the effective date of the plan, if he is then in the employer's service, or . on the date on which he has completed 3 months of continuous service with the employer. NORMAL RETIREMENT AGE For the purpose of this plan, the normal retirement age shall be the first day of the month following or coinciding with the participant's 65th birthday. - -------------------------------------------------------------------------------- page 2 PARTICIPANT'S LIFE INSURANCE Sum Insured - ----------- One times the annual salary, the result being rounded to the next $1,000. Maximum: $170,000 without evidence of insurability or $340,000 with evidence of insurability. Reduction: This benefit is reduced by 50% on the participant's 65th birthday. This benefit terminates on the participant's 70th birthday or upon retirement, if earlier. PARTICIPANT'S ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE Sum Insured - ----------- One times the annual salary, the result being rounded to the next $1,000. Maximum: $170,000 without evidence of insurability or $340,000 with evidence of insurability. Reduction: This benefit is reduced by 50% on the participant's 65th birthday. This benefit terminates on the participant's 70th birthday or upon retirement, if earlier. - -------------------------------------------------------------------------------- page 3 DEPENDENTS' LIFE INSURANCE (class 100 only) Spouse: $5,000 Each child aged . less than 24 hours: None . 24 hours and more: $2,500 This benefit terminates on the participant's 70th birthday or upon retirement, if earlier. - -------------------------------------------------------------------------------- page 4 SHORT-TERM DISABILITY INCOME INSURANCE Weekly Indemnity - ---------------- 60% of the weekly salary, the result being rounded to the next dollar. Weekly maximum: $1,000 Elimination Period: . Accident: 14 calendar clays . Hospitalization: 14 calendar days . Illness: 14 calendar days For the purpose of defining the elimination period, any disability resulting from an accident and starting more than 30 days after the said accident is considered as a disability resulting from an illness. Maximum Benefit Period: 17 weeks Benefits are non taxable and are payable on a working day basis. This benefit terminates on the participant's 70th birthday or upon retirement, if earlier. - -------------------------------------------------------------------------------- page 5 LONG-TERM DISABILITY INCOME INSURANCE Monthly Indemnity - ----------------- 66 2/3% of the first $2,500 of the basic monthly salary, plus 45% of the excess, the result being rounded to the next dollar. Monthly maximum: $3,500, subject to applicable reductions. However, the overall maximum must not exceed 85% of the net monthly salary determined at the onset of disability. Elimination Period: 17 weeks Payment of benefits begins after the termination of the maximum benefit period provided under the Short-term Disability Income Insurance, if applicable. Maximum Benefit Period: To the participant's 65th birthday Maximum Annual Indexation Rate: 3% Benefits are non taxable. This benefit terminates on the participant's 65th birthday or upon retirement, if earlier. - -------------------------------------------------------------------------------- page 6 SUPPLEMENTAL HEALTH INSURANCE ================================================================================ HOSPITALIZATION IN CANADA - -------------------------------------------------------------------------------- Deductible: Reimbursement: Daily Maximum: none 100% Semi-private room without limit as to the number of days ================================================================================ EMERGENCY EXPENSES OUTSIDE THE PROVINCE OF RESIDENCE and MEDICAL ASSISTANCE OUTSIDE CANADA - -------------------------------------------------------------------------------- Deductible: Reimbursement: Maximum Per Insured Person: none 100% $4,000,000 lifetime ================================================================================ OTHER MEDICAL EXPENSES 1N CANADA - -------------------------------------------------------------------------------- Deductible . Individual protection: $25 . Family protection: $50 Reimbursement . drugs and paramedical fees: 80% . other expenses: 100% Maximum: Unlimited ================================================================================ Dependents, if applicable, are covered under the present benefit. This benefit terminates on the participant's 70th birthday or upon retirement, if earlier. - -------------------------------------------------------------------------------- page 7 Medical Expenses ---------------- Covered Expenses Maximums Per - ---------------- Insured Person -------------- Fees for nursing care $5,000 per calendar year. Ambulance Unlimited. Oxygen Unlimited. Drugs or medicine Unlimited. Artificial limbs Unlimited. and eyes Wheelchair, hospital Unlimited. bed, other therapeutic appliances Breast prostheses $150 per 24 months. Medical elastic $100 per calendar year. stockings. Room and board in a $20 per day; global rehabilitation maximum of 90 days per institution, a calendar year. convalescent home or a chronic care institution Orthopedic shoes $200 per calendar year. (including ortheses and alterations) - -------------------------------------------------------------------------------- page 8 Medical Expenses (cont'd) ---------------- Covered Expenses Maximums Per - ---------------- Insured-Person -------------- Intrauterine devices $50 per calendar year. Eyeglasses or contact $200 lifetime. lenses following cataract surgery Diagnostic laboratory $100 per calendar year. and x-ray procedure fees Orthopedic devices Unlimited. Crutches and Unlimited. hernial belts Capillary $150 per calendar year. prostheses Sclerosing $15 per visit. injections Dental care as a result Unlimited. of an accidental injury Paramedical fees for $20 per visit. Global maximum a physiotherapist and of $400 per calendar year. a physical rehabilita- One (1) treatment per day. tion therapist Paramedical fees for a $20 per visit. Maximum of speech therapist, an $400 per calendar year audiologist, a chiro- for each of these professionals. practor, an osteopath, a One (1) treatment per day. psychologist, a pediatrist, an acupuncturist and an occupational therapist - -------------------------------------------------------------------------------- page 9 Medical Expenses (cont'd) ---------------- Covered Expenses Maximums Per - ---------------- Insured person -------------- X-rays by a $50 per calendar year. chiropractor Hearing aids $500 per 5-year period. - -------------------------------------------------------------------------------- page 10 DENTAL CARE INSURANCE Deductible . Individual protection: $50 . Family protection: $50 Reimbursement . Preventive treatments: 80% . Basic treatments: 80% Maximum Per Insured Person . Preventive and Basic treatments: $1,000 per calendar year Dependents, if applicable, are covered under the present benefit. Expenses are reimbursed according to the Dental Surgeons Association's Fee Guide for the current year. This benefit terminates on the participant's 70th birthday or upon retirement, if earlier. - -------------------------------------------------------------------------------- page 11 GENERAL PROVISIONS - -------------------------------------------------------------------------------- DEFINITIONS The terms and conditions of each of the benefits contained in this plan will prevail notwithstanding anything to the contrary in the GENERAL PROVISIONS. Acceptance of Evidence of Insurability: The date of acceptance of any evidence - -------------------------------------- of insurability means the date of receipt of the last document confirming the insurer's acceptance of the risk. Accidental Injury: Any bodily injury sustained while the insurance is in force, - ----------------- directly and solely due to an external, sudden, violent and unintentional cause and requiring within thirty (30) days of the accident the care of a physician. Actively at Work: The status of a participant who is performing his usual duties - ---------------- on a full-time and permanent basis and working a minimum of twenty-two and a half hours (22.5) per week. Wherever there is mention of a number of full-time work days, public holidays are considered full-time work days. Day: A calendar day, except if otherwise mentioned in the present plan. - --- Dependents: The participant's spouse or the children of the participant or of - ---------- the spouse. If dependents are insured, the words "spouse" and "child" have the following meanings: . Spouse The person who is legally married to a participant, or the person designated by the said member, whom he - -------------------------------------------------------------------------------- page 12 declares publicly to be his spouse and with whom he has been living on a permanent basis for at least one (1) year. In all cases, a de facto separation of more than three (3) months results in the loss of status as spouse. . Child Any single child of the participant or of his spouse residing in Canada who depends on the participant for support and who meets at least one of the following conditions: . He is under twenty-one (21) years of age; . He is under twenty-six (26) years of age and is attending a recognized educational institution on a full-time basis; . He became totally and permanently disabled while still considered a dependent under a) or b) above. Disability: A state of total and continuous incapacity as defined in the - ---------- benefits of the present plan. For disability to be acknowledged, the participant's condition must require regular care actually given by a physician or a specialist. It is understood that whenever medical care is necessary and, according to the insurer, is a matter for a specialist, the medical care must actually be given by a specialist of the appropriate field. Eligibility Period: The continuous period, as specified in the Summary of - ------------------ Benefits, during which an employee must be actively at work before being eligible for coverage under this insurance. Elimination Period: The continuous period indicated in the Summary of Benefits - ------------------ during which a participant must be absent from work due to disability before he can begin to receive disability income benefit payments under a disability income benefit. - -------------------------------------------------------------------------------- page 13 Employee: A person actively working on a permanent basis for the policyholder - -------- and receiving regular salary for services rendered. Illness: Any deterioration in health requiring regular, continuous and curative - ------- care actively provided by a physician and satisfactory to the insurer, and whose default would bring deterioration of the person's health. Insured Person: The participant and the dependents of the participant insured - -------------- under this plan. The insured person must at all times be covered under a government health plan and live in Canada permanently (at least one hundred and eighty-two [182] days a year), in order to be eligible under the present plan and to maintain his rights to insurance, unless otherwise agreed previously with the insurer or unless mention to the contrary is made in the present plan. Participant: Any employee insured under this plan. - ----------- Physician: A person who is legally licensed and authorized to practice medicine. - --------- Salary: The remuneration that the employer has stated to the insurer including - ------ any additional income earned on a regular basis (overtime, bonuses, commissions, shift differentials, gratuities) in accordance with the standards of the Employment Insurance Act. Whenever the remuneration is composed wholly or partly of commissions or gratuities, the salary will be based on the average basic salary plus commissions and gratuities earned during the calendar year preceding the year of insurance. If the employee has not completed one (1) year of service, the salary shall be the estimated annual remuneration of the employee at the beginning of the year of insurance up to a maximum of seventy-five percent (75%) of the maximum insurable earnings determined under the Employment Insurance Act. - -------------------------------------------------------------------------------- page 14 Salary (Net): The participant's annual salary immediately prior to the beginning - ------------ of disability, less: . The employee's annual Employment Insurance premium; . The employee's annual Quebec or Canada Pension Plan contribution; . Income tax deducted according to the tax tables established under the Canadian Income Tax Act and the income tax act of the participant's province of residence. Specialist: A physician licensed by the provincial licensing authority to - ---------- practice medicine with specialization. PARTICULARS PLAN AMENDMENT - -------------- The benefits herein provided are complementary to the benefits provided by government plans. Any modification brought to one of these plans after the effective date of the present plan will in no way modify the benefits herein provided, unless an agreement is signed by the authorized officers of the insurer and the policyholder. However, this does not apply to modifications regarding the maximum insurable earnings determined under the Employment Insurance Act. INCONTESTABILITY - ---------------- Whenever evidence of insurability is required to approve insurance for a participant or a dependent, or to approve one of the benefits, the statements made in such - -------------------------------------------------------------------------------- page 15 proof are, except in cases of error in age or fraud, accepted as true and incontestable after the said participant's or dependent's insurance or benefit has been in force for two (2) years, and provided the participant or dependent is still living at that time. If the insurance is cancelled and then reinstated, the two-year period starts as of the date the insurance has been reinstated. RENUNCIATION - ------------ In a case where the insurer does not require compliance with a provision of this plan, such occurrence in no way creates a commitment to act likewise in the event of a subsequent breach of the same provision. Moreover, no approval by the insurer of any act, on the part of the policyholder or of a participant, for which such approval was required, shall exempt the policyholder or the participant from having to obtain the insurer's approval for any subsequent similar act. INDIVIDUAL CERTIFICATES - ----------------------- The insurer issues individual certificates to be delivered by the policyholder to each participant. LAWFUL CURRENCY - --------------- All payments hereunder will be made in the lawful currency of Canada and according to the exchange rates effective at the time the event giving entitlement to benefits took place. - -------------------------------------------------------------------------------- page 16 BENEFICIARY - ----------- Any participant may name a beneficiary or change a named beneficiary, subject to the provisions of the law, by written declaration signed by the participant and delivered to the insurer's head office. The insurer declines any responsibility with respect to the sufficiency or validity of such nomination or change of beneficiary. The rights of a beneficiary who dies before the participant revert to the participant. If no beneficiary has been named, the death benefit is paid to the participant's rightful claimants. INSURANCE ELIGIBILITY - ----------- Employee An employee becomes eligible: a) as of the effective date of the plan, in the case of any employee then in the employer's service, provided the eligibility period specified in the Summary of Benefits is satisfied, if applicable; or b) in all other cases, on the date the employee has satisfied the eligibility period specified in the Summary of Benefits, if applicable. However, no employee hired after the effective date of the plan will be eligible if he attains age - -------------------------------------------------------------------------------- page 17 sixty-five (65) before the end of the eligibility period. Moreover, a participant is not eligible for the long-term disability income benefit if he attains age sixty-five (65) before the end of the elimination period of this benefit. Dependents A dependent becomes eligible on the latest of the following dates: a) The date on which the employee of whom he is dependent becomes eligible; b) The date on which he meets the definition of dependent of this plan for the first time; c) The day after he leaves the hospital, if he is hospitalized on the date on which he would normally be eligible. However, this does not apply to the life insurance benefit or in the case of a newborn child. APPLICATION FOR GROUP INSURANCE - ------------------------------- Any employee who is eligible for the insurance must submit an application for himself and for each of his dependents, at their respective eligibility date, on forms supplied by the insurer. EFFECTIVE DATE OF INSURANCE - --------------------------- Whether plan membership is compulsory or voluntary, the employee's insurance and dependents' insurance, if any, take effect on one of the following dates: - -------------------------------------------------------------------------------- page 18 a) The eligibility date, if the application is received by the insurer prior to that date, or within thirty-one (31) days after such date; b) The date on which the insurer accepts the required evidence of insurability, in all other cases. The employee must provide such evidence, at no expense to the insurer. However, if the employee was not actively at work on the date the insurance would otherwise have become effective, the insurance takes effect on the date the employee returns to active work. Any amount of insurance in excess of the non-evidence maximum shown in the Summary of Benefits, if applicable, takes effect on the date the insurer accepts the evidence of insurability. TERMINATION OF INSURANCE - ------------------------ Participant A participant's insurance automatically terminates on the earliest of the following dates: a) The date the benefit or plan is terminated; b) The date on which the participant retires, unless otherwise specified in the Summary of Benefits; c) The date the participant reaches the age limit specified in the Summary of Benefits, if applicable; d) The date of the participant's death; - -------------------------------------------------------------------------------- page 19 e) The later of the following dates: . the date indicated on a written notice received from the policyholder; . the date this notice was received by the insurer; f) The date the participant is incarcerated after committing a criminal offence for which he was found guilty; g) The date the participant ceases to qualify as an employee as defined in this plan, except in the following cases: . If the participant ceases to be actively at work due to illness or accidental injury, the participant is considered to remain in the employer's service as long as he is entitled to the disability income benefits of the present plan. . In the case of temporary termination of employment due to a strike or a lock-out, the insurance, with the exception of disability income benefits, is kept fully in force for a period not exceeding three (3) months for all participants, provided premiums continue to be paid, and provided there be no-individual selection. The insurance may however be cancelled or modified within the first seven (7) days of the event, if the policyholder so requests in writing and if both parties agree. The cancellation or modification takes effect on the date the request is received by the insurer. . In the case of temporary termination of employment due to the lay-off of a participant, class or category of employees, the insurance is kept fully in force for a period not exceeding three (3) months for all participants, provided - -------------------------------------------------------------------------------- page 20 premiums continue to be paid, and provided there be no individual selection. The insurance may however be cancelled if the policyholder so requests in writing; in such a case, the cancellation takes effect on the date the request is received by the insurer. . If the participant ceases to be actively at work due to a maternity leave taken in conformity with a provincial or federal law, the insurance is kept fully in force for a maximum period of eighteen (18) weeks, provided premiums continue to be paid. If the participant ceases to be actively at work due to a parental leave taken in conformity with a provincial or federal law, the insurance is kept in force for a maximum period of thirty-four (34) continuous weeks, provided such period is part of the fifty-two (52) week period immediately following the date of birth or adoption, if prior agreement with the insurer was made and premiums continue to be paid. If disability occurs during the maternity or parental leave, the elimination period of the disability income insurance will only start at the date the participant was expected to return to work. The insurer, however, reserves the right to terminate any extension of insurance herein specified by giving the policyholder thirty-one (31) days notice to that effect. Dependent Unless otherwise specified in the Summary of Benefits, a dependent's insurance terminates on the earliest of the following dates: - -------------------------------------------------------------------------------- page 21 a) On the date the participant of whom he is a dependent ceases to be covered under the plan; b) On the date the dependent ceases to be a dependent as defined in this plan; c) The later of the following dates: - the date indicated on a written notice received from the policyholder; - the date this notice was received by the insurer. The above provisions apply equally in the case of partial cancellation of insurance owing to the cancellation of one or several specific benefits. REINSTATEMENT OF INSURANCE - -------------------------- Whether plan membership is compulsory or voluntary, an employee's insurance and dependents' insurance, if any, are reinstated for the same benefits and according to the terms that existed at the time of cancellation. The reinstatement takes effect on one of the following dates: a) The date of return to active work, provided the employee is again eligible and provided the application reaches the insurer within thirty-one (31) days of return to active work and if absence from active work lasted less than twelve (12) months. Following this thirty-one (31) day period, the insurance can only become effective on the date the insurer accepts the required evidence of insurability, at no expense to the insurer; b) The date on which the insurer accepts the required evidence of insurability at no expense to the insurer, if the insurance terminated for any reason other than absence from active work; - -------------------------------------------------------------------------------- page 22 c) The date on which the employee and dependents, if any, again satisfy the requirements with regard to eligibility and the effective date of insurance, if absence from active work lasted more than twelve (12) months. However, any employee not actively at work on the day the insurance would otherwise be reinstated by virtue of this article will again be insurable only when he resumes active work. Moreover, if an individual life insurance contract has been issued in accordance with the "Conversion privilege" included in the participant's group life insurance benefit, and provided such individual contract is still in force, the insured person will again be entitled to the group insurance life benefit only on the date the insurer accepts the required evidence of insurability. BENEFITS CLAIMS NOTICE - ------------- Supplemental Health and Dental Care insurance, if applicable: The insurer must be notified of any claim for Supplemental Health or Dental Care insurance within twelve (12) months immediately following the date of the event which gives entitlement to benefits, on forms provided by the insurer and, if applicable, with satisfactory written proof. Other Benefits: Any other claim must be submitted on forms provided for that purpose by the insurer within the thirty-one (31) - -------------------------------------------------------------------------------- page 23 days immediately following the date of the event which gives entitlement to benefits, and satisfactory written proof must be provided to the insurer within ninety (90) days immediately following the date benefits became payable. The insurer reserves the right to require additional proof or information whenever it deems necessary and to have the insured person examined by a physician of its choice. Any claim submitted after the ninety-day (90) period and while the plan is in force limits the insurer's responsibility to the ninety-day (90) period preceding the date that any written request was received. Notwithstanding any provisions to the contrary, upon cancellation of the plan, any income disability claim must be submitted to the insurer within six (6) months of the onset of such disability. Any other claim must be submitted within ninety (90) days following cancellation of the plan. RIGHT OF RECOVERY - ----------------- If the insured person can claim to a third party indemnities for loss entitling him to benefits payable under the present plan, the insurer is entitled to recover from any person, including the insured person, any insurer or any other organization, the benefit payments that the insured person would have received or been entitled to receive, subject however to the maximum amount of indemnities payable under the benefits of the present plan. - -------------------------------------------------------------------------------- page 24 MEDICAL EXAMINATION - ------------------- The insurer has the right to require, as often as deemed necessary and at his own expense, a medical examination of any person for whom a claim is submitted and to obtain the report of any physician or any dentist having examined such person. Failure on the part of an insured person to submit to such examination results in the loss of any right to benefits. BENEFIT PAYMENT - --------------- The insurer will pay the benefits according to the terms and conditions of the plan within thirty (30) days following the receipt of the required satisfactory proof of claim. However, in the case of disability claims, the thirty (30) days commence from the expiry of the elimination period if such date is subsequent to submitting satisfactory proof of claim. Payments are made according to the terms and conditions of the plan with retroactive adjustments. Disability income benefits payable to a participant incapable of managing his assets and giving receipt are paid to the guardian or curator. However, after a six (6) month period following the date the participant was declared unfit by a physician, the insurer will continue to pay the benefits provided the institution of a protective supervision is undertaken. - -------------------------------------------------------------------------------- page 25 PARTICIPANT'S LIFE INSURANCE - -------------------------------------------------------------------------------- Upon the death of the participant, the insurer undertakes to pay to the beneficiary the sum insured as indicated in the Summary of Benefits, based on the participant's class and subject to the terms and conditions hereinafter specified. SPECIAL DBFINITION - ------------------ Disability If the participant is covered with LONG-TERM DISABILITY INCOME INSURANCE under the present plan: A state of total and continuous incapacity, resulting from illness or accidental injury, which wholly prevents the participant from performing: a) each and every task of his regular employment during the elimination period of the Long-term Disability Income benefit and during the twenty-four (24) months immediately following this period, regardless of the availability of such occupation; and b) afterwards, any remunerated function or work for which he is reasonably qualified by training, education or experience, regardless of the availability of such occupation. The disability will only be recognized if the participant receives no remuneration arising directly or indirectly from any employment, except under a rehabilitation program approved by the insurer. - -------------------------------------------------------------------------------- page 26 If the participant is not eligible to receive benefits or is not covered with LONG-TERM DISABILITY INCOME INSURANCE under the present plan: A state of total and continuous incapacity, resulting from illness or accidental injury, which wholly prevents the participant from performing any work for remuneration or profit. CONVERSION PRIVILEGE - -------------------- A participant who has not attained age sixty-five (65) and whose group coverage is cancelled due to termination of employment or of group membership, and not because of cancellation of this plan (subject, however, to any legal provision to this effect), can, within thirty-one (31) days of such cancellation, convert all or part of his life insurance coverage into an individual life insurance contract of a type usually issued by the insurer, without having to provide evidence of insurability. The participant may choose one of the following types of insurance: . permanent; . term to age sixty-five (65); . one-year (1) term convertible into permanent or term to age sixty-five (65) at the end of one (1) year. In all cases, the face amount of the individual policy is the least of the following amounts, whether the participant be insured by more than one life insurance benefit, optional life insurance benefit or by more than one group insurance policy issued.by the insurer: a) The amount selected by the participant at the time of conversion; - -------------------------------------------------------------------------------- page 27 b) The amount for which the participant was insured immediately prior to the termination of his insurance; c) The difference between the amount for which the participant was insured immediately prior to the termination of his insurance, and the amount for which he is eligible under a new group life insurance contract; d) Two hundred thousand dollars ($200,000). Such individual insurance policy shall not contain a disability clause, nor an accidental death and dismemberment clause, and the premium shall be based on the insurer's rates in effect which apply to the plan and to the amount of such policy, according to the participant's attained age and to the class of risk to which he belongs. The said policy will only be issued if the insurer receives a written request to that effect, together with a deposit covering the monthly premium for a one-year (1) term policy within thirty-one (31) days following the date of the termination of the participant's insurance, and will take effect only at the expiration of that period. Should the participant die during the period of thirty-one (31) days following the termination of his insurance, the insurer shall pay an amount equal to the convertible amount of insurance prior to the termination of his insurance. WAIVER OF PREMIUMS - ------------------ a) A participant who is under sixty-five (65) years of age and becomes disabled is eligible for waiver of premiums under this benefit, if such participant is - -------------------------------------------------------------------------------- page 28 eligible for long-term disability income benefit under the present plan. If the participant is not eligible to receive benefits or is not covered under the long-term disability income benefit, he is eligible for waiver of premiums under this benefit if he fulfills the following conditions: - The participant is less than sixty-five (65) years of age at the onset of disability; - The participant became disabled according to the definition of Disability of the present benefit, before the termination of employment and while insured under the present benefit; - The participant has been disabled for at least six (6) continuous months. Proof of disability must be satisfactory to the insurer and must be submitted within nine (9) months from the onset of disability, at no expense to the insurer. The amount of insurance for which waiver of premiums is granted will not be greater than that which was in force on the participant's life at the onset of disability; this amount will be subject to reduction and termination as indicated in the Summary of Benefits, if applicable, as if the participant were actively at work. b) The participant's waiver of premiums begins on the first of the following dates: - The day following the elimination period of the Long-term Disability Income benefit, if applicable; - The day following a continuous disability period of six (6) months. - -------------------------------------------------------------------------------- page 29 c) The participant whose premiums are waived under this article must provide the insurer with proof of disability, as often as the insurer may reasonably require. Such proof is to be provided at no expense to the insurer. d) The waiver of premiums terminates on the earliest of the following dates; - The date on which the participant ceases to be disabled; - The date on which the participant fails to submit to an examination by the physician designated by the insurer; - The date on which the participant retires or reaches the normal retirement age under the employer's pension plan, but never beyond the normal retirement age indicated in the Summary of Benefits of the present plan; - The date on which the participant reaches the age of termination indicated in the Schedule of Benefits, if applicable; - The date on which the participant fails to provide any proof of disability required by the insurer; - The date on which the participant is incarcerated after committing a criminal offence for which he was found guilty. - -------------------------------------------------------------------------------- page 30 DEPENDENT'S LIFE INSURANCE - -------------------------------------------------------------------------------- Upon the death of an insured dependent, the insurer undertakes to pay to the participant the benefits specified herein, subject to the terms and conditions hereinafter specified. The sum insured under this benefit, based on the participant's class, is shown in the Summary of Benefits. WAIVER OF PREMIUMS - ------------------ A participant whose premiums are waived under the article Waiver of Premiums of his life insurance benefit in also entitled to waiver of premiums for the present benefit, under the same conditions. EXTENSION OF DEPENDENT'S INSURANCE AT THE PARTICIPANT'S DEATH - ------------------------------------------------------------- At the participant's death, the dependents' insurance is extended, without premium payment, to the earliest of the following dates: a) Twenty-four (24) months after the participant's death; b) The date on which the dependents' insurance would have terminated had the participant then been living; c) The termination date of the benefit or plan. - -------------------------------------------------------------------------------- page 31 PARTICIPANT'S ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE - -------------------------------------------------------------------------------- The insurer undertakes to pay the sum insured at the time of accidental death or dismemberment, provided the participant's life insurance benefit remains in force and subject to the terms and conditions hereinafter specified. The sum insured under this benefit, based on the participant's class, is shown in the Summary of Benefits. In the event of death, the benefit is payable to the beneficiary and, in the event of dismemberment, the benefit is payable to the participant. SPECIAL CONDITIONS - ------------------ The sum insured is payable if the participant suffers an accidental loss of a type described in the schedule of benefits shown below and provided such loss results directly from accidental injury and occurs within three hundred and sixty-five (365) days of the accident. No benefits shall be payable for losses arising from accidents occurring prior to the participant's effective date of coverage. SCHEDULE OF BENEFITS -------------------- Percentage Accidental Loss of of Sum Insured - ------------------ -------------- - - life 100% - - sight in both eyes 100% - - both hands or both feet 100% - - one hand or one foot and sight in one eye 100% - - one hand and one foot 100% - - one hand or one foot 50% - - sight in one eye 50% - - hearing in both ears 50% - -------------------------------------------------------------------------------- page 32 The term "loss" means total and irrecoverable loss of the use of a limb or part of a limb, as specified in the preceding Schedule of Benefits, of an eye or of hearing, such that its use may not be even partially restored by therapy of any kind. If the participant suffers more than one loss as a result of the same accident, only one benefit, the greater, will be paid. EXCLUSIONS - ---------- No benefit shall be paid under this benefit for any loss resulting directly or indirectly from: a) suicide, attempted suicide or voluntary self-inflicted injury, while sane or insane; b) committing, attempting to commit, or provoking an assault or criminal offence; c) civil unrest, insurrection or war, whether war be declared or not, or participation in a riot; d) service in the armed forces or reserves of any country; e) flight or attempted flight on board a plane or other aircraft if the participant is part of the crew or performs any function relating to the flight, or participates in the flight as a parachutist; f) injuries sustained by the participant as the result of driving a vehicle, if the participant at the time of sustaining the injuries had alcohol in his blood in excess of eighty (80) milligrams of alcohol per one hundred (100) millilitres of blood; - -------------------------------------------------------------------------------- page 33 g) poisoning or inhalation of gas of any kind, whether it be voluntary or not, except if poisoning or inhalation occurs while the participant is in the exercise of his duties; h) taking of medication or drugs of any kind. EXAMINATION AND AUTOPSY - ----------------------- If required by the insurer before payment, the participant, if he is alive, must allow himself to be examined, and if he is dead, the insurer will be entitled to have the participant's body examined and have an autopsy performed. WAIVER OF PREMIUMS - ------------------ A participant whose premiums are waived under the article Waiver of Premiums of his life insurance benefit is also entitled to waiver of premiums for the present benefit, under the same conditions. However, waiver of premiums ceases on the termination date of the benefit or plan. - -------------------------------------------------------------------------------- page 34 SHORT-TERM DISABILITY INCOME INSURANCE - -------------------------------------------------------------------------------- Upon the participant becoming disabled due to illness or accidental injury, the insurer undertakes to pay the participant the weekly indemnity specified herein for each week or part of a week during which the total disability lasts, subject to the terms and conditions hereinafter specified. SPECIAL DEFINITIONS - ------------------- Hospitalization: Occupancy of a hospital room as admitted bedridden patient, if an invoice is issued by a government health plan. Disability: A state of total and continuous incapacity, resulting from illness or accidental injury, which totally prevents the participant from performing each and every task of his regular employment, without regard to the availability of such occupation, provided the participant receives no remuneration arising either directly or indirectly from any employment. PARTICULARS - ----------- Beginning of Benefits: Payment of weekly indemnity begins following expiry of the elimination period specified in the Summary of Benefits. - -------------------------------------------------------------------------------- page 35 Amount of Benefits: The amount of weekly indemnity payable under this benefit is determined according to a formula set forth in the Summary of Benefits and may not exceed the weekly maximum amount therein specified. Reduction of Benefits: a) The weekly indemnity will be reduced by any disability benefits which are payable or which would have been payable had a satisfactory application been made under i) a workers' compensation act; ii) a provincial automobile insurance law recognized under the Employment Insurance Regulations; iii) the Quebec or Canada Pension Plan; iv) any other similar law; v) a provincial crime victims compensation act, except for the period during which employment insurance benefits would or could have been payable. However, if benefits payable under the present benefit are taxable, they will be calculated as follows: 1 /o/ the indemnity payable by the insurer, 2 /o/ less the federal and provincial taxes applicable, according to the participant's personal exemption, 3 /o/ less the indemnity payable by the government plan. - -------------------------------------------------------------------------------- page 36 b) The weekly indemnity will be reduced by any pension benefits that the participant receives from the Quebec or Canada Pension Plan. c) The weekly indemnity will be reduced by any payment received according to the employer's policy regarding continuation of salary, vacation, statu- tory holidays or sick leave, if the insurer receives a written notice to this effect at the time of claim and prior to any other subsequent period of paid leave. Termination of Benefits: Weekly indemnity ceases on the earliest of the following dates: a) The date on which the maximum benefit period specified in the Summary of Benefits expires; b) The date on which the participant ceases to be disabled; c) The date on which the disabled participant reaches the age of termination indicated in the Summary of Benefits, if applicable, provided the participant has received at least fifteen (15) weeks of benefits; otherwise, on the date on which he has received fifteen (15) weeks of benefits; d) The date on which the participant retires; e) The date of the participant's death; f) The date on which the participant fails to submit to an examination by the physician designated by the insurer; g) The date on which the participant fails to provide any evidence of disability required by the insurer; h) The date on which the participant begins a remunerative occupation; - -------------------------------------------------------------------------------- page 37 i) The date on which the participant is incarcerated after committing a criminal offence for which he was found guilty. SUCCESSIVE PERIODS OF DISABILITY - -------------------------------- If the participant who has returned to active work again becomes disabled while this coverage is in force, within fifteen (15) days of the first disability, and if such disability results from the same cause as the previous disability or from related causes, this is considered to be a continuation of the previous disability. If the participant who has returned to active work for a period of fifteen (15) consecutive days or more again becomes disabled, while this coverage is in force, and if such disability results from the same cause as the previous disability or from related causes, this is considered to be a new disability only if the participant is not entitled to monthly disability benefits, and a new elimination period will apply. However, if the participant who has returned to active work again becomes disabled while this coverage is in force, due to an illness or accidental injury totally unrelated to the previous cause of disability, this is considered to be a new disability and a new elimination period will apply. EXCLUSIONS AND LIMITATIONS - -------------------------- a) The benefit specified herein does not cover any disability resulting from one of the following causes: . Injury or illness resulting from civil unrest, insurrection or war, whether war be declared or not, or participation in a riot; - -------------------------------------------------------------------------------- page 38 - Attempted suicide or voluntary self-inflicted injury, while sane or insane; - Cessation of work to receive care which is not medically required or which is given for cosmetic purposes, unless such care is for accidental injury and commenced within ninety (90) days of the accident; - Injury or illness while committing, attempting to commit, or provoking an assault or criminal offence. b) Pregnancy - Weekly indemnity is paid in the event of illness relating to pregnancy. However, the insurer pays no indemnity for any illness or accidental injury: - During a maternity or parental leave taken in accordance with provincial or federal legislation or during any maternity or parental leave taken in agreement with the employer; - In the course of any period during which the participant receives maternity or parental benefits under the Employment Insurance Act; - During any extension of maternity or parental leave beyond the periods specified above, if the participant was entitled to and requested such extension. c) If disability results from drug addiction or alcoholism, the weekly indemnity will be paid provided that the participant is following a closed treatment program approved by the insurer. d) A participant who is out of Canada and the United States for a period of ninety (90) consecutive days or more will no longer be entitled to the indemnity under the present benefit and such entitlement will - -------------------------------------------------------------------------------- page 39 be restored only upon the participant's return, subject to all other provisions of the present benefit. e) The insurance provided herewith does not cover any disability resulting from an illness or accidental injury which occurs during a strike, lock-out or temporary layoff, if the participant's benefit is not kept in force during the strike, lock-out or temporary layoff. However, if the participant's benefit is kept in force, the elimination period of the disability income benefit begins on the date the participant would have returned to work. WAIVER OF PREMIUMS - ------------------ A participant whose premiums are waived under the article Waiver of Premiums of his life insurance benefit is also entitled to waiver of premiums for the present benefit, under the same conditions. However, waiver of premiums ceases on the termination date of the benefit or plan. - -------------------------------------------------------------------------------- page 40 LONG-TERM DISABILITY INCOME INSURANCE - -------------------------------------------------------------------------------- Upon the participant becoming disabled due to illness or accidental injury, the insurer undertakes to pay the participant the monthly indemnity specified herein for each month or part of a month (one-thirtieth (1/30) of the monthly indemnity for each day) during which the disability lasts, subject to the terms and conditions hereinafter specified. SPECIAL DEFINITION - ------------------ Disability A state of complete and continuous incapacity, resulting from illness or accidental injury, which wholly prevents the participant from performing: a) Each and every task of his regular employment during the elimination period and during the twenty-four (24) months immediately following this period, regardless of the availability of such occupation; and b) Afterwards, any remunerated function or work for which he is reasonably qualified by training, education or experience, regardless of the availability of such occupation. Disability will only be recognized if the participant receives no remuneration arising either directly or indirectly from any employment, except under a rehabilitation program approved by the insurer. - -------------------------------------------------------------------------------- page 41 PARTICULARS - ----------- Beginning of Benefits: Payment of monthly indemnity begins following expiry of the elimination period specified in the Summary of Benefits. Amount of Benefits: The amount of monthly indemnity payable under this benefit is determined according to a formula set forth in the Summary of Benefits and may not exceed the monthly maximum amount therein specified. Reduction of Benefits: The monthly indemnity payable under this benefit will be reduced, after the application of the monthly maximum indicated in the Summary of Benefits, by any disability benefits which are payable or which would have been payable to the participant had a satisfactory application been made under: a) the Quebec or Canada Pension Plan, excluding benefits payable on behalf of dependent children; b) a workers' compensation act; c) a provincial automobile insurance law; d) a provincial crime victims compensation act. Moreover, the amount of monthly disability income benefits payable by the insurer is adjusted so that the sum of all income, compensation, indemnity and benefits which the participant would or could receive, due to his disability, from: (a) the policyholder, (b) any government body, (c) under any group insurance or pension plan to which the policyholder contributes, and (d) any other insurance contract, may at no time exceed the OVERALL MAXIMUM, as defined in the Summary of Benefits. Future cost of living adjustments made to amounts received from any of the above-mentioned sources will not bring about further reductions. - -------------------------------------------------------------------------------- page 42 However, if benefits payable under the present benefit are taxable, they will be calculated as follows: 1 /o/ the indemnity payable by the insurer, 2 /o/ less the federal and provincial taxes applicable, according to the participant's personal exemption, 3 /o/ less the indemnity payable by the government plan. Termination of Benefits: The monthly indemnity ceases on the earliest of the following dates: a) The date the maximum benefit period specified in the Summary of Benefits has been reached; b) The date on which the participant ceases to be disabled; c) The date on which the participant reaches the age of sixty-five (65); d) The date on which the participant retires or reaches the normal retirement age under the employer's pension plan, but never beyond the normal retirement age indicated in the Summary of Benefits of the present plan; e) The date on which the participant starts to receive pension benefits from the Quebec or Canada Pension Plan; f) The date of the participant's death; g) The date on which the participant fails to submit to an examination by the physician designated by the insurer; h) The date on which the participant fails to provide any evidence of disability required by the insurer; i) The date on which the participant refuses to participate in a rehabilitation program or to - -------------------------------------------------------------------------------- page 43 engage in rehabilitation employment which the insurer and its consulting physicians deem reasonably appropriate; j) The date on which the participant engages in a remunerative occupation, unless it is rehabilitation employment; k) The date on which the participant is incarcerated after committing a criminal offence for which he was found guilty. SUCCESSIVE PERIODS OF DISABILITY - -------------------------------- If the participant who has returned to active work again becomes disabled while the coverage is in force, within six (6) consecutive months of the first disability and if such disability results from the same cause as the previous disability or from related causes, this is considered to be a continuation of the previous disability. During the elimination period, successive periods of disability from a single cause separated by fifteen (15) days or less will be considered as the same period. However, if the participant who has returned to active work again becomes disabled while the coverage is in force, due to an illness or accidental injury totally unrelated to the previous cause of disability, the disability is considered to be a new disability and a new elimination period will apply. - -------------------------------------------------------------------------------- page 44 EXCLUSIONS AND LIMITATIONS - -------------------------- a) The benefit specified herein does not cover any disability resulting from one of the following causes: - Injury or illness resulting from civil unrest, insurrection or war, whether war be declared or not, or participation in a riot; - Attempted suicide or voluntary self-inflicted injury, while sane or insane; - Flight or attempted flight on board an airplane or other aircraft if the participant is part of the crew or performs any function relating to the flight, or participates in the flight as a parachutist; - Injury or illness resulting from committing, attempting to commit, or provoking an assault or criminal offence. b) Pregnancy - Monthly indemnity is paid in the event of illness relating to pregnancy. However, the insurer pays no indemnity for any illness or accidental injury: - During a maternity or parental leave taken in accordance with provincial or federal legislation or during any maternity or parental leave taken in agreement with the employer; - In the course of any period during which the participant receives maternity or parental benefits under the Unemployment Insurance Act of Canada; - During any extension of maternity or parental leave beyond the periods specified above, if the participant was entitled to and requested such extension. - -------------------------------------------------------------------------------- page 45 c) If disability results from drug addiction or alcoholism, the monthly disability benefits will be payable provided that the participant is following a closed treatment program approved by the insurer. d) No benefits are payable to a participant who was insured on the commencement date of this plan, for any disability beginning within twelve (12) months of such date if the disability is wholly or partly attributable to an illness or injury for which the participant received care or took medication within the ninety days preceding the plan commencement date. However, if this plan is a replacement plan, this provision does not apply to participants who were insured under the previous plan on the date it was terminated. Furthermore, no benefits are payable to a participant who becomes insured after the commencement date of this plan, for any disability beginning within twelve (12) months of the participant's effective date of insurance, if the disability is wholly or partly attributable to an illness or injury for which he received care or took medication within the ninety (90) days preceding his effective date of insurance. e) A participant who is out of Canada and the United States for a period of ninety (90) consecutive days or more will no longer be entitled to the indemnity under the present benefit and such entitlement will be restored only upon the participant's return, subject to all other provisions of the present benefit. f) The insurance provided herewith does not cover any disability resulting from an illness or accidental injury which occurs during a strike, lock-out or temporary layoff, if the participant's benefit is not kept in force during the strike, lock-out or temporary layoff. - -------------------------------------------------------------------------------- page 46 However, if the participant's benefit is kept in force, the elimination period of the disability income benefit begins on the date the participant would have returned to work. WAIVER OF PREMIUMS - ------------------ A participant whose premiums are waived under the article Waiver of Premiums of his life insurance benefit is also entitled to waiver of premiums for the present benefit, under the same conditions. REHABILITATION PROGRAM - ---------------------- A participant who was disabled for at least the elimination period and who, on the prescription and under the supervision of his physician, registers for a rehabilitation program approved by the insurer, is eligible to receive the indemnity payable under this benefit for a maximum period of twenty-four (24) months in addition to receiving the remuneration payable under this rehabilitation program. However, the sum of the remuneration payable under the rehabilitation program and the monthly indemnity under this benefit must not exceed the monthly salary the participant was being paid at the onset of disability. If this sum exceeds one hundred per cent (100%) of the net monthly salary determined at the onset of disability (or of the gross monthly salary if the benefit is taxable), the income payable under this benefit will be reduced so as not to exceed this salary. INDEXATION - ---------- The amount of benefit payable will be adjusted on the first day of January of each year according to the Canadian Consumer Price Index, up to the maximum annual indexation rate indicated in the Summary of Benefits, if applicable. - -------------------------------------------------------------------------------- page 47 SUPPLEMENTAL HEALTH INSURANCE - -------------------------------------------------------------------------------- The insurer undertakes to reimburse health care expenses incurred due to accidental injury, illness or pregnancy, subject to the terms and conditions hereinafter specified. SPECIAL DEFINITIONS - ------------------- Hospital: Hospital means an institution providing care of short duration a) legally acknowledged as such; b) intended for the care of bedridden patients; and c) which provides at all times the services of physicians and registered nurses. Units set aside for convalescent or chronic care purposes in hospitals are excluded. Rehabilitation institution, convalescent home or chronic care institution: Such terms designate an institution or health unit a) legally acknowledged as such; and b) intended for the care of bedridden patients. Nursing homes, homes for the aged, rest homes, reception centres and drug and alcohol treatment centres are excluded. Prosthesis: A device designed to replace all or part of a limb or an organ. - -------------------------------------------------------------------------------- page 48 Orthesis or Orthopedic Device: A device applied to a limb or part of the body in order to correct a functional disability. Therapeutic or Medical Appliances: Appliances currently used according to the manufacturer's standards and recognized as specifically for the immediate treatment of a pathological condition following an illness or an accident, such as appliances for the control of pain, extended physiotherapy and the administration of medication, respiratory assistance and diagnostic devices, excluding orthopedic appliances, stethoscopes and sphygmomanometers. Original or Generic Drug: If mention is made of these two types of drugs, the original drug refers to the drug that was first developed and launched on the market. The generic drug refers to any reproduction of the original drug and is usually less expensive. HOSPITALIZATION IN CANADA - ------------------------- The insurer reimburses that part of hospital expenses incurred in Canada which exceeds the amount reimbursed by government plans, up to the daily maximum specified in the Summary of Benefits, and without any limit as to the number of days of hospitalization. EMERGENCY EXPENSES OUTSIDE THE PROVINCE OF RESIDENCE - ---------------------------------------------------- The insurer reimburses hospitalization, medical and surgical expenses outside the province of residence of the insured person, in case of emergency, for that part of eligible expenses that exceeds the amount paid by a provincial health insurance plan whose coverage is compulsory for all insured persons. - -------------------------------------------------------------------------------- page 49 Expenses must be incurred due to a sudden and unexpected illness or to an accident which occurred during a stay outside the province of residence whose expected length is less than ninety (90) consecutive days. Moreover, when hospitalized outside Canada, the insured person must get in touch with the MEDICAL ASSISTANCE SERVICE as soon as it is possible to do so, otherwise the insurer has the right to terminate coverage. In the absence of medical contraindication, the insurer may request that the insured person be repatriated or treated elsewhere. Repatriation must be recommended and planned by the medical assistance company. If an insured refuses to follow a recommendation for repatriation, the insurer accepts no responsibility for expenses incurred thereafter. The overall maximum reimbursed by the insurer, for expenses incurred outside the province of residence, is specified in the Summary of Benefits. MEDICAL EXPENSES IN CANADA - -------------------------- The following expenses are covered, but only if they were incurred after the effective date of the insurance: a) Services, care and treatment prescribed by a physician, such as: i) Services rendered at the insured person's home by a registered nurse or nurse's aide who is unrelated to the insured person and who does not ordinarily reside with the latter, up to the maximum indicated in the Summary of Benefits; ii) Licensed ambulance service for emergency transportation to the nearest hospital equipped to provide the required treatment. - -------------------------------------------------------------------------------- page 50 or for transportation therefrom, when the physical condition of the insured person precludes the use of any other means of transportation; iii) Oxygen and rental of equipment necessary for its administration; iv) Drugs or medicine available in Canada and which can only be obtained with the written prescription of a physician or dental surgeon and dispensed by a licensed pharmacist, except for those products listed in the article Exclusions and Reductions of the present benefit; Medical drugs such as cardiotropic, antiasthmatic, antidiabetic, antiparkinsonian and anticoagulant are considered eligible medical drugs, provided that they are prescribed by a physician and sold by a licensed pharmacist; v) Purchase of artificial limbs and eyes, if the loss occurred while insured; vi) Rental or purchase, as previously approved by the insurer, of a wheelchair (excluding electric wheelchairs except for quadriplegics), a hospital bed (excluding electric beds) and any other therapeutic appliances (excluding batteries); vii) Purchase of breast prostheses, up to the maximum specified in the Summary of Benefits; viii)Purchase of medical elastic stockings prescribed for the treatment of varicose veins, following severe burns or surgery, up to the maximum indicated in the Summary of Benefits; - -------------------------------------------------------------------------------- page 51 ix) Room and board in a rehabilitation home, a convalescent home or chronic care home designated for such treatment by an appropriate government body, while under the supervision of a physician or registered nurse, up to the maximum indicated in the Summary of Benefits, and provided the stay follows the end of a period of hospitalization by less than fourteen (14) days; x) cost of orthopedic shoes as described below, up to the maximum indicated in the Summary of Benefits: - The cost of modifying a regular shoe or the cost of purchasing, repairing, modifying or adjusting an insert or device added to a regular shoe; - The purchase price of an orthopedic shoe; xi) Cost of intrauterine devices, up to the maximum eligible expenses indicated in the Summary of Benefits; xii) Purchase of glasses or contact lenses following cataract surgery, up to the maximum indicated in the Summary of Benefits, and provided these expenses are incurred before age sixty-five (65); xiii)Diagnostic laboratory and X-ray fees from a commercial establishment, up to the maximum eligible expenses indicated in the Summary of Benefits; xiv) Purchase or rental of orthopedic appliances other than orthopedic shoes and podiatric apparatus which are obtained from a recognized establishment or laboratory and which are required as a result of a bodily injury or illness. The purchase must be made while this coverage is in effect; - -------------------------------------------------------------------------------- page 52 xv) Purchase or rental of crutches, and purchase of hernial belts; xvi) Purchase of capillary prostheses following chemotherapy, up to the maximum indicated in the Summary of Benefits; xvii)Sclerosing injection fees up to the maximum indicated in the Summary of Benefits. b) Dental care given out of hospital by a dentist, in accordance with the normal suggested fee for a general practitioner, and required as a result of accidental injury to whole, healthy, natural teeth. Only care received within twelve (12) months of the accident is covered. All other dental expenses are excluded. c) Fees for paramedical care given by one of the professionals specified in the Summary of Benefits, up to the maximums indicated in the Summary of Benefits. Paramedical care must be given by a person duly authorized by the responsible provincial or federal organization to practice this profession in accordance with the rules of the profession. X-ray fees of a chiropractor, up to the maximum indicated in the Summary of Benefits. However, for Ontario residents, paramedical care given by a chiropractor or a podiatrist are reimbursed according to the method of payment in force under Ontario's Health Insurance Act, prior to August 1, 1996, which forbade the insurer to reimburse expenses incurred for those practitioners before the annual maximum payable under the provincial health plan had been reached. - -------------------------------------------------------------------------------- page 53 d) Hearings Aids: Expenses incurred for the initial purchase, replacement or repair of hearing aids or any related devices (with the exception of batteries), and for the professional services given by a hearing aid acoustician following the purchase, are reimbursed, provided they have been prescribed by a physician, audiologist or speech therapist. Covered expenses are limited to the maximum specified in the Summary of Benefits. EXCLUSIONS AND REDUCTIONS - ------------------------- a) This benefit does not cover: i) Expenses which are or would normally be payable or reimbursable under a workers' compensation act, if a claim had been submitted; ii) Expenses resulting from attempted suicide or voluntary self-inflicted injury, while sane or insane; iii) Expenses resulting from injury or illness caused by civil unrest, insurrection or war, whether war be declared or not, or participation in a riot; iv) Treatment or appliance to correct bruxism or vertical dimension or any temporomandibular joint dysfunction; v) Surgery or treatment which is not medically required, and which is given for cosmetic purposes or for any reason other than curative, or which exceeds ordinary surgery or treatment given in accordance with current therapeutic practice, and surgery or treat- - -------------------------------------------------------------------------------- page 54 ment which is given in relation to an operation or treatment of an experimental nature; vi) Any care or treatment included in the protocol of a research and development program for a product whose use has not been recommended by the manufacturer or which does not comply with government standards, or any other expenses incurred for care or treatment that is not recognized as normal, customary and common practice; vii) Any portion of the charge for services in excess of the reasonable and customary charge normally incurred for an illness of the same nature and severity in the locality where the service is provided; viii)Care and services rendered free of charge or which would be free of charge were it not for insurance coverage or which are not chargeable to the insured person; ix) Rest cure or travel for reasons of health; x) Eye examination, except if mention is made that these expenses are covered under the present benefit; xi) Prescription initial purchase, adjustment or replacement of eyeglasses or contact lenses, except if mention is made that these expenses are covered under the present benefit; xii) All care or treatment related to fertility or infertility; xiii)Purchase or rental of any comfort or massage apparatus, and of domestic accessories that are not exclusively for medical purposes; xiv) Purchase of food or nutritional supplements and expenses incurred in the treatment of - -------------------------------------------------------------------------------- page 55 obesity, whether or not these are prescribed for a medical reason; xv) Expenses incurred for the administration of serums, vaccines and injectable medications; xvi) Contraceptives (other than oral), except if mention is made that these expenses are covered under the present benefit, anti-smoking aids, hair growth stimulants, anabolic steroids and growth hormones; xvii)The following products, except those which can only be obtained with a physician's prescription and dispensed by a pharmacist: - products for the care of contact lenses; - proteins or dietary supplements, amino acids; - baby food; - mouthwash, bandages and throat lozenges; - shampoos, oils, creams; - toilet products including-soaps and emollients; - skin softeners and protectors; - vitamins or multivitamins; - supplements or prenatal vitamins; - minerals; - homeopathic products; xviii)The contribution to the cost of drugs and pharmaceutical services which must be paid by the insured person under any provincial drug insurance plan; xix) Expenses incurred for problems related to erectile dysfunction. b) The amount of benefits is reduced by any benefit that is payable or reimbursable under a government plan, a group plan or an individual plan, or that would have been payable had the person submitted a claim. - -------------------------------------------------------------------------------- page 56 CALCULATION OF REIMBURSEMENT - ---------------------------- Deductible: The deductible is that portion of covered expenses which must be paid by the participant before any benefits are payable under the present benefit. The maximum deductible required per calendar year is specified in the Summary of Benefits, if applicable. Carry-over Provision: If the deductible has been satisfied in whole or in part by the payment of expenses incurred in the last three (3) months of a calendar year, the deductible for the following year will be reduced by the amount of deductible already paid. Reimbursement: The insurer reimburses a percentage of the covered expenses incurred in the course of a calendar year, after applying the deductible for that year, if applicable. Such percentage is specified in the Summary of Benefits. Maximum Benefit Per Insured Person: The overall maximum reimbursed by the insurer for the present benefit is specified in the Summary of Benefits. Coordination of Benefits: The benefits herein will be coordinated with any sum which the insured person is receiving or would receive under any other benefit. The term "coverage" means any coverage providing care, services or supplies under i) any group, individual or family insurance, travel insurance, creditor's or savings insurance coverage, ii) any government-sponsored plan providing coverage for similar care, and iii) any non-insured employee benefit plan. - -------------------------------------------------------------------------------- page 57 WAIVER OF PREMIUMS - ------------------ A participant whose premiums are waived under the article waiver of Premiums of his life insurance benefit is also entitled to waiver of premiums for the present benefit, under the same conditions. However, waiver of premiums ceases on the termination date of the benefit or plan. EXTENSION OF DEPENDENTS' INSURANCE - ---------------------------------- AT THE PARTICIPANT'S DEATH - -------------------------- At the participant's death, the dependents' insurance is extended, without premium payment, to the earliest of the following dates: a) Twenty-four (24) months after the participant's death; b) The date on which the dependents' insurance would have terminated had the participant then been living; c) The termination date of the benefit or plan. - -------------------------------------------------------------------------------- page 58 MEDICAL ASSISTANCE OUTSIDE CANADA - -------------------------------------------------------------------------------- This coverage provides the insured person, who is already covered under a government health insurance plan, with medical assistance in case of emergency while on vacation or business trips of which the expected length is less than ninety (90) days, for any accident or illness which occurs outside Canada, subject to the conditions that follow. In order to take advantage of this coverage, the insured person must necessarily be covered by the SUPPLEMENTAL HEALTH INSURANCE benefit that is part of the present policy issued by the insurer. SPECIAL DEFINITIONS - ------------------- Medical Authority: A legally qualified medical practitioner lawfully entitled to practice medicine in the country where medical services are performed. Accident: Any sudden, unforeseeable and violent event which directly results from an external cause, independent of the insured person's wishes, leads to bodily injuries and prevents the insured person from continuing his trip, and which occurs while this coverage is in effect. Family Member: The insured person's spouse, father, mother, child, brother or sister. Illness: Any sudden and unforeseeable deterioration in health verified by a competent medical authority which prevents the insured person from continuing his trip, and which occurs while this coverage is in effect. - -------------------------------------------------------------------------------- page 59 Hospital: A hospital refers to an institution which provides short-term care and: a) is legally recognized as such in the country where the institution is located; b) provides care to bedridden patients; c) is equipped with a laboratory and an operating room; d) has legally qualified physicians and registered nurses working twenty-four (24) hours a day. Rehabilitation homes, convalescent homes, rest homes, chronic care homes and hospital chronic care wards do not qualify as hospitals. Claims: Any event, accident or illness which justifies intervention by the Medical Assistance Service. MEDICAL ASSISTANCE - ------------------ a) The following emergency medical assistance following an accident or illness is available: i) Twenty-four (24) Hour Access ---------------------------- . The insured person can call the 24-hour hotline at any time of the day or night, and multilingual coordinators will put him in touch with a network of specialists to handle travel-related emergencies. ii) Medical Care ------------ The Medical Assistance Service will: . Upon request by the insured person, organize consultations with general practitioners or specialists in order to - -------------------------------------------------------------------------------- page 60 obtain the best medical care available in the area. . Provide assistance with admittance to the hospital nearest the scene of the accident or illness. . Assure doctors and hospitals that the plan will cover the expenses. iii) Medical Transportation ---------------------- The Medical Assistance Service will: . Arrange for transportation or transfer of the insured person by any appropriate means recommended by the attending physician, which the Medical Assistance Service agrees to, to a hospital near the scene of the accident or illness, if required by the medical emergency. . Organize the return of the insured person to his residence or to a hospital near his residence after initial medical care has been provided, by an appropriate means of transportation, provided that the return is medically necessary and permissible. The Medical Assistance Service arranges for the insured person's return using the most appropriate means of transportation: air ambulance, helicopter, commercial airline, train or ambulance. . The expenses incurred for transporting or transferring the insured person as described in the two previous paragraphs will be paid by the insurer. - -------------------------------------------------------------------------------- page 61 iv) Payment of Medical Expenses and Cash Advance -------------------------------------------- . The Medical Assistance Service will make the necessary arrangements to pay medical expenses covered under the SUPPLEMENTAL HEALTH INSURANCE which is part of this policy issued by the insurer for emergency hospitalization and medical or surgical care outside of Canada. If need be, the Medical Assistance Service will advance up to ten thousand dollars ($10,000) in legal Canadian tender, after reaching an agreement with the insurer, for the participant and his covered dependents. The participant must pay back any cash advance to the insurer in one lump sum and according to the exchange rates effective at the time of the cash advance, within ninety (90) days following his return to Canada. Should the participant fail to pay, the insurer reserves the right to compensate on health claims or any other claims which the participant or his dependents present under this policy. v) Return of Deceased ------------------ . Should the insured person die due to an illness or accident, the Medical Assistance Service will take care of all the arrangements and pay up to three thousand dollars ($3,000) for the postmortem expenses, the coffin and transportation of the deceased to the place of burial in Canada. Funeral expenses will not be covered by the Medical Assistance Service or the insurer. - -------------------------------------------------------------------------------- page 62 vi) Return of Dependent Children ---------------------------- . The Medical Assistance Service will organize the return of the insured person's children under age sixteen (16) who are left unattended and will arrange and pay for economy transportation for the children, with an escort if necessary, to their usual place of residence in Canada. If the return tickets are still valid, only the additional cost for return transportation will be paid, after deducting the value of the tickets. vii) Return of a Family Member ------------------------- . The Medical Assistance Service will organize the return of a family member who has lost the use of his airplane ticket due to the insured person's hospitalization or death. The Medical Assistance Service will make the arrangements to provide economy transportation for a family member to his usual place of residence in Canada. If the return tickets are still valid, only the additional cost for return transportation will be paid, after deducting the value of the tickets. viii) Visit from a Family Member -------------------------- . The Medical Assistance Service will organize round-trip economy class transportation for a family member to visit the insured person if the person is hospitalized for at least seven (7) consecutive days and if the attending physician feels that the visit would be beneficial for the patient. - -------------------------------------------------------------------------------- page 63 ix) Meals and Accommodation ----------------------- . With regard to paragraphs vi), vii) and viii), the Medical Assistance Service will pay expenses incurred for meals and accommodation up to one hundred and fifty dollars ($150) per day for a maximum of seven (7) days. Receipts must be provided for these expenses before the Medical Assistance Service issues a reimbursement. x) Vehicle Return. -------------- . The Medical Assistance Service will pay up to one thousand dollars ($1,000) to return the insured person's vehicle, either private or rental, to the insured person's residence or the nearest appropriate vehicle rental location. xi) Cash Advances ------------- . The Medical Assistance Service will advance cash, if need be, for the insured person to obtain the services described in paragraphs iii), vi), vii), viii), ix) and x), or will provide payment guarantees of up to one thousand dollars ($1,000) in legal Canadian tender. The participant must pay back any cash advance to the insurer according to the exchange rates effective at the time of the cash advance. The cash advance will be withheld by the insurer from any claim payments, if applicable. b) Other emergency travel services also available to the insured person while travelling abroad: - -------------------------------------------------------------------------------- page 64 . Telephone Interpretation Service -------------------------------- In case of an emergency, the Medical Assistance Service provides the insured person with telephone interpretation services in most foreign languages. . Messages -------- In case of an emergency, the Medical Assistance Service relays a message, upon request, to the insured person at his home, office or elsewhere, or holds messages for the insured person or his family members for fifteen (15) days. . Legal Assistance ---------------- Should an insured person require legal assistance, the Medical Assistance Service assists him in finding local legal aid for an accident or another cause of defence, and will also help the insured person to obtain a cash advance from his credit cards, family and friends, in order to pay for any bail or legal fees. . Travel Information ------------------ The Medical Assistance Service sends the insured person travel information related to transportation, vaccinations and precautionary measures before, during and after the trip. . Emergency Medication -------------------- Should an insured person require medication not available locally that is indispensable for a treatment in progress, the Medical Assistance Service coordinates the search for and dispatch of the medication. The insured person is responsible for the cost of the medication - -------------------------------------------------------------------------------- page 65 unless it is covered under the SUPPLEMENTAL HEALTH INSURANCE of this policy. . Lost Baggage or Documents ------------------------- If the insured person loses or has his baggage stolen, the Medical Assistance Service will help him contact the appropriate authorities. EXCLUSIONS - ---------- This benefit does not cover: a) Expenses payable or reimbursable under a government, a group or individual plan, or which normally would have been payable if a claim had been submitted; b) Expenses resulting from attempted suicide or voluntary self-inflicted injury, whether the insured person is sane or insane; c) Expenses resulting from injury or illness caused by civil unrest, insurrection or war, whether war is declared or not, or participation in a riot; d) Surgery or treatment which is not medically required, and which is given for cosmetic purposes, for any reason other than curative, or which exceeds ordinary surgery or treatment given in accordance with normal therapeutic practice, and surgery or treatment which is given in relation to an operation or treatment of an experimental nature; e) The portion of the expenses which exceeds reasonable and customary fees for the area in which treatment is provided for an illness of the same nature and severity; - -------------------------------------------------------------------------------- page 66 f) Care or services rendered free of charge or which would be free of charge were it not for insurance coverage or which are not chargeable to the insured person; g) Any rest cure or travel for reasons of health. PROVISIONS - ---------- Notice of Claim: As soon an the insured person is aware of an incident, he must take all reasonable precautions to stop its progression and must contact the Medical Assistance Service as soon as possible to indicate the circumstances and the known or presumed causes of the incident. Upon request by the Medical Assistance Service, the insured person must provide a certificate from the attending physician explaining the probable consequences of the illness or the injuries suffered during the accident. Prescription: Claims must be made within twelve (12) months following the date of the incident. Refund for the Return Ticket: When the insured person's transportation is arranged by the Medical Assistance Service, he must present the original return ticket or the reimbursement. If neither is available, the price of the ticket will be withheld by the insurer from the amounts payable to the insured person, if applicable. LIABILITY - --------- The Medical Assistance Service may not be held responsible for failure to provide medical assistance or for delays caused by strikes, civil wars, wars, invasions, intervention by enemy powers, hostilities (whether war is declared or not), rebellions, insurrections, acts of terrorism, military operations or coups, riots or - -------------------------------------------------------------------------------- page 67 uprisings, radioactive fallout, or any other situation beyond its control. The doctors, hospitals, clinics, lawyers and other authorized practitioners or institutions to which the Medical Assistance Service directs insured persons are, for the most part, independent contractors and act on their own behalf and are not employees, agents or subordinates of the Medical Assistance Service. The Medical Assistance Service and the insurer are not in any way responsible for negligence or other acts or omissions by these doctors, hospitals, clinics, lawyers or other authorized practitioners or institutions. - -------------------------------------------------------------------------------- page 68 DENTAL CARE INSURANCE - -------------------------------------------------------------------------------- The insurer undertakes to reimburse the participant's dental care expenses, subject to the terms and conditions hereinafter specified. SPECIAL DEFINITIONS - ------------------- General Practitioner: A dentist who practices dentistry without specialization. Specialist: A person licensed by the provincial licensing authority to practice dentistry with specialization. Denturist: A person licensed by the appropriate provincial licensing authority to work as a practitioner supplying and fitting dentures. Expenses Incurred: Any fee corresponding to a professional procedure already performed. Expenses are considered to be incurred only when treatment has actually been given, even if a treatment plan has been submitted to and approved by the insurer. For dentures, expenses are considered to be incurred only on the date such dentures are installed. DENTAL EXPENSES - --------------- "Eligible expenses" means fees incurred for treatment given by a general practitioner or by a specialist on the recommendation of a general practitioner. Such expenses must be incurred while this plan is in force. Expenses incurred in Canada are limited to the normal - -------------------------------------------------------------------------------- page 69 rate suggested for general practitioners of the province where treatment is given. Expenses incurred for treatment provided by a denturist are limited to the normal suggested fee for denturists of the province where treatment is provided. Expenses incurred outside Canada are limited to the normal rate suggested for general practitioners of the insured person's province of residence. These expenses are reimbursed according to the Fee Guide of the year indicated in the Summary of Benefits. The following expenses are covered if so stated in the Summary of Benefits: Preventive Care - --------------- a) Examinations and Diagnoses - oral examination: once every two (2) years - oral check-up: once every six (6) months - emergency oral examination - specific oral examination b) X-rays - intra-oral - periapical: one complete series every two (2) years - intra-oral - occlusal - intra-oral - interproximal - extra-oral - sialography - panoramic: once every two (2) years - radiopaque dyes c) Tests and Laboratory Examinations - microbiologic culture - biopsy of oral tissue - soft - biopsy of oral tissue - hard - cytologic smear - -------------------------------------------------------------------------------- page 70 . pulp vitality tests . caries susceptibility tests d) Preventive Services . polishing of coronal portion of teeth (prophylaxis): twice every twelve (12) months . topical application of fluoride . initial oral hygiene instruction e) space maintainers for persons under age eighteen (18) Basic Treatments - ---------------- a) Basic Treatments . finishing restorations . pit and fissure sealant . caries control . interproximal discing . prophylactic odontomy b) Restorative. . amalgam restorations . composite restorations c) Endodontics . pulp capping . pulpotomy (excluding final restoration) . emergency pulpotomy . endodontic trauma . root canal therapy . endodontic surgery . apexification d) Periodontics . surgical services . provisional matching . adjunctive periodontal procedures - -------------------------------------------------------------------------------- page 71 Root planning and curettage are covered up to a maximum of three (3) sextants and two (2) quadrants or up to fourteen (14) teeth per calendar year. These procedures are limited to dentists exclusively and are only covered if testing of periodontal pockets indicates four millimeters (4 mm) or more. In all cases, appropriate x-rays and periodontal chart must be submitted. e) Dentures - removable . adjustments . repairs . rebasing and relining . prophylaxis and polishing f) Oral Surgery . removal of erupted tooth (uncomplicated) . surgical removals (complicated) . removal of tumours or cysts g) Adjunctive General Services . anaesthesia (in relation to surgery) EXCLUSIONS AND REDUCTIONS - ------------------------- a) This benefit does not cover: i) Treatment or appliance related directly or indirectly to full mouth reconstruction, to correct bruxism or vertical dimension or any temporomandibular joint dysfunction; ii) Services rendered by a dental hygienist and not administered under the supervision of a dentist; - -------------------------------------------------------------------------------- page 72 iii) Dental services covered under the health insurance, if such benefit is part of this plan, or under any other group insurance contract; iv) Services and supplies relating to any appliance worn in the practice of a sport; v) Expenses which are payable or reimbursable under a worker's compensation act, or would normally have been if a claim had been submitted; vi) Care or services necessary due to an attempted suicide or voluntary self-inflicted injury, while sane or insane; vii) Care or services resulting from civil unrest, insurrection or war, whether war be declared or not, or participation in a riot; viii)Services which are not medically required, which are given for cosmetic purposes or which exceed ordinary services given in accordance with current therapeutic practice; ix) Care or services rendered free of charge or which would be free of charge were it not for insurance coverage or which are not chargeable to the insured person; x) Care or services related to implants. b) The amount of benefits is reduced by any benefit that is payable or reimbursable under a government plan, a group plan or an individual plan, or that would have been payable had the person submitted a claim. c) Treatment Plan - If the total cost of a treatment is expected to exceed four hundred dollars ($400), - -------------------------------------------------------------------------------- page 73 a treatment plan must be submitted to the insurer who will determine, before commencement of treatment, the amount of eligible expenses. "Treatment plan" means a written description of the treatment which, in the opinion of the dentist, will be required, including X-rays in support of such opinion, and specification of the probable date and cost of treatment. PAYMENT OF BENEFITS - ------------------- Proof: Before paying benefits, the insurer may require, as proof and at no expense to the insurer, a complete diagram showing the insured person's state of dentition prior to the beginning of the treatment for which a claim is submitted. The insurer may also, if deemed necessary, require laboratory or hospital reports, X-rays, casts, molds or models used for examination purposes, or any other similar evidence. Alternative Treatment Plan: If more than one type of treatment exists for the dental condition of the insured person, the insurer reimburses the lesser fee, provided however that the treatment given is normal and appropriate. CALCULATION OF REIMBURSEMENT - ---------------------------- Deductible: The deductible is that portion of eligible expenses which must be paid by the participant before any benefits are payable. The maximum deductible required per calendar year is specified in the Summary of Benefits, if applicable. Carry-Over Provision: If the deductible has been satisfied in whole or in part by the payment of expenses incurred in the last three (3) months of a calendar - -------------------------------------------------------------------------------- page 74 year, the deductible for the following year will be reduced by the amount of the deductible already paid. Reimbursement: The insurer reimburses a percentage of eligible expenses incurred in the course of a calendar year, after applying the deductible for that year, if applicable. Such percentage is specified in the Summary of Benefits. Maximum Benefit Per Insured Person: The global maximum amount reimbursed by the insurer for the present benefit is specified in the Summary of Benefits. In the case of any person becoming insured more than thirty-one (31) days following the eligibility date, the reimbursement for dental expenses during the first twelve (12) months of coverage may not exceed one hundred dollars ($100) per person, up to a maximum of one hundred fifty dollars ($150) per family. Coordination of Benefits: The benefits herein will be coordinated with any sum which the insured person is receiving or would receive under any other benefit. The term "coverage" means any coverage providing care, services or supplies under i) any group, individual or family insurance, travel insurance, creditor's or savings insurance coverage, ii) any government-sponsored plan providing coverage for similar care, and iii) any non-insured employee benefit plan. - -------------------------------------------------------------------------------- page 75 [LOGO OF GROUP INSURANCE COMPANY] [LOGO OF LES CONSEILLERS EN AVANTAGES SOCIAUX] ---------------------------------------------- [LOGO OF INDUSTRIAL ALLIANCE] -11- SCHEDULE 4.41 TAX MATTERS [Summary of French Written Documents] The documents attached to this schedule refer to correspondence of Ernst & Young with Anapharm, Inc. and the "Ministere du Revenu du Quebec" (freely translated as "Quebec Revenue Ministry") regarding the treatment of allowances for compensation paid to Anapharm's volunteers. SCHEDULE 4.41 TAX MATTERS See documents attached hereto. (e) The Company, up to this day, has not received any notice of assessment from the provincial governemental authorities for the taxation period ended April 30, 2001. Quebec [LOGO OF ERNST & YOUNG] A/TO: Guylaine Perron, Anapharm inc. Marc Lebel, Anapharm inc. DE/FROM: Nancy Avoine Raymond Fortier C.C. Maurice Tremblay DATE: Le 25 fevrier 2002 OBJET/RE: Indemnites compensatoires verses aux volontaires - -------------------------------------------------------------------------------- Le present memorandum a pour objet de vous informer sur l'evolution de l'analyse par le ministere du Revenu du Quebec ("MRQ") du traitement fiscal des indemnites compensatoires versees aux volontaires. Nous avons eu des discussions avec monsieur Alain Vermette du MRQ la semaine demiere et souhaitons vous faire part des commentaires suivants. Vous trouverez en annexe un document ernis par le service de l'interpretation du MRQ qui commente le traitement fiscal d'une indemnite recue par le sujet d'une experimentation de medicaments. Bien que datee de novembre 2001, cette interpretation a ete rendue publique a la mi-revrier seulement et c'est a ce moment que Monsieur Vermette en a ete mis au courant. Selon Monsieur Vermette, cette interpretation a ete emise en reponse a une demande d'interpretation soumise au MRQ. Il ne ponvait pas nous donner plus d'information sur la source de la demande. Vous constaterez que le MRQ conclur que les indemnites versees a un particulier conformement a l'article 25 du Code civil du Quebec constituent un revenu d'entreprise pour co dernier. Le payeur des indemnites n'a aucune obligation en matiere de deduction a la source et de declaration de renseignements. Au niveau d'Anapharm, Monsieur Vermette avait pour objectif de verifier si les indemnites versees aux volontalres constituaient du salaire et donc determiner si Anapharm devait effectuer des retenues a la source et emettre des releves fiscaux. L'interpretation du MRQ resumee ci-dessus qui conclut qu'il ne s'agit pas de salaire permet a Monsieur Vermette de clore son dossier. Il n'a pas d'interpretation d'aller plus loin dana le dossier en cherchant a determiner s'il s'agit bien d'un revenu d'entreprise ou s'il s'agit pluror d'un montant non impossable. Il a mentionne que d'aller plus loin sur cette question aurait mis en peril les credits d'impot du Quebec reclarnes sur les indemnites versees aux volontaires a titre de sous-traitance par Anapharm. . Comprendre les besoins de nos clients Understanding our clients' needs . Satisfaire leurs attentes Meeting their expectations . Toujours faire mieux Doing things better every time -2- Neanmoins, dans le futur, le MRQ exigera que Anapharm joigne a sa reclamation de credits d'impot pour R-D du Quebec, a l'egard des indemnites reclamees comme sous-traitance, la liste des personnes a qui les indemnites ont ete versees et le numero d'assurance sociale de chacune d'elle. L'article 1029.8.0.0.1 de la Loi sur les impots du Quebec stipule qu'un contribuable n'a pas droit a un credit d'impot sur un montant verse a un sous-traitant s'il ne fournit pas les informations suivantes (dans le cas d'un particulier): . Nom de la personne . Numero d'assurance sociale . Contrepartie totale prevue au contrat . Contrepartie versee dans l'annee Monsieur Vermette a mentionne que le MRQ pourrair se servir des informations fournies par Anapharm sur les indemnites versees aux volontaires pour verifier si les volontaires se sont imposes sur les sommes qu'ils ont recues. OBJET: Page 1 sur 2 [GRAPHIC] Direction des jois sur les impots [GRAPHIC] DESTINATAIRE: Monsieur Alain Boulanger Chef du service de l'interpretation relative aux particuliers EXPEDITEUR: Jean Goulet Service de l'interpretation relative aux particuliers DATE: Le 27 novembre 2001 OBJET: Traitement fiscal d'une indemnite recue par le sujet d'une experimention de medicaments N/Ref: 01-010957 [GRAPHIC] La presente visa a consigner les conclusions de la conversation concernant l'objet mentionne en time intervenue le 26 novembre entre vous, monsieur Rene Martineau, chef du Service de l'interpretation relative aux entreprises, monsieur Leonid [ILLEGIBLE], directeur des lois sur les impots et la soussigne. L'indemnite, mentionnee au second alinea de l'article 25 du Code civil du Quebec, qui est versee a un particulier en raison de sa participation en tant que sujet d'une experience visant a tester les effots de medicaments constitue essentiallement un montant recu en contreparde de la fourniture d'un service par ce particulier. Compte renu des circonstances entourant l'experimentation de medicaments, le Ministere considere qu'un tel service n'est generalement pas rendu en vertu d'un contrat de travail defini a l'article 2085 du Code civil du Quebec, mais plutot en vertu d'un contrat d'entreprise ou de service defini a l'article 2098 du Code civil du Quebec. En consequence, un particulier beneficiant d'une indemnite decrite ci-dessus, doit inclure OBJET: Page 2 sur 2 dans le calcul de son revenu en vertu de l'article 80 de la Loi sur les impots (I.R.Q., chapitre I-3) le montant de cette indemnite, deduction faite des depensee quil est raisonnable de considerer comme ayant ete encournes pour participer a l'experimentation. Compte tenu de cette conclusion et des politiques du Ministere, il est entendu que le payeur d'une telle indemnite n'a aucune obligation en mariere de deduction a la source et de declaration de renseignements a l'egard de ladite indemnite. Jean Goulet, avocat ....2 [LETTERHEAD OF ERNST & YOUNG] COPIE Le 5 fevrier 2002 Monsieur Alain Vermette Ministere du revenu du Quebec 3800, rue de Marly Sainte-Foy (Quebec) GIX 4A5 Objet: Anapharm inc. Indemnites compensatoires versees aux volontaires Monsieur, Nous avons pris connaissance de la demande d'interpretation que vous vous appretez a soumettre au departement de la legislation sur le traitement fiscal des sommes versees par Anapharm inc. a des volontaires. Nous vous soumettons certains commentaires et interrogations que nous avons a l'egard de cette demande. Indemnites compensatoires versees Anapharm verse des indemnites compensatoires aux volontaires qui participent aux etudes cliniques qu'elle realise. Ces indemnites sont versees pour compenser les individus pour l'ensemble des desagrements subis au cours d'une etude. Les volontaires doivent prendre le medicament a l'etude et subir des prelevements frequents de sang ou d'urine a des temps precis. Ils peuvent etre victimes de malaises tels des etourdissements, des pertes de conscience, des maux de tete, des douleurs dues aux prises de sang, etc. Ils doivent se conformer a des regles strictes et s'engager a ne pas poser certains gestes. Notons que le code civil du Quebec prevoit a l'article 25: L'alienation que fait une personne d'une partie ou de produits de son corps doit etre gratuite; elle ne peut etre repetee si elle presente un risque pour la sante. L'experimentation ne peur donner lieu a aucune contrepartie financiere hormis le versement d'une indemnite en compensation des pertes et des contraintes subies. Conformement a cet article, les sommes versees constituent des indemnites. . Membre d'Ernst & Young International, Ltd./ A member of Ernst & Young International, Ltd. [LOGO OF ERNST & YOUNG] -2- Revenu provenant d'une source L'article 28 de la Loi sur les impots du Quebec stipule: Un contribuable doit, pour diterminer son revenu pour une annee d'imposition aux fins de la presente partie: a) additionner l'ensemble de ses revenus provenant pour l'annee de chaque source, au Canada et dans tout autre endroit,... Pour conclure qu'un revenu est imposable, il faut etablir qu'il s'agit d'un revenu provenant d'une source. Vous etes d'avis que les paiements non imposables parce qu'ils ne constituent pas un revenu d'une source se limitent a la liste de paiements exoneres que vous citez, a savoir les gains fortuits, les dons, et les dommages - interets pour blessure ou deces. Vous utilisez une definition inclusive de "revenu". Or, il nous apparait que les tribunaux utilisent une approche inverse. A cet effet, nous vous referons aux causes federales suivantes qui ont conclu a la non-imposition des sommes versees: . Fortino (97 DTC 55) sur les paiements pour non competition . Bedard (91 DTC 573) pour les cas de diffamation . Fries (90 DTC 6662) pour les paies de greve . Cirella (77 DTC 5442) pour les dommages pour prejudice personnel Des interpretations de l'Agence des douanes et du revenu du Canada ("ADRC") commentent la non-imposition de certaines sommes: . Violation des droits de la personne, comme par exemple la discrimination (9804555 et 9919297) . Dommages generaux dus a la douleur ou la souffrance (9804555, IT-365R2 et l'equivalent du Quebec IMP.28-2/R1) . Dedommagement non considere comme attribuable a la perte de revenu de bien, d'entreprise ou d'emploi (9900197) . "Mental distress, nuisance, inconvenience" (9713285) . Dommages generaux (9710505) Dans l'interpretation 9713285, l'ADRC cite a titre de test: "the court have stated that the essential question is to determine what the compensation is intended to replace". . Membre d'Ernst & Young International, Ltd./ A member of Ernst & Young International. Ltd. [LOGO OF ERNST & YOUNG] -3- L'interpretation 9900197 contient le commentaire suivant qui aborde dans le meme sens: De facon generale, un dedommagement sera considere comme etant du revenu si le montant recu constitue une compensation pour une perte de revenu de bien, d'entreprise ou d'emploi. La Cour Supreme a conclu dans l'arret Fries que pour imposer un montant, il doit etre demontre qu'il s'agit d'un revenu provenant d'une source: Nous ne sommes pas convaincus que les paiements sous forme d'allocation de greve constituent en 1'espece un "revenu (...) dont la source" au sens de l'article 3 de la Loi de l'impot sur le revenu, s.c. 1970-71-72, ch. 63. Dans ces circonstances, ce doute doit profiter aux contribuables. La question de base est, telle qu'exprimee dans la decision Fortino, a savoir si les sommes en question sont un revenu "from a productive source" et non seulement un revenu d'une provenance incertaine. Pour effectuer cette determination il faut se rappeler les commentaires suivants faits par le juge: However, we have to keep in mind first that the definition of gross income in the U.S. Revenue Act is exceedingly broad. This is not the case under the Act which is drafted in such a way as to include in the tax base only income from a source. The analysis made above of the interpretation to be given to the concept of income in Canadian law tends more towards a restrictive interpretation of what is to be included in taxable income. Our courts seem to act very carefully in including in taxable income amounts that are not specifically covered in the Act. Secondly, the tax treatment of a covenant ancillary to the sale of any property is treated in the Act in a section dealing with capital gains (section 42). For these reasons, I am very reluctant to follow U.S. case law. I will recall here what has been said by the Supreme Court of Canada in CUQ v. Corp. Notre-Dame de Bon-Secours, with respect to the rules that should be applied in the interpretation of tax legislation. A legislative provision should be given a strict or liberal interpretation depending on the purpose underlying it, and that purpose must be identified in light of the context of the statute, its objective and the legislative intent: this is the teleological approach. And where a reasonable doubt is not resolved by the ordinary rules of interpretations, it should be settled by recourse to the residual presumption in favour of the taxpayer. These principles were also applied in Symes v. Canada, and in Schwartz, supra. In these two cases, it was decided that a general provision in the Act should not prevail over a detailed provision enacted by Parliament. Now, some covenants signed with respect to the sale of property are specifically treated in section 42 of the Act. Consideration given for such covenants is deemed to be proceeds of disposition of such property. If the consideration given for a certain type of covenant in respect of the disposition of property is not caught by this section of the Act, it should not, in my view, be taxable as income under section 3. . Membre d'Ernst & Young International, Ltd./A member of Ernst & Young International, Ltd. [LOGO OF ERNST & YOUNG] -4- En conclusion, il nous semble que l'imposition d'une somme n'est pas la regle generale etablie par la loi et que la loi n'a pas a enoncer explicitement chaque exoneration pour que soit evitee l'imposition d'un montant. Le silence de la loi dans le cas des volontaires peut indiquer que la regle d'imposition ne s'applique pas (voir a cet effet Fortino ou Fries). Il semble que les tribunaux n'aient eux non plus jamais adresse la question des paiements a des volontaires a des essais cliniques. Toutefois, comme ces gens recoivent des sommes en dedommagement des desagrements subis et pour eviter de poser certains gestes, ces paiements pourraient etre traites comme ceux pour dommages, greve ou non-competition. Revenu d'emploi ou d'entreprise Vous suggerez qu'une indemnite compensatoire pourrait constituer un revenu provenant d'une source qui est un emploi (salaire) ou une entreprise (revenu autonome). Pour qualifier le revenu comme provenant d'un emploi ou d'une entreprise, il doit y avoir un travail accompli. Les volontaires peuvent vaquer a leur "emploi ou activite habituelle" tout en absorbant les medicaments. Au cours de la periode de confinement, les volontaires occupent leurs temps de diverses facons dont il peut etre cite a titre d'exemple: . Etudier . Lire . Faire des appels te1ephoniques . Utiliser les postes internet installes chez Anapharm . Jouer a des jeux de societe . Travailler sur leur ordinateur personnel . Ecouter de la musique, regarder la te1evision Par ailleurs, la quasi-totalite des etudes comportent une partie hors clinique apres la periode de confinement. Au cours de cette periode ("wash-out"), les volontaires reprennent leur vie habituelle et vont chez Anapharm seulement a des intervalles predefinis pour des prelevements. Ils peuvent donc exercer (pour d'autres) toute sorte d'activites remuneratrices pour la presque totalite du temps de confinement et la periode de wash-out. Pouvons-nous conclure que ces personnes accomplissent en meme temps un travail pour Anapharm? Tout ce qui se passe, c'est que leur corps elimine un medicament et ils permettent a Anapharm de leur faire des prelevements sanguins ou urinaires. Peut-on dire qu'un malade hospitalise est un employe de l'hopital lorsque ses "substances" servent a des tests? Si oui, comment appliquer les regles legales concernant le salaire minimum, le temps supplementaire, les vacances..? Le controle exerce par Anapharm est fragmentaire et superficiel. Seuls certains aspects de l'occupation des gens pourraient etre controles. En fait, Anapharm controle plus ce que les . Membre d'Ernst & Young International, Ltd./A member of Ernst & Young International, Ltd. [LOGO OF ERNST & YOUNG] -5- volontaires ne font pas que ce qu'ils font. Les volontaires n'ont besoin d'aucune experience ou competence particuliere pour participer a une etude. Ils n'ont pas de tache a realiser et ils ne sont pas evalues. Leur role est en fait passif. Autre question: si les volontaires sont employes, les prisonniers de l'Etat le sont-ils? Les passagers d'un avion sont-ils des employes parce qu'ils respectent des regles a bord? Les employes en greve sont-ils a l'emploi de leur syndicat lorsqu'ils sont en greve et s'abstiennent de travailler ou font du piquetage. Conclusion Nous nous interrogeons sur le fondement de votre premisse a l'effet que "a moins qu'il ne soit expressement exempte de l'impot par une disposition de la Loi, un contribuable est ordinairement imposable sur le plein montant de toutes ses recettes autres qu'en capital ..." particulierement a la lecture des decisions des tribunaux, incluant la Cour Supreme du Canada. Compte tenu des doutes quant a votre premisse de base, nous apprecierions recevoir vos commentaires apres avoir pris connaissance de la jurisprudence et des opinions de l'ADRC citees ci-dessus. Votre document ne traite pas des releves 1 et, en consequence, nous reservons pour plus tard nos commentaires sur un tel sujet. N'hesitez pas a nous contacter si des informations additionnelles s'averaient necessaires. Veuillez agreer, Monsieur, l'expression de nos meilleurs sentiments. Ernst & Young Nancy Avoine, CA Raymond Fortier, FCA /jm c.c. Monsieur Marc Lebel, Anapharm inc. [X] Madame Guylaine Perron, CA, Anapharm inc. . Membre d'Ernst & Young International, Ltd./A member of Ernst & Young International, Ltd. [GRAPHIC] Gouvernement du Quebec Ministere du Flevenu Direction regioneale de Quebec et de la Chau. . ... DESTINATAIRE: Mme Sylvie Begin Chef du service de la verification " A " Direction de la verification et de l'analyse fiscale - Quebec EXPEDITEUR: Alain Vermette Verificateur au service de la verification " A " Direction de la verification et de l'analyse fiscale - Quebec OBJET: Demande d'opinion a la Direction generale de la Legislation Montant recu par les "volontaires" chez Anapharm DATE: 14 janvier 2002 Je vous transmet cette demande d'interpretation a soumettre a la Direction generale de la Legislation relativement au sujet mentionne en rubrique. 1) Preambule Anapharm inc est une enterprise de recherche contractuelle qui a pour mission d'effectuer, pour le compte de compagnies pharmaceutiques, des travaux de recherche relies au developpement de nouveaux medicaments et de nouveaux produits pharmaceutiques. La societe a debute ses activites le 1er juin 1994. Au 30 avril 2000, elle avait a son emploi pres de 300 employes reguliers et occasionnals. Ses activites se divisent en 3 grandes categories, soit les activites de Phase 1 de biodisponibilite comparative et de bioequivalence, les activites de mise au point de methodes de dosage, les activites relatives a la mise au point de nouveaux devis experimentaux. Demande d'interpretation Anapharm Inc. 1 de 8 a) Les activites de Phase 1 de biodisponibilite comparative et de bioequivalence Ces activites se regroupent en 3 principales etapes: 1) activites de recherche cliniques Il s'agit ici de la realisation d'etudes cliniques de Phase 1 ou de bioequivalence. Une etude clinique de Phase 1 consiste, dans une premiere etape, a formuler des hypotheses de recherche, faire une recherche de litterature, rediger un protocole de recherche et proceder a l'administration d'un medicament de recherche a un groupe de sujets sains (6 a 50 personnes) et aux prelevements de matrices biologiques, selon le protocole de recherche etabli. Les prelevements sont par la suite analyses par un laboratoire afin de determiner les concentrations du medicament et de ses metabolites. 2) activites d'analyse Il s'agit d'appliquer a un medicament la methode de dosage developpee et validee anterieurement, afin de determiner la concentration de medicament ou de ses metabolites dans les echantillons. 3) activites d'analyse de donnees L'analyse de donnees et la redaction de rapports couvrant les parametres pharmacocinetique, les parametres pharmacodynamiques et leur analyse statistique. b) Les activites de mise au point de methodes de dosage On entend par mise au point de methodes de dosage, le developpement et la validation de methodes de dosage de medicaments dans des matrices biologiques tels le plasma et l'urine. Demande d'interpretation Anapharm Inc. 2 de 8 c) Les activites relatives a la mise au point de nouveaux devis experimentaux La mise au point de nouveaux devis experimentaux vise a creer, valider et mettre en place des methodes de travail et des outils visant a preciser de facon significative certaines etapes de la recherche clinique et a ameliorer la specificite des methodes de dosage precedernment developpees ou a etre developpees. 2) Les faits Nous avons effectue une verification, et nous nous sommes interesses au statut des personnes participant aux activites de recherche cliniques de Phase 1. Celles-ci sont appelees communement "volontaires". Anapharm inc n'emet pas de releve 1, que ce soit pour les inclure a sa masse salariale ou pour les declarer a la case autres revenus. Les voluntaires sont recruites par le biasis d'annonces paraissant dans le grands quotidiens de la region ainsi dans la plupart des stations de radio. De plus, sur le site Internet d'Anapharm inc, on peut trouver les differentes etudes a venir. Une "compensation" de 515$ a 2,000$ est offerte aux eventuels volontaires, pour les etudes paraissant actuellement sur le site. Le volontaire doit correspondre a un profil physique precis. Ce profil peut etre le sexe: homme or femme or un et l'autre, l'age: 18 a 45 ans, 35 a 65 ans, fumeur or non-fumeur ou etre associe a un probleme physiologique precis, par exemple avoir des problemes de reflux oesophagien diagnostique par un medecin. Par la suite, Anapharm inc fait subir un examen medical complet au volontaire. Celui-ci doit repondre de facon parfaite au profil medical recherche. Ainsi, le candidat doit etre exempt de toute maladie, hypertension arterielle, sida, hepatite et l'examen medical ne doit reveler aucune trace de drogue ou de nicotine, si le profil recherche est non-fumeur. Apres que la volontaire a ete retenu pour une liste d'etude, on lui demande par la suite de participer a une etude specifique. Les membres du personnel d'Anapharm informent alors le volontaire quel sera le medicament a l'etude. Avant que ne debute celle-ci, le volontaire doit signer un formulaire appele "FORMULAIRE DE CONSENTEMENT ECLAIRE", que vous trouverez ci-joint. Voici le detail des informations contenues dans le formulaire: Demande d'interpretation Anapharm Inc. 3 de 8 Objectif et description generale de cette etude de recherche clinique - - Description, nom commercial, territoire de vente du medicament. - - Dose orale initiale et maximale quotidienne du medicament. - - But del'etude et conditions particulieres de prise du medicament. - - Nombre de periodes, duree en heures, en nombre de visites, en temps ecoule entre les periodes. - - Nombre et description des volontaires. Description detaillee de cette etude de recherche clinique - - Test et analyse a etre passes au moment de l'admission a chaque periode pour alcool, drogue et pour une dame, un test de grossesse. Un resultat positif d'un des tests correspond a un retrait de l'etude. - - Description du deroulement de l'etude: l'arrivee, periode de jeune, moment de prise du medicament. - - Analyse effectuee durant le sejour: signes vitaux, electrocardiogramme, prise de sang. - - Condition de prise de sang soit directement sur la veine or par catheter intraveineux. - - Document a completer une fois de retour a la maison. Restrictions - - Determination de l'alimentation durant l'etude. - - Periode de jeune precedant et posterieur a la prise du medicament. - - Possibilite de periode d'eveil et/ou de position assise or couchee pendant un certain nombre d'heures. - - Interdiction de prendre un medicament avec or sans ordonnance pendant 14 jours precedents la premiere periode. - - Autres interdictions concernant la cigarette, la consommation de graines de pavot, produits a base d'alcool ou a base de xanthine or de pamplemousse. - - Verification des effets personnels a l'arrivee pour s'assurer qu'aucun produit interdit n'est apporte (nourriture, medicaments). - - Pour une femme, elle ne doit devenir enoeinte pendant sa participation a l'etude. Elle doit de plus s'engager a utiliser un moyen contraceptif autre que la pilule contraceptive. A cet effet le formulaire donne une liste des methodes acceptees. Demande d'interpretation Anapharm Inc. 4 de 8 Risques - - Liste des effets indesirables connus associes au medicament de l'etude. - - Liste des risques connus lies aux prises de sang, a l'insertion de catheter. - - Engagement de la part d'Anapharm inc de fournir des soins medicaux soit par lui, par une clinique or un hopital local au cas ou il arriverait quelque chose. - - Engagement de la part du commanditaire a payer tous les frais medicaux raisonnables qui, autrement, ne seraient pas remboursables, si, selon l'investigateur et le commanditaire, l'etude a ete menee conformement au protocole. Aucune autre indemnisation que celle indiquee dans ce formulaire ne sera offerte. - - Par ailleurs le volontaire ne renonce a aucun de ses droits legaux en signant ce formulaire. Compensation financiere - - Une compensation est fixee mais aussi determinee en fonction de la proportion de l'etude completee. Retrait de l'etude de recherche - - Possibilite pour le volontaire de se retirer de l'etude en tout temps et possibilite pour les investigateurs, sans l'accord du volontaire de le retirer pour toutes raisons. Confidentialite - - Anapharm inc s'engage a conserver les dossiers cliniques et l'identite du volontaire confidentiels. Responsabilite du volontaire Le volontaire reconnait ne pas avoir participe a une autre etude clinique dans les 30 jours precedant l'administration du medicament. Consentement - - Le volontaire signe le formulaire a l'effet qu'il a lu et compris l'information contenue dans celui-ci. 3) Demande d'interpretation Anapharm Inc. 5 de 8 Argumentation La premiere question que nous nous sommes posee, etait de savoir si la "compensation" recue par le volontaire etait imposable. L'article 28 indique que le revenu d'un contribuable, aux fins de l'impot, inclut ses revenus de toutes sources ainsi que la partie imposable des gains en capital apres deduction des partes en capital deductibles. A moins qu'il ne soit expressement exempte de l'implot par une disposition de la Loi, un contribuable est ordinairement imposable sur le plein montant de toutes ses recettes autres qu'en capital, que celles-ci proviennent d'une source enumeree a l'article 28 ou non. A la lumiere des informations au dossier, nous sommes d'avis que cette "compensation" n'est pas un gain fortuit (loterie, paris, concours, prix or recompenses), un don, un paiement a titre de dommages-interets pour blessure or deces et constitue donc une source de revenu qui doit etre incluse dans le calcul de son revenu pour l'annee. Il nous reste maintenant a qualifier ce revenu. Nous nous sommes demandes si nous pouvions qualifier ce revenu comme un revenu d'emploi ou un revenu d'autonome. Le bulletin d'interpretation RRQ. 1-1/R2 du ministere du Revenu du Quebec nous apprend: "L'article 2085 due Code civil du Quebec prevoit que le contrat de travail est celui par lequel une personne s'oblige, pour un temps limite et moyennant renumeration a effectuer un travail sous la direction ou le controle d'une autre personne, l'employeur. Il ressort de notre droit civil que le lien de subordination constitue l'element principal de la determination du statut de travailleur. L'article 2085 du Code civil du Quebec, lu en conjonction avec l'article 2099, nous amene en effet a conclure que l'existence d'un lien de subordination quant a l'execution du travail caracterise en contrat de travail. Au contraire, le contrat d'entreprise ou de service est defini a l'article 2098 du Code civil du Quebec comme celui par lequel, une personne, selon le cas l'entrepreneur ou le prestataire de services, s'engage envers une autre personne, le client, a realiser un ouvrage materiel ou intellectuel ou a fournir un service moyennant un prix que le client s'oblige a lui payer. L'article 2099 due Code civil du Quebec precise a cet egard que l'entrepreneur ou le prestataire de services a le libre choix des moyens d'execution du contrat et qu'il n'existe aucun lien de subordination quant a son execution." Demande d'interpretation Anapharm Inc. 6 de 8 Le meme RRQ1-1/R nous apprends aussi que: "Le Ministere considere que la presence d'une subordination effective du travail est un element determinant d'un lien d'emploi et, en consequence, lui accorde une importance primordiale. Dans cette optique, il est propose de proceder a l'analyse de deux etapes: premierement, la subordination effective et deuxiemement, les autres criteres. Ainsi, lorsque le critere de la subordination effective est concluant en lui-meme, il n'y aura pas lieu d'analyser les autres criteres. Par contre, s'il subsiste un donte, les autres criteres accessoires s'avereront utiles pour confirmer l'existence d'un contrat de travail entre les parties." En analysant les differences notions prises en compte dans l'appreciation du critere de subordination soir: le controle dans l'execution du travail, l'execution personnelle du contrat, la fixation des horaires de travail, le lieu de travail, les conditions d'engagement et de congediement; ceux-ci tendent a demontrer un lien d'emploi. Apres l'analyse des conditions d'emploi par rapport au controle, il faut les examiner du point de vue des chances de profit ou des risques de pertes. Il est bien evident que l'implication financiere du travailleur est nul, il ne risque pas de subir des pertes dues aux mauvaises creances, aux dommages causes au materiel, il n'assume aucune depense d'exploitation. Il a droit a sa pleine remuneration quelle que soit la sante financiere de l'entreprise. Le dernier critere a examiner dans ce dossier est l'integration. En effet, si le travailleur integre les activites du payeur a ses propres activites commerciales, cela indiquerait qu'il agit pour son propre compte. Par compte, s'il integre ses activites a celles du payeur il y aurait la une relation employe-employeur. Dans le dossier des "volontaires" ils integrent les activites du payeur Anapharm inc puisqu'ils sont un rouage essentiel dos activites de recherche. Il est a noter que les activites reliees aux volontaires ont une progression importante. Ainsi en 1997, 405 volontaires ont participe aux etudes pour une compensation totale de 245,515$; en 1998, 847 volontaires pour 554,735$; en 1999, 1,714 volontaires pour 536,106$ et jusqu'au 30 avril 2000; 897 volontaires pour 605,208$. Demande d'interpretation Anapharm Inc. 7 de 8 4) Notre position Tout d'abord, nous croyons que le revenu recu par un "volontaire" est un revenu imposable. De plus, l'argumentation donnee autour des notions d'employe ou d'autonome nous porte a croire qu'il s'agit d'un revenu d'emploi. Nois joignons a notre demande une interpretation du federal se prononcant sur l'imposition de ce revenu, pour une entreprise similaire a Anapharm. 5) Questions a soumttre a la DGL a) Etant donne l'ampleur considerable que prend cette entreprise, est-ce que la "compensation" recue par un volontaire constitue pour lui un revenu imposable? b) Si oui, pouvons nous qualifier la "compensation" recue par un volontaire a titre de revenu d'emploi, de travail autonome ou d'une autre source? Alain Vermette Demande d'interpretation Anapharm Inc. 8 de 8 Page 1 Tax Windows Files Query 9526475 Montant recu par volontaire - Etude clinique November 30, 1995 Document Number: 9526475 Income Tax Act: 3 Interpretation Bulletins: IT-334R2, Miscellaneous receipts PRINCIPALES QUESTIONS: On montant recu par un particulier (volontaire) pour sa participation dans une etude clinique est-il imposable? POSITION ADOPTEE: Oui. RAISONS POUR POSITION ADOPTEE: Ce type de vermement est considere comme etant un revenu d'une source. Le Ministere est d'avis qu'a moins qu'il ne soit expressement exempte de l'impot par une disposition de la Loi, un contribuable est ordinairement imposable sur le plien montant de toutes ses recettes autres qu'en capital, que celles-ci proviennent d'une source enumeres a l'article 3 ou non (IT-334R2). 5-952647 Philip Diguer A la attention de Le 30 novembre 1995 Mesdames, Messieurs: Objet: Traitement fiscal des versements pour participation a des etudes cliniques La presente est en response a votre lettre du 28 septembre 1995 par laquelle vous nous demandez notre opinion concernant l'objet mentionne en titre. En resume vous decrivez la situation suivante. Situation Page 2 Tax Windows Files Query 9526475 Vous etes d'avis qu'il n'existe aucune disposition dans la Loi prevoyant l'imposition des sommes recues par des volontaires participant a des etudes cliniques. Question soulevee Vous desirez savoir si le montant recu par un volontaire dans le cadre d'une clinique tel que decrit ci-dessus serait imposable en vertu de la Loi. Nos commentaires Tel que mentionne au paragraphe 21 de la circulaire d'information 70 6R2 du 28 septembre 1990 ainsi que dans le Communique Special du 30 septembre 1992, le Ministere a comme pratique de ne pas mettre d'opinion ecrite concernant des transactions projetees autrement que par voie de decisions anticipees. Par ailleurs, lorsqu'il s'agit de determiner si une transaction completee a recu un traitement fiscal approprie, la decision en revient d'abord a nos bureaux de services fiscaux a la suite de l'examen de tous les faits et documents dans le cadre d'une mission de verification. Neanmoins, nous vous offrons les commentaires d'ordre general suivante qui, nous l'esperons, vous seront utiles. Tel que prevu au paragraphe 2 du bulletin d'interpretation IT-334R2, l'article 3 de la Loi de l'impot sur le ravenu (ci-apres la "Loi") indique que le revenu d'un contribuable, aux fins de la Loi, inclut ses revenus de toute source. Un contribuable, aux fins de la Loi, inclut ses revenus de toute source. Un contribuable est ordinarement imposable sur le plein montant de toutes ses recettes autres qu'en capital, que celles-ci proviennent d'une source enumeree specifiquement a l'article 3 ou non. Nous sommes d'avis qu'un montant recu par un contribuable a titre de volontaire dans le cadre d'une etude clinique n'est pas un gain fortuit, ni un don, ni un paiement a titre de dommages-interets pour blessure ou deces et constitue une source de revenu qui doit etre incluse dans la calcul de son revenu pour cette annee d'imposition, en vertu de l'alinea 3a) de la Loi. Generalement, la Societe devrait remplir un feuillet T4A-Supplementaire si le paiement depassse 500 $ pour un contribuable donne. Par ailleurs, le Ministere accepterait que le contribuable deduise dans le calcul de son revenu de cette source, toute depense raisonnable pouvant etre entierement applicable a cette source de revenu. Nous esperons que ses commentaires vous seront utiles et nous vous prions d'agrear, Mesdames, Messieurs, l'expression de nos salutations distinguees. Maurice Bisson Page 3 Tax Windows Files Query 9526475 Pour le Directeur Division des entreprises et general Direction des decisions et de l'interpretation de l'impot Direction generale de la politique et de la legislation c.c. Raymond Cousineau Division des retenues a la source SCHEDULE 4.47 THIRD PARTY CONSENTS Consents and notifications of Bank of Montreal, Royal Bank of Canada, Documentum, CIT Financial Services Ltd., Micromedex and Chubb Insurance Company are required. -13- SCHEDULE 4.48 LOCATION OF THE ASSETS [Summary of French Written Documents] The last document attached to this schedule, titled in French "Logiciels de la division Bioanalytique" (translated as "Bioanalytic Division Software"), states (i) the name of each software; (ii) the name of the suppliers; (iii) the purchase cost of each software; and (iv) the cost for annual maintenance. SCHEDULE 4.48 LOCATION OF THE ASSETS See documents attached hereto: - Inventory Quebec Servers; - Software at Anapharm; - Equipment list / Scientific Affairs; - Quality Assurance; - Analytical Instrumentation / Equipment Inventory Update Form; - Fixed Assets; - Bioanalytic Division Software. Inventory Quebec servers
PC TYPE PROCESSOR Memory (Kbytes) Operating System Name Screen Size - ------- --------- --------------- --------------------- ----------- IBM or compatible Pentuim III or Pentium III Xeon 130468 Windows NT Server Service Pack 6 N/AP Compaq Pentium III Xeon 1048092 Windows 2000 Service Pack 2 N/AP Compaq Pentium III 523808 Windows 2000 Service Pack 2 N/AP Compaq Pentium III 523808 Windows 2000 Server Service Pack 1 N/AP Compaq Pentium II 1048092 Windows 2000 Server Service Pack 1 N/AP Compaq Pentium III 1048092 Windows 2000 Server Service Pack 1 N/AP Compaq Pentium III 523808 Windows 2000 Server Service Pack 1 N/AP Compaq Pentium III Xeon 523680 Windows NT Server Service Pack 6 N/AP Compaq Pentium III 785948 Windows 2000 Server Service Pack 2 N/AP Compaq Pentium III 654876 Windows 2000 Server Service Pack 1 N/AP Compaq Pentium III Xeon 2097151 Windows 2000 Server Service Pack 2 N/AP Compaq Pentium III Xeon 2097151 Windows 2000 Server Service Pack 1 N/AP Compaq Pentium III Xeon 2097151 Windows 2000 Server Service Pack 1 N/AP Compaq Pentium III Xeon 2096668 Windows 2000 Server Service Pack 2 N/AP Compaq Pentium III or Pentium III Xeon 1048092 Windows 2000 Server Service Pack 2 N/AP Compaq Pentium II 327096 Windows NT Advanced Server Service Pack 6 N/AP Alpha 1048092 Windows 2000 Server Service Pack 2 N/AP Compaq Pentium III 654896 Windows 2000 Server Service Pack 2 N/AP Compaq Pentium III 1523808 Windows NT Server Service Pack 6 N/AP Alpha Alpha 1048092 True Unix 64 N/AP IBM Pentium III 261436 Windows NT Server Service Pack 6 N/AP IBM Pentium III or Pentium III Xeon 130364 Windows 2000 Server Service Pack 2 N/AP IBM Pentium III 260528 Windows 2000 N/AP Compaq Pentium III Xeon 700 2500000 Windows 2001 N/AP Compaq Pentium III Xeon 700 2500000 Windows 2002 N/AP Compaq Pentium III Xeon 700 2500000 Windows 2003 N/AP Compaq P3 1000 500000 Windows 2004 N/AP Compaq P3 1133 750000 Windows 2005 N/AP Compaq P3 1000 750000 Windows 2006 N/AP Location Primary Use -------- ----------- IBM or compatible ANAQC11 Kantech Compaq ANAQC01 Files and Domain Controller Principal Compaq ANAQC02 Secondary Domain Controller and Norton Compaq ANAQC04 SQL CESR Compaq ANAQC05 Analytic Compaq ANAQC07 Ciltrix Metaframe 1.8 for CESR Compaq ANAQC08 Proxy Compaq ANAQC13 Millennium 32 Compaq ANAQC14 BackupServer Compaq ANAQC15 Printer Compaq ANAQC16 PDK Compaq ANAQC17 SQL for Magic Compaq ANAQC18 Accounting Compaq ANAQC19 LIMS Compaq ANAQC20 Magic Compaq ANAQC21 Nothing Alpha ANAQC22 Zac Compaq ANAQC24 Backup for Magic Compaq Server5 Exchange Server and BDC Alpha Dec Alpha DS 20E Not Yet attributed IBM ANAQC06 Web Access IBM ANAQC10 Kantech IBM ANAQC23 Test for Ciltrix Compaq Server Room GED Compaq Server Room GED Compaq Server Room GED Compaq Server Room 1 GED et 3 Domain Controller Compaq Server Room GED Compaq Server Room GHOST
197 Inventory Quebec PCs (cont.) Memory Screen PC TYPE PROCESSOR (Kbytes) Operating System Name Size Location - ------- --------- -------- --------------------- ---- -------- IBM or compatible Pentium MMX 84948 Windows NT Workstation Service Pack 4 17" archives IBM or compatible Pentium II or Pentium III Xeon 130420 Windows NT Workstation Service Pack 4 17" clapointe IBM or compatible Pentium MMX 85076 Windows 2000 Professional Service Pack 2 17" CONSULTATION IBM or compatible Pentium III 130612 Windows NT Workstation Service Pack 4 17" CROBERGE IBM or compatible Caleron 130612 Windows 2000 Professional Service Pack 1 17" DHACHE IBM or compatible Pentium II 130488 Windows NT Workstation Service Pack 4 17" DMILLER2 IBM or compatible Pentium III 130480 Wndows 2000 Professional Service Pack 2 17" DRAIELAPTOP1 IBM or compatible Pentium II 130488 Windows NT Workstation Service Pack 6 17" DSIROIS IBM or compatible Pentium MMX 97716 Windows NT Workstation Service Pack 5 17" FREEZER IBM or compatible Pentium II or Pentium III Xeon 195956 Windows NT Workstation Service Pack 6 17" GINOROY IBM or compatible Pentium III 130544 Windows 2000 Professional 17" GIRARDLALANDE IBM or compatible Pentium III 129458 Windows NT Workstation Service Pack 4 17" ICARON IBM or compatible Pentium III 130544 Windows 2000 Professional Service Pack 1 17" IDESMARAIS2 IBM or compatible Pentium III 129456 Windows 2000 Professional Service Pack 1 17" IGERVAIS2 IBM or compatible Pentium III 130544 Windows 2000 Professional Service Pack 2 17" INFORMATIQUES IBM or compatible Pentium III 130544 Windows 2000 Professional Service Pack 3 17" JOHANEBC IBM or compatible Pentium II or Pentium III Xeon 130420 Windows NT Workstation Service Pack 4 17" JRAIL IBM or compatible Pentium II or Pentium III Xeon 261524 Windows NT Workstation Service Pack 5 17" JVANDRY IBM or compatible Pentium II or Pentium III Xeon 64884 Windows NT Workstation Service Pack 6 17" LBEAUPRE IBM or compatible Central Processor (DMI Information) 327096 Windows NT Workstation Service Pack 7 17" LCMS3000-08 IBM or compatible Central Processor (DMI Information) 327096 Windows NT Workstation Service Pack 8 17" LCMS3000-09 IBM or compatible Central Processor (DMI Information) 327096 Windows NT Workstation Service Pack 9 17" LCMS3000-10 IBM or compatible Pentium MMX 64948 Windows NT Workstation Service Pack 10 17" LOULONG IBM or compatible Pentium III 261552 Windows 2000 Professional 17" MARCLEBEL IBM or compatible Caleron 130364 Windows 98 Build 1998 17" MARIE-LOU IBM or compatible Pentium II 130364 Windows 2000 Professional Service Pack 2 17" MCALARIE IBM or compatible Pentium 73140 Windows NT Workstation Build Service Pack 5 17" METLER_TOLSDP IBM or compatible Pentium II 64948 Windows NT Workstation Service Pack 4 17" MSLAURENT2 IBM or compatible Pentium II or Pentium III Xeon 130548 Windows 2000 Professional Service Pack 1 17" NDELAGE IBM or compatible Pentium III 130480 Windows 2000 Professional Service Pack 1 17" INDULISSE2 IBM or compatible Pentium II 84948 Windows NT Workstation Service Pack 6 17" NLAPLANTE
198 Inventory Quebec PCs (cont.) Memory PC TYPE PROCESSOR (Kbytes) Operating System Name - ------- --------- -------- --------------------- IBM or compatible Pentium II 64948 Windows NT Workstation Service Pack 3 IBM or compatible Pentium MMX 130612 Windows 2000 Professional Service Pack 2 IBM or compatible Caleron 130364 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium III 130544 Windows 2000 Professional IBM or compatible Pentium II 130544 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 1 IBM or compatible Caleron 130544 Windows 2000 Professional Service Pack 2 IBM or compatible Pentium III model 5 or Pentium II Xeon Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II model 5 or Pentium II Xeon Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II 129546 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 IBM or compatible Pentium III 129456 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium III 129456 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 IBM or compatible Pentium III 129456 Windows 2000 Professional Service Pack 2 IBM or compatible Pentium III 129456 Windows 2000 Professional Service Pack 2 IBM or compatible Pentium III 129456 Windows 2000 Professional Service Pack 2 IBM or compatible Pentium III 129456 Windows NT Workstation Service Pack 6 IBM or compatible Pentium II or Pentium III Xeon 130612 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II or Pentium III Xeon 196080 Windows 2000 Professional Service Pack 2 IBM or compatible Pentium III 129456 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium III 129456 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 IBM or compatible Pentium III 130544 Windows 2000 Professional Service Pack 1 IBM or compatible Pentium II 196024 Windows 2000 Professional Service Pack 2
Screen PC TYPE Size Location - ------- ---- -------- IBM or compatible 17" P-63 IBM or compatible 17" PARTAGE3 IBM or compatible 17" PDELAROSBILLAP IBM or compatible 17" PMILANI2 IBM or compatible 17" PQC002 IBM or compatible 17" PQC004 IBM or compatible 17" PQC006 IBM or compatible 17" PQC007 IBM or compatible 17" PQC008 IBM or compatible 17" PQC009 IBM or compatible 17" PQC012 IBM or compatible 17" PQC014 IBM or compatible 17" PQC015 IBM or compatible 17" PQC016 IBM or compatible 17" PQC019 IBM or compatible 17" PQC022 IBM or compatible 17" PQC023 IBM or compatible 17" PQC024 IBM or compatible 17" PQC025 IBM or compatible 17" PQC026 IBM or compatible 17" PQC037 IBM or compatible 17" PQC042 IBM or compatible 17" PQC045 IBM or compatible 17" PQC046 IBM or compatible 17" PQC048 IBM or compatible 17" PQC051 IBM or compatible 17" PQC054 IBM or compatible 17" PQC055
199 Inventory Quebec PCs (cont.) Memory Screen PC TYPE PROCESSOR (Kbytes) Operating System Name Size Location - ------- --------- -------- --------------------- ---- -------- IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 1 17" PQC056 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 1 17" PQC059 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 1 17" PQC061 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC063 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC064 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 1 17" PQC066 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 1 17" PQC067 IBM or compatible Pentium III or Pentium III Xeon 130548 Windows 2000 Professional Service Pack 1 17" PQC069 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC070 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 1 17" PQC073 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 1 17" PQC074 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 1 17" PQC075 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC076 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 1 17" PQC078 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 1 17" PQC079 IBM or compatible Pentium II 129456 Windows Professional 17" PQC084 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 1 17" PQC085 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 17" PQC087 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC088 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 17" PQC093 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC094 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC097 IBM or compatible Pentium II 261492 Windows NT Workstation Service Pack 6 17" PQC098 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC100 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC101 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 17" PQC104 IBM or compatible Pentium IV 261492 Windows NT Workstation Service Pack 6 17" PQC105 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC106
200 Inventory Quebec PCs (cont.) SERVERS Memory Screen PC TYPE PROCESSOR (Kbytes) Operating System Name Size Location - ------- --------- -------- --------------------- ---- -------- IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC112 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC113 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC116 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC117 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC123 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 17" PQC124 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC125 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 17" PQC126 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC127 IBM or compatible Pentium II 196024 Windows 2000 Professional Service Pack 2 17" PQC128 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC129 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC130 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 17" PQC131 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 17" PQC132 IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 2 17" PQC133 IBM or compatible Pentium II 196024 Windows NT Workstation Service Pack 6 17" PQC135 IBM or compatible Pentium II 129332 Windows 2000 Professional Service Pack 2 17" PQC137 IBM or compatible Pentium III or Pentium III Xeon 130544 Windows 2000 Professional Service Pack 2 17" PQC138 IBM or compatible Pentium II 129332 Windows 2000 Professional Service Pack 2 17" PQC142 IBM or compatible Pentium II 129332 Windows 2000 Professional Service Pack 2 17" PQC145 IBM or compatible Pentium II 129332 Windows 2000 Professional Service Pack 2 17" PQC146 IBM or compatible Pentium II 129332 Windows 2000 Professional Service Pack 2 17" PQC147 IBM or compatible Pentium II 129332 Windows NT Workstation Service Pack 6 17" PQC149 IBM or compatible Pentium MMX 64948 Windows NT Workstation Service Pack 4 17" RELAISRECRU IBM or compatible Pentium II 129456 Windows 2000 Professional Service Pack 1 17" RPAQUIN IBM or compatible Pentium III 329752 Windows 2000 Server Service Pack 2 17" S006 IBM or compatible Pentium MMX 261684 Windows 2000 Professional Service Pack 1 17" SYLVAN_TEST IBM or compatible Pentium II 129456 Windows NT Workstation Service Pack 5 17" TESTPQP
201 Inventory Quebec PCs (cont.) SERVERS Memory Screen PC TYPE PROCESSOR (Kbytes) Operating System Name Size Location - ------- --------- -------- --------------------- ---- -------- HP Pentium II 65076 Windows NT Workstation Service Pack 4 17" CHEMSTATION02 HP Pentium III 130420 Windows NT Workstation Service Pack 6 17" CHEMSTATION03 HP Pentium II 65076 Windows NT Workstation Service Pack 4 17" CHEMSTATIONB 148 HP Pentium MMX 64948 Windows NT Workstation Service Pack 4 17" CHEMSTATIONHP01 HP Pentium II 130544 Windows NT Workstation Service Pack 4 17" HPLC1 HP Pentium II 130544 Windows NT Workstation Service Pack 4 17" hplc2 HP Pentium II 130544 Windows NT Workstation Service Pack 4 17" HPLC3 HP Pentium II 130544 Windows NT Workstation Service Pack 6 17" HPLC4 HP Pentium II 130544 Windows NT Workstation Service Pack 4 17" HPLC5 HP Pentium III 130488 Windows 2000 Professional Service Pack 1 17" CLINQUE4 IBM Pentium III 130612 Windows 2000 Professional Service Pack 1 17" CONGELATEUR IBM Pentium III 130488 Windows 2000 Professional Service Pack 1 17" DHUOT IBM Pentium III 129456 Windows 2000 Professional Service Pack 1 17" FPOULIOT IBM Pentium III or Pentium III Xeon 130488 Windows 2000 Professional Service Pack 1 17" GBROUSSEAU IBM Pentium III or Pentium III Xeon 196024 Windows 2000 Professional Service Pack 1 17" ISGERVAIS IBM Pentium III 129456 Windows 2000 Professional Service Pack 2 17" JFGIRARD2 IBM Pentium III 130488 Windows 2000 Professional Service Pack 1 17" JLEFEBVRE IBM Pentium III 130488 Windows 2000 Professional Service Pack 1 17" LACHANCE IBM Pentium III 129456 Windows 2000 Professional Service Pack 1 17" LAROUCHE IBM Pentium III or Pentium III Xeon 130488 Windows 2000 Professional Service Pack 2 17" LLEBEL IBM Pentium III 130544 Windows 2000 Professional Service Pack 2 17" LQC007 IBM Pentium III 196080 Windows 2000 Professional Service Pack 2 17" LQC010 IBM Pentium III 130544 Windows 98 Build 1998 17" LQC011 IBM Pentium III 130544 Windows 2000 Professional Service Pack 2 17" LQC012 IBM Pentium III 130544 Windows 98 Build 1998 17" LQC013 IBM Pentium III 130544 Windows 2000 Professional Service Pack 2 17" LQC014 IBM Pentium III 129456 Windows 2000 Professional Service Pack 1 17" MANADEAU IBM Pentium III or Pentium III Xeon 130364 Windows NT Workstation Service Pack 6 17" MRACINE
Inventory Quebec PCs (cont.) Memory Screen PC Type Processor (Kbytes) Operating System Name Size Location - ------- --------- -------- --------------------- ---- -------- IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" MTLTMP2 IBM Pentium III 130 364 Windows NT Workstation Service Pack 4 17" MULTIPROBES IBM Pentium III 260 528 Windows 2000 Professional Service Pack 2 17" PAPELLETIER1 IBM Pentium III 130 364 Windows NT Workstation Service Pack 6 17" PARTAGE7 IBM Pentium III 130 364 Windows NT Workstation Service Pack 6 17" PARTAGE8 IBM Pentium III 130 488 Windows 2000 Professional Service Pack 1 17" PQC001 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC003 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC005 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC010 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 1 17" PQC011 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC017 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC018 IBM Pentium III or Pentium III Xeon 130 552 Windows 2000 Professional Service Pack 2 17" PQC020 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC021 IBM Pentium III 261 436 Windows NT Workstation Service Pack 5 17" PQC027 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC028 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC029 IBM Pentium III 260 528 Windows 2000 Professional Service Pack 1 17" PQC031 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC032 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC034 IBM Pentium III or Pentium III Xeon 261 560 Windows 2000 Professional Service Pack 2 17" PQC038 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC039 IBM Pentium III 130 488 Windows 2000 Professional Service Pack 2 17" PQC040 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PQC041 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC043 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC044 IBM Pentium III 261 560 Windows 2000 Professional Service Pack 2 17" PQC047 IBM Pentium III 261 560 Windows 2000 Professional Service Pack 2 17" PQC050
Inventory Quebec PCs (cont.) Memory Screen PC Type Processor (Kbytes) Operating System Name Size Location - ------- --------- -------- --------------------- ---- -------- IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC053 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC057 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC058 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC060 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC062 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC065 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 1 17" PQC068 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC071 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC072 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC077 IBM Pentium III 260 528 Windows 2000 Professional Service Pack 2 17" PQC080 IBM Pentium III or Pentium III Xeon 196 024 Windows 2000 Professional Service Pack 1 17" PQC081 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC082 IBM Pentium III 130 488 Windows 2000 Professional Service Pack 1 17" PQC083 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC089 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC090 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PQC092 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC095 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC096 IBM Pentium III 129 332 Windows NT Workstation Service Pack 8 17" PQC099 IBM Pentium III 261 560 Windows 2000 Professional Service Pack 2 17" PQC103 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PQC108 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC109 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC109 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" PQC110 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC111 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC114 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC115
Inventory Quebec PCs (cont.) Memory Screen PC Type Processor (Kbytes) Operating System Name Size Location - ------- --------- -------- --------------------- ---- -------- IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC119 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PQC120 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PQC121 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PQC122 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC134 IBM Pentium III 129 332 Windows NT Workstation Service Pack 6 17" PQC136 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PQC140 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PQC141 IBM Pentium III 130 488 Windows 2000 Professional Service Pack 2 17" PQC144 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC148 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC151 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PQC151 IBM Pentium MMX 97 972 Windows 2000 Professional Service Pack 1 17" PRETORDINATEUR IBM Pentium III 129 456 Windows 2000 Professional Service Pack 1 17" SCONGELATEUR IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" TCLOUTIER IBM Pentium III 130 488 Windows 2000 Professional Service Pack 1 17" WDEVRIES IBM Pentium III 261 436 Windows NT Workstation Service Pack 6 17" ZABOLFATHI TOSHIBA Pentium MMX 65 076 Windows NT Workstation Service Pack 6 17" CGRATTO_PORT TOSHIBA Celeron 64 948 Windows 2000 Professional Service Pack 2 17" CLAMONTAGNE TOSHIBA Pentium II 65 076 Windows 2000 Professional Service Pack 2 17" ELEBLANC TOSHIBA Celeron 65 076 Windows NT Workstation Service Pack 4 17" FVALLEE_PORTA TOSHIBA Celeron 129 456 Windows 2000 Professional Service Pack 1 17" LQC001 TOSHIBA Celeron 130 480 Windows 2000 Professional Service Pack 1 17" LQC002 TOSHIBA Celeron 129 456 Windows 2000 Professional Service Pack 1 17" LQC003 TOSHIBA Celeron 130 480 Windows 2000 Professional Service Pack 1 17" LQC004 TOSHIBA Celeron 129 456 Windows 2000 Professional Service Pack 2 17" LQC005 TOSHIBA Celeron 130 480 Windows 2000 Professional Service Pack 1 17" LQC006 TOSHIBA Pentium II 196 060 Windows 2000 Professional Service Pack 1 17" LQC008 TOSHIBA Pentium II 64 948 Windows 2000 Professional 17" MJVALLEE2000
Inventory Montreal servers & PCs 2 server and 44 PCs Memory Screen PC Type Processor (Kbytes) Operating System Name Size Location - ------- --------- -------- --------------------- ---- -------- IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PTR001 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PTR002 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PTR003
Inventory Montreal servers & PCs 2 server and 44 PCs Memory Screen PC Type Processor (Kbytes) Operating System Name Size Location - ------- --------- -------- --------------------- ---- -------- HP Pentium II 533 000 Windows 2000 Service Pack 2 N/Ap ANAMTL01 IBM compatible Pentium I 65076 Windows NT Workstation Service Pack 6 N/Ap ANAMTL02 IBM Pentium III 130 544 Windows 2000 Professional Service Pack 2 17" LMTL004 IBM Celeron 130 480 Windows 2000 Professional Service Pack 2 17" LMTL005 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMT013 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL001 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL002 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL007 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL008 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL009 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL010 IBM Celeron 130 480 Windows 2000 Professional Service Pack 2 17" PMTL011 IBM Pentium III or Pentium III Xeon 130 548 Windows 2000 Professional Service Pack 2 17" PMTL012 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL014 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL015 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL016 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL017 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 1 17" PMTL018 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL019 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL020 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL021 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL022 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL023 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL024 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL025 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL026 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL027 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL028 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL029 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL030 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL031
Inventory Montreal servers & PCs Memory Screen PC Type Processor (Kbytes) Operating System Name Size Location - ------- --------- -------- --------------------- ---- -------- IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL032 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL034 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL035 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL036 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Build 2195 17" PMTL037 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL038 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL039 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL040 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL041 IBM Pentium III 129 456 Windows 2000 Professional Service Pack 2 17" PMTL042 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional Service Pack 2 17" PMTL044 IBM Pentium III or Pentium III Xeon 130 488 Windows 2000 Professional 17" REESMTL TOSHIBA Celeron 130 480 Windows 2000 Professional Service Pack 1 17" LMTL001 IBM Celeron 130 480 Windows 2000 Professional Service Pack 2 17" LMTL002 IBM Pentium III 130 528 Windows 2000 Professional Service Pack 2 17" LMTL003
SOFTWARE AT ANAPHARM Software Name & Version Expiration Copies Number Users Number Major Costs of Renewal - ----------------------- ---------- ------------- ------------ ---------------------- Acrobat Reader 200 200 ACT 20 20 BackupExec 10 10 5000 $ CESR v3 fevr-02 118 118 10000 $ ChemStation 8 8 Chrom-Perfect 8 8 ClinTrial Simulator 2.0 1 1 CPS 2000 16 16 2704 $ Crystal Report 6 4 4 Dave 2.1 4 4 Disk Keep 5 5 5 Documentum 75 75 39000 Dynamics 6.0 dec-01 1 14 16908 $ Easy CD Creator 3.5 2 2 Entra-Pass NT 1.0 4 4 EP2 10 10 37500 Kinetica 2000 1 1 Legato 30 1 5000 Mac Quan 6 3 Magic juil-02 7369 $ Mail Sweeper 1 1 Microsoft Exchange 5.5 1 170 Millesium 3.2 6 6 3000 $ MSP 98/2000 40 40 Norton Antivirus 225 225 Office 97/2000 225 225 OmniPage (Pro-9) 2 1 Oracle avr-02 200 14400 $ PDK 10000 400 Refer to Dynamics 6.0 PGP 1 100 PIX 1 1 3000 $ Rees 1 1 9000 $ SAS 6.12 oct-02 4 4 9123 $ Virtual Tower 1 1 Visio Pro 2000 2 2 Visual Fortran 1 1 Watson 6.2 mars-02 500 300 116250 $ Windows NT/2000 225 225 Winn Mix 1.0 1 1 Winn Online 3.0 Prof 1 1
Liste equipement/Affaires scientifiques Quebec et Montreal Budget Titres Prix Quantite Prix Total - ------ ---- -------- ---------- Ordinateur avec MicroSoft Office et Sindows 2000 (prix 3500,00 $ 29 72500,00 $ Laserjet E100 N HP pour les rapport 1 Lexmark W820 pour les rapport 1 Laserjet 4000 TN HP 1 Lexmark Opera T 614 1 Portable (Prix approximatif) 3500,00 $ 4 14000,00 $ IBM Netvista 40+ moniteur 2280,00 $ 1 2280,00 $ Moniteur 17 po 730,00 $ 1 730,00 $ Scanner Mtl 500,00 $ 1 500,00 $ Gravour (Ordinateur bureau visiteur) 1 Kinetica 1 480,00 $ CPS Electronic 155,00 $ 155,00 $ MS Project/Licenses et Update 15000,00 $ MicroMedex 1 9600,00 $ WinNolin (Pharaight) 1 7592,00 $ Reference Manager/Licenses 650,00 $ 650,00 $ Reference Manager/Updates 720,00 $ 720,00 $ SAS 2200 $ 1 2200,00 $ Word Perfect 425,00 $ 425 $ EP2 Database 159000 $ for 10 users 159000 $ EP2 55000 $ Entretion 55000 $
Quality Assurance No asset with value higher than $30,000 - -26 ordinateurs et deux portables - -27 telephones - -35 bureaux et tables de travail - -14 etageres, pour les archives nous avons 52 etageres - -40 chaises - -1 imprimante - -1 scan - -1 graveur - -14 classeurs - -1 dechiquetteuse [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
================================================================================================ DESCRIPTION SUPPLIER MANUFACTURER MODEL Rotative agitator Fisher Fisher Hemat./Chem.Mixer 346 Fisher Fisher Hemat./Chem.Mixer 346 Analytical Cell N/R N/R N/R N/R N/R N/R SPE ESA 5010 SPE ESA 5010 SPE ESA 5010 SPE ESA 5010 SPE ESA 5010 SPE ESA 5010 SPE ESA 5010 Atmospheric pressure chemical ionization source Agilent Technologies Agilent Technologies Series 1100 G1947A Agilent Technologies Agilent Technologies Series 1100 G1947A Agilent Technologies Agilent Technologies Series 1100 G1947A Automatic Sample Injector N/R N/R N/R N/R N/R N/R Mandel Shimadzu SIL-9A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A N/AV N/AV N/AV Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Mandel Gilson 232 XL Man-Tech Shimadzu SIL-10AxI N/AV N/AV N/AV Man-Tech Shimadzu SIL-10AxI Man-Tech Shimadzu SIL-10AxI Man-Tech Shimadzu SIL-10A Man-Tech Shlmadzu SIL-10A Man-Tech Shimadzu SIL-10A
Page 1 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
==================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL Mandel Gilson 232 XL Mandel Gilson 232 XL Chromabec Hitachi L-7250 Mandel Gilson 232 XL Mandel Gilson 232 XL Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10ADvp Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Chromabec Hitachi L-7250 Chromabec Hitachi L-7250 Man-Tech Shimadzu SIL-10A Chromabec Hitachi L-7250 Perkin-Elmer Perkin-Elmer Series 200 LC autosampler Perkin-Elmer Perkin-Elmer Series 200 LC autosampler Perkin-Elmer Perkin-Elmer Series 200 LC autosampler Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Chromabec Hitachi L-7250 Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Perkin-Elmer Perkin-Elmer Series 200 LC autosampler Perkin-Elmer Perkin-Elmer Series 200 LC autosampler Chromabec Hitachi L-7250 Chromabec Hitachi L-7250 Labsphere Inc.(Agilent Technologies) Leap Technologies CTC Analytics (HTS Pal) Labsphere Inc.(Agilent Technologies) Leap Technologies CTC Analytics (HTS Pal) Perkin-Elmer Perkin-Elmer Series 200 LC autosampler Perkin-Elmer Perkin-Elmer Series 200 LC autosampler Chromabec Hitachi AS-4000 Balance VWR Scientific Sartorius R-160-P/Sartorius
Page 2 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM ========================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific Sartorius BP-410/Sartorius VWR Scientific Mettler Toledo AG245 Blender N/A KitchenAid Classic Blender 4KSB3WH N/A KitchenAid Classic Blender 4KSB3WH Cabinet Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo ALB N/A Specialiste Stylo ALB N/A Specialiste Stylo ALB N/A Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo Lincora N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Perfix N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A N/A RLB N/A Specialiste Stylo Global N/A Centrifuge Fisher Scientific IEC Centra GP8R VWR Scientific Heraeus Megafuge 2.0R VWR Scientific Beckman Allegra-6R Page 3 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM ================================================================================ DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific Beckman Allegra -6R VWR Scientific Becton Dickinson Dynac III VWR Scientific Becton Dickinson Dynac III VWR Scientific Heraeus Megafuge 2.OR VWR Scientific Heraeus Multifuge 3 S-R Filing cabinet Specialiste Stylo Atropex N/A Specialiste Styio Atropex N/A Specialiste Stylo Atropex N/A Specialiste Stylo Global N/A Specialiste Stylo Admiral N/A Specialiste Stylo Admiral N/A Specialiste Stylo Artopex N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Global N/A Specialiste Stylo Bonnex N/A Specialiste Stylo Artopex N/A Specialiste Stylo N/A N/A Specialiste Stylo Global N/A Column Heater Chromabec Jones Chromatography N/A Chromabec Jones Chromatography N/A N/A Eppendorf Controller TC-50 N/A Eppendorf Column Heater CH-430 Supelco Eppendorf Column Heater CH-500 Supelco Eppendorf Column Heater CH-500 Supelco Eppendorf Column Heater CH-500 Supelco Eppendorf Column Heater CH-500 Compressor Perkin-Elmer CTI Cryogenics 8200 Page 4 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
============================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL Controller for GC/ECD Hewlett Packard Hewlett Packard 7673 Hewlett Packard Hewlett Packard 7673 Certificated Weight for Balance VWR Scientific Troemner 1 mg VWR Scientific Troemner 1 mg VWR Scientific Troemner 1 mg VWR Scientific Troemner 2 mg VWR Scientific Troemner 2 mg VWR Scientific Troemner 50 mg VWR Scientific Troemner 50 mg VWR Scientific Troemner 10 g VWR Scientific Troemner 200 g VWR Scientific Troemner 200 g VWR Scientific Troemner 1 mg VWR Scientific Troemner 1 mg VWR Scientific Troemner 50 mg VWR Scientific Troemner 50 mg VWR Scientific Troemner 10 g Mass Spectrometer of GC Hewlett Packard Hewlett Packard 5972 Series Hewlett Packard Hewlett Packard 5973 Series Hewlett Packard Hewlett Packard 5973 Series Hewlett Packard Hewlett Packard 5973 Series 1999A Varian Varian Saturn 2000/2000R Agilent Technologies Hewlett Packard 5973 Series 1999A Agilent Technologies Hewlett Packard 5973N Series G2589A Electrochemical Detector N/R N/R N/R N/R N/R N/R SPE ESA 5200A SPE ESA 5200A
Page 5 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM =============================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL Fluorescence Detector N/R N/R N/R Man-Tech Shimadzu RF-10A Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-10AxI Man-Tech Shimadzu RF-551 Man-Tech Shimadzu RF-10AxI Vacuum Degasser N/R N/R N/R Mandel Shimadzu 220-91060-00 Chromabec Chromabec Gastorr GT-104 Chromabec Chromabec Gastorr GT-104 Chromabec Chromabec Gastorr 154 Chromabec Chromabec Gastorr 154 Hewlett Packard Hewlett Packard G1322 A Hewlett Packard Hewlett Packard G1322 A Hewlett Packard Hewlett Packard G1322 A Hewlett Packard Hewlett Packard G1322 A Hewlett Packard Hewlett Packard G1322 A Hewlett Packard Hewlett Packard G1322 A Chromabec Chromabec Gastorr 154 Agilent Technologies Hewlett Packard G1322 A Agilent Technologies Hewlett Packard G1322 A Chromabec Chromabec Gastorr 154 Chromabec Chromabec Gastorr 154 Chromabec Chromabec Gastorr 155 Page 6 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
================================================================================================ DESCRIPTION SUPPLIER MANUFACTURER MODEL Agilent Technologies Hewlett Packard G1322 A Agilent Technologies Hewlett Packard G1322 A Agilent Technologies Hewlett Packard G1322 A Agilent Technologies Hewlett Packard G1322 A Agilent Technologies Hewlett Packard G1322 A Agilent Technologies Hewlett Packard G1322 A Agilent Technologies Hewlett Packard G1322 A Agilent Technologies Hewlett Packard G1322 A Agilent Technologies Hewlett Packard G1322 A Dispenser N/A N/A L/I repipet 0-5 mL VWR Scientific Brinkman Dispensette 2-10 mL VWR Scientific Brinkman Dispensette 2-10 mL VWR Scientific Jencons Scientific Zipette 0-30 mL VWR Scientific Brinkman Dispensette 2-10 mL N/AV N/AV N/AV VWR Scientific EMScience Optifix solvents 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 0.1-2.5 mL VWR Scientific EMScience Optifix solvents 2-10 mL VWR Scientific EMScience Optifix solvents 2-10 mL VWR Scientific EMScience Optifix solvents 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 2-10 mL VWR Scientific Brinkman Bottletop Dispenser 2-10 mL LC-MS Detector Agilent Technologies Agilent Technologies Series 1100 G1946D(LC-MSD) Agilent Technologies Agilent Technologies Series 1100 G1946D(LC-MSD) LC-MS/MS Detector Perkin-Elmer PE Sciex MS API III Plus Perkin-Elmer PE Sciex API 365(LC/MS 365-01)
Page 7 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM =============================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL Perkin-Elmer PE Sciex API 3000(LC/MS 3000-01) Perkin-Elmer PE Sciex API 3000(LC/MS 3000-02) Perkin-Elmer PE Sciex API 365(LC/MS 365-02) Perkin-Elmer PE Sciex API 3000(LC/MS 3000-03) Perkin-Elmer PE Sciex API 3000(LC/MS 3000-04) Perkin-Elmer PE Sciex API 3000(LC/MS 3000-05) Perkin-Elmer PE Sciex API 3000(LC/MS 3000-06) Perkin-Elmer PE Sciex API 3000(LC/MS 3000-07) Applied Biosystems PE Sciex API 3000(LC/MS 3000-08) Applied Biosystems PE Sciex API 3000(LC/MS 3000-09) Applied Biosystems PE Sciex API 3000(LC/MS 3000-010) Applied Biosystems PE Sciex API 4000(LC/MS 4000-01) Applied Biosystems PE Sciex API 4000(LC/MS 4000-02) U.V. Detector Waters Waters 481 Waters Waters 484 N/AV N/AV N/AV Man-Tech Shimadzu SPD-10A Man-Tech Shimadzu SPD-10A Man-Tech Shimadzu SPD-10A Man-Tech Shimadzu SPD-10A Man-Tech Shimadzu SPD-10Avp N/AV N/AV N/AV Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp Man-Tech Shimadzu SPD-10Avp ECD Detector Hewlett Packard Hewlett Packard 19233 Page 8 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
===================================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL pH Electrode N/R N/R N/R N/R N/R N/R N/R N/R N/R VWR Scientific Orion Ross Comb. 8104 BN VWR Scientific Orion Ross Comb. 8104 BN VWR Scientific Orion Ross Comb. 8104 BN VWR Scientific Orion Ross Comb. 7100SC VWR Scientific Orion Ross Comb. 8104 BN VWR Scientific Orion Ross Comb. 8104 BN VWR Scientific Orion Ross Comb. 8104 BN VWR Scientific Beckman 511080 VWR Scientific Beckman 511081 VWR Scientific Beckman 511081 VWR Scientific Corning 476296 VWR Scientific Beckman 511080 VWR Scientific Beckman 511080 VWR Scientific Beckman 511080 VWR Scientific Beckman 511080 VWR Scientific Beckman 511080 VWR Scientific Beckman 511080 VWR Scientific Beckman 511080 VWR Scientific Beckman 511080 VWR Scientific Beckman 511080 VWR Scientific Beckman 511080 VWR Scientific Beckman 511080 Electrospray ionization source Agilent Technologies Agilent Technologies Series 1100 G1948A Agilent Technologies Agilent Technologies Series 1100 G1948A Evaporators Mandel Pierce Reacti-Therm III 18835 Mandel Pierce Reacti-Therm III 18835 Mandel Pierce Reacti-Therm III 18835 Mandel Pierce Reacti-Therm III 454 Zymark Zymark Turbo Vap LV Zymark Zymark Turbo Vap LV Zymark Zymark Turbo Vap LV Zymark Zymark Turbo Vap LV
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=================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL Zymark Zymark Turbo Vap LV Zymark Zymark Turbo Vap LV Zymark Zymark Turbo Vap LV Zymark Zymark Turbo Vap 96 Fraction Collector Man-Tech Gilson FC203B Mandel Gilson FC203B Freezer Sears Kenmore C-675-4714 (-20) Baxter Revco C-2890A-11-A (-80) N/A Habcold 14000(-80) N/AV N/AV WFC15M3BW0 (-20) ESBE Scientific Sanyo MDF-U6086S (-80) ESBE Scientific Sanyo MDF-U6086S (-80) ESBE Scientific Sanyo MDF-U6086S (-80) ESBE Scientific Sanyo MDF-U6086S (-80) ESBE Scientific Sanyo MDF-U6086S (-80) Super LiquidaMeuble General MFC20M4FWO (-20) N/R General WFC15M4FW1 (-20) Super LiquidaMeuble General MFC15M4FW1 (-20) VWR Scientific Foster N/A (-20) ESBE Scientific Sanyo MDF-U6086S (-80) ESBE Scientific Sanyo MDF-0830 (-80) N/A N/A N/A Super LiquidaMeuble General MFC09M1BW4 (-20) Super LiquidaMeuble Wood's Custom C22WCB (-20) Super LiquidaMeuble General MFC25M46W1 (-20) N/R Gibson (Frigidaire) CFC20M4HW1 (-20) ESBE Scientific Sanyo MDF-U6086S (-80) ESBE Scientific Sanyo MDF-U3086S (-80) Super LiquidaMeuble General MFC25M46W1 (-20) ESBE Scientific Sanyo MDF-U6086S (-80) Super LiquidaMeuble Frigidaire MFC25M46W1 (-20) Super LiquidaMeuble Frigidaire MFC25M46W1 (-20) ESBE Scientific Sanyo MDF-U71VC (-80) Super LiquidaMeuble Frigidaire MFC25M46W1 (-20) Super LiquidaMeuble Frigidaire MFC25M46W1 (-20)
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================================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL Super LiquidaMeuble Frigidaire FFU21D7HWO (-20) Super LiquidaMeuble Frigidaire FFU21D7HWO (-20) Super LiquidaMeuble Frigidaire FFU21D7HWO (-20) VWR Scientific Foster N/A (-20) ESBE Scientific Sanyo MDF-071C (-80) ESBE Scientific Sanyo MDF-071C (-80) ESBE Scientific Sanyo MDF-071V (-80) ESBE Scientific Sanyo MDF-071V (-80) ESBE Scientific Sanyo MDF-071V (-80) N/R Gibson GFC09M3EW2 (-20) N/R Gibson MFC25M4GW3 (-20) N/R Frigidaire MFC25M4GW3 (-20) ESBE Scientific Sanyo MDF-U50V (-80) Super LiquidaMeuble Gibson CSC20M4HW1 (-20) N/R Woodscostom C22WCB(-20) N/R Sanyo MDF-U537 (-20) ESBE Scientific Sanyo MDF-U71V (-80) Super LiquidaMeuble General MFC15M4FW1 (-20) Tanguay Frigidaire FFC25C4AWO (-20) Gamma Counter Packard Packard Cobra II Auto-Gamma E500501 Gas Chromatograph Detector Hewlett Packard Hewlett Packard 5890 Series II Plus Hewlett Packard Hewlett Packard 5890A Hewlett Packard Hewlett Packard 6890 Series G1530A Hewlett Packard Hewlett Packard 6890 Series G1530A Hewlett Packard Hewlett Packard 6890 Series G1530A Varian Varian 3800/3380 Agiltent Technologies Hewlett Packard 6890 Series G1530A Agiltent Technologies Hewlett Packard 6890 Series G1530A Guard Pack Holder Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap
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================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Waters Waters N/Ap Guard Cell SPE ESA 5020 SPE ESA 5020 SPE ESA 5020 SPE ESA 5020 Heated Nebulizer Ionization source Perkin-Elmer PE Sciex Heated Nebulizer Perkin-Elmer PE Sciex Heated Nebulizer Perkin-Elmer PE Sciex Heated Nebulizer Perkin-Elmer PE Sciex Heated Nebulizer Perkin-Elmer PE Sciex Heated Nebulizer Perkin-Elmer PE Sciex Heated Nebulizer Perkin-Elmer PE Sciex Heated Nebulizer Perkin-Elmer PE Sciex Heated Nebulizer Applied Biosystems PE Sciex Heated Nebulizer Applied Biosystems PE Sciex Heated Nebulizer Applied Biosystems PE Sciex Heated Nebulizer Homogeneisator VWR Scientific Omni 2000 Fume Hood N/A Norlab N/A N/A Norlab N/A N/A Norlab N/A N/A Norlab N/A
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=================================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL N/A Norlab N/A Sigma systems Mott manufacturing ltd 7228100 Digital relative Humidity/Temperature meter VWR Scientific VWR Scientific Thermo-Hydro(35519-047) VWR Scientific VWR Scientific Thermo-Hydro(35519-047) VWR Scientific VWR Scientific Thermo-Hydro(35519-047) VWR Scientific VWR Scientific Thermo-Hydro(35519-047) VWR Scientific VWR Scientific Thermo-Hydro(35519-047) VWR Scientific VWR Scientific Thermo-Hydro(35519-047) VWR Scientific VWR Scientific Thermo-Hydro(35519-047) VWR Scientific VWR Scientific Thermo-Hydro(35519-047) Ionization gauge Hewlett Packard Hewlett Packard 59864B Hewlett Packard Hewlett Packard 59864B Hewlett Packard Hewlett Packard 59864B Agilent Technologies Hewlett Packard 59864B Agilent Technologies Hewlett Packard 59864B Incubator/Shaker N/A New Brunswick G-24 VWR Scientific Scientific Products IC-83 N/A Lindberg/Blue G01350A VWR Scientific Scientific Products 1410M Injector of GC N/R N/R N/R Hewlett Packard Hewlett Packard 6890 Series Hewlett Packard Hewlett Packard 18593B Hewlett Packard Hewlett Packard 7683 Series G2613A Hewlett Packard Hewlett Packard 7683 Series G2613A Hewlett Packard Hewlett Packard 7683 Series G2613A Agilent Technologies Hewlett Packard 7683 Series G2613A Agilent Technologies Hewlett Packard 7683 Series G2613A Integrator Hewlett Packard Hewlett Packard HP3394A N/AV N/AV N/AV Hewlett Packard Hewlett Packard HP3396B Hewlett Packard Hewlett Packard HP3396
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====================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL Ion-Spray Ionization source Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Perkin-Elmer PE Sciex Turbo Ion-spray Applied Biosystems PE Sciex Turbo Ion-spray Applied Biosystems PE Sciex Turbo Ion-spray Applied Biosystems PE Sciex Turbo Ion-spray Applied Biosystems PE Sciex Turbo Ion-spray Applied Biosystems PE Sciex Turbo Ion-spray Keypad Mandel Gilson N/A Mandel Gilson N/A Mandel Gilson N/A Hewlett Packard Hewlett Packard G1323A Hewlett Packard Hewlett Packard G1323A Hewlett Packard Hewlett Packard G1323A Hewlett Packard Hewlett Packard G1323A Mandel Gilson N/A Mandel Gilson N/A Hewlett Packard Hewlett Packard G1323A Hewlett Packard Hewlett Packard G1323B Agilent Technologies Hewlett Packard G1323B Agilent Technologies Hewlett Packard G1323B Agilent Technologies Hewlett Packard G1323B Agilent Technologies Hewlett Packard G1323B Agilent Technologies Hewlett Packard G1323B Agilent Technologies Hewlett Packard G1323B
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======================================================================================= DESCRIPTION SUPPLIER MANUFACTURER MODEL Agilent Technologies Hewlett Packard G1323B Agilent Technologies Hewlett Packard G1323B Agilent Technologies Hewlett Packard G1323B Agilent Technologies Hewlett Packard G1323B Agilent Technologies Hewlett Packard G1323B Labshere Inc.(Agilent Technologies) Leap Technologies CTC Analytics Labshere Inc.(Agilent Technologies) Leap Technologies CTC Analytics Liquid Handling System Packard Packard AMPIIE1 Manual Injector valve Mandel Rheodyne 7125 Supelco Rheodyne 7125 Microcentrifuge N/R N/R N/R VWR Scientific Heraeus Biofuge 13 N/AV N/AV N/AV N/AV N/AV N/AV VWR Scientific Heraeus Biofuge pico Labcor (Cole-Parmer) Labnet Z 233-M-2 Labcor (Cole-Parmer) Labnet Z 233-M-2 Muli-Tubes Vortexer VWR Scientific VWR Scientific N/A VWR Scientific VWR Scientific N/A Cart VWR Scientific Baxter N/Ap Data Logger ReesScientific ReesScientific Series II-PC Reacti-Block 16x100/13x100 Mandel Pierce N/Ap Crimper VWR Scientific Hewlett Packard N/A
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============================================================================================= DESCRIPTION SUPPLIER MANUFACTURER MODEL Decapper VWR Scientific Hewlett Packard N/A VWR Scientific Agilent Technologies 5184-3567 (11mm) Microdispenser Digital VWR Scientific N/A 53506-201 Captrol III 100 pL Fisher Drummond 3-000-752 UV lamp for ToxiLab Fisher Spectroline ENF-260C Ultrapure water system (Nanopure UV) VWR Scientific Barnstead/Termolyne D7331 pH Meter VWR Scientific Corning M220 VWR Scientific Beckman q350 Photochemical reactor Aura Industries Aura Industries UV 254 nm Aura Industries Aura Industries UV 254 nm Aura Industries Aura Industries UV 254 nm 8 Channels Pipette N/A Titertek Digital Multichanel VWR Scientific Nichyrio Model 7000 VWR Scientific Brinkman Transferpette 8 Pipet N/R N/R N/R VWR Scientific Gilson Pipetman l-20pL VWR Scientific Labsystem Finnpipette Digital 5-40pL VWR Scientific Nichiryo 5000 210-50pL Fisher Nichiryo 5000 20-200pL Fisher Nichiryo 5000 20-200pL Fisher Nichiryo 5000DG 20-200pL Fisher Nichiryo 5000 20-200pL Fisher Nichiryo 5000 20-200pL Fisher Nichiryo 5000DG 20-200pL VWR Scientific Labsystem Finnpipette Digital 40-200pL
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================================================================================= DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific Eppendorf Reference 500-2500pL VWR Scientific Labsystem Finnpipette Digital 40-200pL Fisher Nichiryo 5000 40-200pL VWR Scientific Labsystem Finnpipette Digital 40-200pL N/AV N/AV N/AV N/AV N/AV N/AV Fisher Nichiryo 5000DG 100-1000pL N/AV N/AV N/AV Fisher Nichiryo 5000DG 100-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL N/AV N/AV N/AV N/AV N/AV N/AV VWR Scientific Gilson Pipetman 200-1000pL VWR Scientific Nichiryo 5000 200-100pL N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV VWR Scientific Eppendorf Reference 500-2500pL VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Nichiryo Oxford 20-200 VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Nichiryo Oxford 100-1000pL
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================================================================================= DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 40-200pL VWR Scientific Labsystem Finnpipette Digital 40-200pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Nichiryo Oxford 100-1000 VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Labsystem Finnpipette Digital 40-200pL VWR Scientific Labsystem Finnpipette Digital 40-200pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Nichiryo Oxford 100-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Labsystem Finnpipette PDP 20-200pL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Nichiryo 5000 100-1000pL VWR Scientific Nichiryo 5000 20-200pL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpippet Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Labsystem Finnpipette Digital 20-200pL
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================================================================================= DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Labsystem Finnpipette Digital 20-200pL VWR Scientific Eppendorf Research Eppendorf 500-5000pL VWR Scientific Eppendorf Research Eppendorf 500-5000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Labsystem Finnpipette Digital 200-1000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 500-5000pL VWR Scientific Eppendorf Research Eppendorf 500-5000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL VWR Scientific Gilson Pipetman 20-200pL VWR Scientific Labsystems Finnpipette Digital 20-200pL VWR Scientific Labsystems Finnpipette Digital 200-1000pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL
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======================================================================================= DESCRIPTION SUPPLIER MANUFACTURER MODEL NR Drummond Pipet-Aid 100 VWR Scientific Nichiryo Oxford 20-200pL VWR Scientific Labsystems Finnpipette Digital 200-1000pL VWR Scientific Labsystems Finnpipette Digital 200-1000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Labsystems Finnpipette Digital 200-1000pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 20-200pL VWR Scientific Eppendorf Research Eppendorf 100-1000pL Stirrer VWR Scientific Corning P-320 VWR Scientific Thermolyne S-7225 VWR Scientific Corning PC-410 VWR Scientific Coming PC-310 VWR Scientific Corning PC-320 VWR Scientific Coming PC-310 VWR Scientific Coming PC-320 VWR Scientific Corning PC-310 VWR Scientific Corning PC-310 VWR Scientific Coming PC-320 VWR Scientific Coming PC-310 VWR Scientific VWR Scientific 360 VWR Scientific VWR Scientific 360 VWR Scientific VWR Scientific 360 VWR Scientific VWR Scientific 360 VWR Scientific VWR Scientific 360 VWR Scientific VWR Scientific 360 VWR Scientific VWR Scientific 360 VWR Scientific Barnstead Cimarec 2/S46725 VWR Scientific Barnstead Cimarec 2/S46725 VWR Scientific Barnstead Cimarec 2/S46725 VWR Scientific Barnstead Cimarec 2/S46725 VWR Scientific Barnstead Cimarec 2/S46725 VWR Scientific Barnstead Cimarec 2/S46725 VWR Scientific Barnstead Cimarec 2/S46725 VWR Scientific Barnstead Cimarec 2/S46725 VWR Scientific Barnstead Cimarec 2/S46725 VWR Scientific Barnstead Cimarec 2/S46725
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============================================================================================ DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific VWR Scientific 360 Stirrer VWR Scientific VWR Scientific 360 Stirrer Series 200 Peltier Tray Control Peltier Tray Perkin-Elmer Perkin-Elmer Assembly Perkin-Elmer Perkin-Elmer Series 200 Peltier Tray Proportionning Valve Mandel Shimadzu FCV-10AL High Vacuum Pump Hewlett Packard Edwards E2M2 Hewlett Packard Edwards E2M1.5 Hewlett Packard Edwards E2M1.5 PE Sciex Leybold Trivac D10E(API 365-01) PE Sciex Leybold Trivac D16B(API 365-01) PE Sciex Leybold Trivac D10E(API 365-02) PE Sciex Leybold Trivac D16B(API 365-02) PE Sciex Leybold Trivac D10E(API 3000-01) PE Sciex Leybold Trivac S25B(API 3000-01) PE Sciex Leybold Trivac D10E(API 3000-02) PE Sciex Leybold Trivac S25B(API 3000-02) PE Sciex Leybold Trivac D10E(API 3000-03) PE Sciex Leybold Trivac S25B(API 3000-03) PE Sciex Leybold Trivac D10E(API 3000-04) PE Sciex Leybold Trivac S25B(API 3000-04) PE Sciex Leybold Trivac D10E(API 3000-O5) PE Sciex Leybold Trivac S25B(API 3000-05) PE Sciex Leybold Trivac D10E(API 3000-06) PE Sciex Leybold Trivac S25B(API 3000-06) PE Sciex Leybold Trivac D10E(API 3000-07) PE Sciex Leybold Trivac S25B(API 3000-07) Applied Biosystems Leybold Trivac D10E(API 3000-08) Applied Biosystems Leybold Trivac S25B(API 3000-08) Applied Biosystems Leybold Trivac D10E(API 3000-09) Applied Blosystems Leybold Trivac S25B(API 3000-09) Applied Biosystems Leybold Trivac D10E(API 3000-10) Applied Biosystems Leybold Trivac S25B(API 3000-10)
Page 21 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
======================================================================================= DESCRIPTION SUPPLIER MANUFACTURER MODEL Agilent Technologies Edwards E1M18 Agilent Technologies Edwards E1M18 Applied Biosystems Varian 949-9325S006(API 3000-04) Applied Biosystems Varian 949-9325S006(API 3000-03) Applied Biosystems Varian 949-9335S001(API 3000-07) Applied Biosystems Varian D16E (API 4000-01) Applied Biosystems Varian D16E (API 4000-01) Applied Biosystems Varian D16E (API 4000-02) Applied Biosystems Varian D16E (API 4000-02) Hewlett Packard Edwards E2M1.5 Hewlett Packard Edwards 1.5 Hewlett Packard Edwards E2M1.5 Varian Alcatel N/A Agilent Technologies Edwards E2M1.5 Agiient Technologies Edwards E2M1.5 Refrigerated Bath Haake Haake D8-G VWR Scientific VWR Scientific 1166 Refrigerator Sears Kenmore C675-23772-OZ Super Liquida Meuble Mc Clary YRF1814W-R2 N/R N/R N/R N/R General TAC4SNTW Sears Danby DMR1706WE N/R Danby DCR080WEY-7 Super Liquida Meuble Mc Clary YRF-1817W-V1 N/A Danby D1707W Super Liquida Meuble Danby D1707W Super Liquida Meuble Danby D1707W N/R MKE-Industries R1-482SC N/R MKE-Industries Rl-482SC N/R Haier BC-110 N/R G.E. TAC4SNYBW N/R Danby D100ZM Corbeil Electronique L.G. Express cool GR-282R N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV
Page 22 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM ================================================================================ DESCRIPTION SUPPLIER MANUFACTURER MODEL N/AV N/AV N/AV N/R MKE-Industries R1-482SC Pressure Regulator N/A Purox R-2050 VWR Scientific Hewlett Packard Avondale PA N/AV N/AV N/AV N/AV N/AV N/AV Hewlett Packard Hewlett Packard 491 N/A Victor N/A Soudure Leclero Hewlett Packard CGA350 N/AV N/AV N/AV Supelco Air Products 50 BLB inc. Victor HRS-2570 N/AV N/AV N/AV N/AV N/AV N/AV Prodair Smith WTN.SD N/AV N/AV N/AV Supelco Air Products 250 N/AV N/AV N/AV Supelco Air Products 1000 Supelco Air Products 250 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Page 23 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
=================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Chromatographic Specialities Scott Speciality Gases 5118B580 Chromatographic Specialities Scott Speciality Gases 5110B580 Chromatographic Specialities Scott Speciality Gases 5118B580 Chromatographic Specialities Scott Speciality Gases 5118B580 Chromatographic Specialities Scott Speciality Gases 5118B580 Chromatographic Specialities Scott Speciality Gases 5118A580 Chromatographic Specialities Scott Speciality Gases 5118C580 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Supelco Air Products 100 Pipette Repeater VWR Scientific Eppendorf 4780
Page 24 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
=================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL N/AV N/AV N/AV N/AV N/AV N/AV VWR Scientific Eppendorf 4780 VWR Scientific Eppendorf 4780 VWR Scientific Eppendorf 4780 VWR Scientific Eppendorf 4780 VWR Scientific Eppendorf 4780 VWR Scientific Eppendorf 4780 VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf 4780 VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf 4780 VWR Scientific Eppendorf 4780 VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus VWR Scientific Eppendorf Repeater Plus Reverse osmosis/tank system (Ropure ST) VWR Scientific Barnstead/Termolyne D6311 Module control relay switch Pacakrd Black Box SWI030A Pacakrd Black Box SWI031A Pacakrd Black Box SWI031A
Page 25 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM ================================================================================ DESCRIPTION SUPPLIER MANUFACTURER MODEL Safety Cabinet VWR Scientific Eagle MFG BEI-30 VWR Scientific Eagle MFG 1962 System Controller Module Man-Tech Shimadzu SCL-10A Man-Tech Shimadzu SCL-10A Man-Tech Shimadzu SCL-10A Man-Tech Shimadzu SCL-10A Man-Tech Shimadzu SCL-10A Man-Tech Shimadzu SCL-10A Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Man-Tech Shimadzu SCL-10Avp Solvent Delivery Module N/R N/R N/R N/R N/R N/R N/R N/R N/R N/R N/R N/R Man-Tech Shimadzu LC-10AD Man-Tech Shimadzu LC-10AD Page 26 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM ================================================================================ DESCRIPTION SUPPLIER MANUFACTURER MODEL Man-Tech Shimadzu LC-10AD Man-Tech Shimadzu LC-10AD Man-Tech Shimadzu LC-10AD Man-Tech Shimadzu LC-10AD Man-Tech Shimadzu LC-10AD Dionex Dionex GP40 N/AV N/AV N/AV Man-Tech Shimadzu LC-10AD Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp N/A Harvard Apparatus 55-1111 Hewlett Packard Hewlett Packard Series 1100 G1311A N/A Kd Scientific 100 Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Hewlett Packard Hewlett Packard Series 1100 G1311A Hewlett Packard Hewlett Packard Series 1100 G1311A Hewlett Packard Hewlett Packard Series 1100 G1311A Hewlett Packard Hewlett Packard Series 1100 G1311A Hewlett Packard Hewlett Packard Series 1100 G1311A Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Agilent Technologies Hewlett Packard Series 1100 G1311A Agilent Technologies Hewlett Packard Series 1100 G1311A Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Agilent Technologies Hewlett Packard Series 1100 G1311A Agilent Technologies Hewlett Packard Series 1100 G1311A Agilent Technologies Hewlett Packard Series 1100 G1311A Agilent Technologies Hewlett Packard Series 1100 G1311A Agilent Technologies Hewlett Packard Series 1100 G1311A Agilent Technologies Hewlett Packard Series 1100 G1311A Page 27 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
================================================================================================ DESCRIPTION SUPPLIER MANUFACTURER MODEL Agilent Technologies Hewlett Packard Series 1100 G1311A Agilent Technologies Hewlett Packard Series 1100 G1311A Agilent Technologies Hewlett Packard Series 1100 G1311A Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Fisher Scientific Kd Scientific 100 Man-Tech Shimadzu LC-10ADvp Man-Tech Shimadzu LC-10ADvp Fisher Scientific Kd Scientific 100 Fisher Scientific Kd Scientific 100 Seal Vacuum Sears Decosonic KIC 828 Reciprocating Shaker VWR Scientific Eberbach 6000 VWR Scientific IKA Labortechnik HS501Digital VWR Scientific IKA Labortechnik HS501Digital Shaker Bath VWR Scientific Forma Scientific 2568 Sodium lamp Luminaires ABC Philips 86051-0 Luminaires ABC Philips 86051-0 Luminaires ABC Philips 86051-0 Steam Washer VWR Scientific Labconco 4403 (Steam Scrubber) VWR Scientific Labconco 4420300(Flask Scrubber) Switching Valve Supelco Rheodyne LabPro Chromatographic Specialities VICI EMTMA-CE Chromatographic Specialities VICI EMTCA-CE Packard Omnifit LTD 11101 Syringe Pump Mandel Shimadzu N/Ap Mandel Shimadzu N/Ap Mandel Shimadzu N/Ap Mandel Shimadzu N/Ap Mandel Shimadzu N/Ap Mandel Shimadzu N/Ap
Page 28 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
============================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL Mandel Shimadzu SIL-10Axl Mandel Shimadzu SIL-10Axl Mandel Shimadzu SIL-10Axl Mandel Shimadzu SIL-10A Mandel Shimadzu SIL-10A Mandel Shimadzu SIL-10A N/AV N/AV N/AV Mandel Gilson 402 Mandel Gilson 402 Mandel Gilson 402 Mandel Gilson 402 Mandel Gilson 402 Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Man-Tech Shimadzu SIL-10A Tachometer VWR Scientific VWR Scientific 20904-011 Thermometer VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61019-206 VWR Scientific VWR Scientific 61019-206 VWR Scientific VWR Scientific N/A VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61222-500 VWR Scientific VWR Scientific 61222-500 VWR Scientific VWR Scientific 61222-500
Page 29 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
================================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific VWR Scientific 61222-500 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-542 VWR Scientific VWR Scientific 61054-542 VWR Scientific VWR Scientific 61054-542 VWR Scientific VWR Scientific 61054-542 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 N/AV N/AV N/AV VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 Fisher Scientific Fisher Scientific Fisher Brand 14-983-17A VWR Scientific VWR Scientific N/A VWR Scientific VWR Scientific N/A N/A Spartan N/A VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-542 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-542 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-542 VWR Scientific VWR Scientific 61054-542 VWR Scientific VWR Scientific 61054-542 VWR Scientific VWR Scientific 61054-546
Page 30 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM ================================================================================ DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific N/R VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-542 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 Page 31 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM ================================================================================ DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-540 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 VWR Scientific VWR Scientific 61054-546 Digital Thermometer Fisher Scientific Barnant 600-2820 VWR Scientific Barnant 600-1010 Thermocouple Probe VWR Scientific Barnant Type K VWR Scientific Barnant Type K Timer N/R N/R N/R N/R N/R N/R VWR Scientific VWR Scientific VWR N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV Fisher Fisher 14-649-15 VWR Scientific VWR Scientific VWR N/AV N/AV N/AV VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR Page 32 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM ========================================================================= DESCRIPTION SUPPLIER MANUFACTURER MODEL N/AV N/AV N/AV N/AV N/AV N/AV VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific N/A N/AV N/AV N/AV VWR Scientific VWR Scientific N/A VWR Scientific VWR Scientific N/A N/AV N/AV N/AV VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR Page 33 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
===================================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR VWR Scientific VWR Scientific VWR Temperature Sensor Sensitech inc. Sensitech inc. TempTale D D6200-03 Sensitech inc. Sensitech inc. TempTale D D6200-03 Sensitech inc. Sensitech inc. TempTale D D6200-03 Sensitech inc. Sensitech inc. TempTale D D6200-03 Turbo Source Housing Applied Biosystems PE Sciex API 4000 (LC/MS 4000-01)
Page 34 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM
============================================================================================= DESCRIPTION SUPPLIER MANUFACTURER MODEL Applied Biosystems PE Sciex API 4000 (LC/MS 4000-02) Temperature Sensor Interface Sensitech inc. Interface Plus T17-0016030 Thyac V Survey Meter Victoreen LLC Victoreen LLC 190 Thyac V Survey Probe Victoreen LLC Victoreen LLC 489-50 Ultrasonic Bath VWR Scientific VWR Scientific Branson 2200 VWR Scientific VWR Scientific Aquasonic 150T UDB-63100- UPS System Liebert Liebert C25RT04(100kVA,80kW) Vacuum Manifolds for SPE Dr. Plastic Dr. Plastic 60 Dr. Plastic Dr. Plastic 80 Dr. Plastic Dr. Plastic 30 Dr. Plastic Dr. Plastic 108 Dr. Plastic Dr. Plastic 120 Dr. Plastic Dr. Plastic 120 Dr. Plastic Dr. Plastic 120 Dr. Plastic Dr. Plastic 120 Dr. Plastic Dr. Plastic 120 Dr. Plastic Dr. Plastic 120 Vacuum Pump Fisher Gast 0522-V4B-G180DX Fisher GE 5KH33GN293X Fisher Fisher N/A VWR Scientific Gast DOA-P104-AA VWR Scientific Gast DOA-P104-AA VWR Scientific Welch GEM1.0 8890A VWR Scientific Gast DOA-P104-AA VWR Scientific Gast DOA-P104-AA VWR Scientific Gast DOA-P104-AA
Page of 35 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM ============================================================================= DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific Gast DOA-P104-AA VWR Scientific Gast DOA-P104-AA VWR Scientific Gast DOA-P104-AA Valve box module Packard Packard 760 16 78 Velometer VWR Scientific ALNOR ATSI Company 8100 Vortex VWR Scientific ASP S/P Vortex Mixer VWR Scientific Scientific Ind. G-560 VWR Scientific ASP S/P Vortex Mixer VWR Scientific Scientific Ind. G-560 VWR Scientific Scientific Ind. G-560 VWR Scientific ASP S/P Vortex Mixer VWR Scientific Baxter S/P Vortex Mixer VWR Scientific Scientific Ind. Vortex Genie 2 VWR Scientific Scientific Ind. Vortex Genie 2 VWR Scientific Thermolyne 37600 Mixer VWR Scientific Scientific Ind. G-560 VWR Scientific Scientific Ind. G-560 VWR Scientific Scientific Ind. G-560 VWR Scientific Scientific Ind. G-560 VWR Scientific VWR Scientific Vortex Genie 2 VWR Scientific VWR Scientific Vortex Genie 2 VWR Scientific VWR Scientific Vortex Genie 2 VWR Scientific VWR Scientific Vortex Genie 3 VWR Scientific VWR Scientific Vortex Genie 2 VWR Scientific VWR Scientific Vortex Genie 2 VWR Scientific VWR Scientific Vortex Genie 2 VWR Scientific VWR Scientific Vortex Genie 2 VWR Scientific VWR Scientific Vortex Genie 2 VWR Scientific VWR Scientific Mini Vortexer 945200 VWR Scientific VWR Scientific Mini Vortexer 945200 VWR Scientific VWR Scientific Mini Vortexer 945200 VWR Scientific VWR Scientific Mini Vortexer 945200 VWR Scientific VWR Scientific Mini Vortexer 945200 VWR Scientific VWR Scientific Vortex Genie 2 VWR Scientific VWR Scientific Vortex Genie 2 Page 36 of 37 [LOGO OF ANAPHARM] ANALYTICAL INSTRUMENTATION/EQUIPMENT INVENTORY UPDATE FORM ======================================================================== DESCRIPTION SUPPLIER MANUFACTURER MODEL VWR Scientific VWR Scientific Mini Vortexer 945300 VWR Scientific VWR Scientific Mini Vortexer 945300 VWR Scientific VWR Scientific Vortex Genie 2 ======================================================================== Page 37 of 37 Anapharm Inc. Fixed assets Finances division For the period of February 1st, 2001 to January 31, 2002
Date Supplier Description Hardware: 13/03/2001 INFO EBR F-022833 (1) Serveur Proliant DL 580R -Terminal Serveur 29/04/2001 INFO EBR F-023947 (1) Serveur comptabilite Compaq ML-570 Software: 22/02/2001 GROUPE CONSEIL LVMB F-6759 Modules Dynamics pour SQL
Logiciels de la division Bioanalytique Schedule 4.48 - ----------------------------------------------------------------------- COUT DE MAINTIEN LOGICIEL FOURNISSEUR COUT D'AOHAT ANNUEL - ----------------------------------------------------------------------- - ----------------------------------------------------------------------- Analyst Applied Biosystems N/A N/A - ----------------------------------------------------------------------- - ----------------------------------------------------------------------- Millenium Waters $133,900.00 $10,200.00 - ----------------------------------------------------------------------- - ----------------------------------------------------------------------- ChemStation GCMS Agilent $13,000.00 N/A - ----------------------------------------------------------------------- ChemStation LCMS Agilent $17,000.00 N/A - ----------------------------------------------------------------------- - ----------------------------------------------------------------------- - ----------------------------------------------------------------------- Ria Smart Canberra Packard N/A N/A - ----------------------------------------------------------------------- - ----------------------------------------------------------------------- LIMS Innaphase $426,000.00 $75,000.00 - ----------------------------------------------------------------------- In US funds - ----------------------------------------------------------------------- SCHEDULE 4.49 BANK ACCOUNTS See document attached hereto for a complete list of the bank accounts of the Company. The persons authorized to draw on or have access to the Company's bank accounts are: - - [*]; - - Marc LeBel ; - - [*]; - - [*]; - - [*]. [*] Confidential portions omitted and filed separately with the Commission. SCHEDULE 4.50 POWERS OF ATTORNEY None. SCHEDULE 4.53 TRIALS None. SCHEDULE 7.6 INVESTMENT LETTERS See document attached hereto. March ,2002 --- SFBC International, Inc. 11190 Biscayne Boulevard Miami, Florida 33181 Attention: Arnold Hantman, Chief Executive Officer Re: SFBC International, Inc./Stock Transfer Dear Sirs: This will confirm my representation to you and my agreement with you in connection with my acquisition of shares (the "Shares") of the common stock of SFBC International, Inc. (the "Company"), a Delaware corporation as part of the purchase price for my sale of shares of Anapharm Inc. to a wholly-owned subsidiary of the Company. 1. Prior to my acquisition of these Shares, I have reviewed the operations of the Company and in this connection the Company offered me access to the same information concerning it which would be contained in a prospectus meeting the requirements of Section 10 to the Securities Act of 1933 ("Securities Act"). In connection therewith, I furnished you with information, upon which you have relied, in support of my advice to you that I am a substantial investor and able to bear the risk of the loss of my entire investment. In addition, I have the knowledge and experience in business matters so that I am capable of evaluating the merits and risks involved with my acquisition of the Shares. Alternatively, in making such acquisition I relied upon the advice of -------------------------- as to the appropriateness of such investment and such person has the - --------- knowledge and experience in business matters so as to be capable of evaluating the merits and risks involved with the acquisition of the Shares. 2. I have acquired the Shares for my own account. You have advised me that the transfer of the Shares to me will not be registered under the Securities Act, and that in not registering the Shares you have relied upon my representations to you set forth in this letter. The Shares were acquired by me for my own account for investment and not with a view to, or for resale in connection with, the distribution thereof. I have no present intention of reselling or distributing them after any period of time. I do not have any contract, undertaking, agreement or arrangement with any person to sell or transfer to such persons or to any third person any of the Shares. My acquisition of the Shares for investment is consistent with my financial needs. E-1 3. I shall make no disposition at any time of any of the Shares in contravention of the provisions of the Securities Act or rules thereunder. 4. I shall make no disposition of any of the Shares unless and until (i) notice of the proposed disposition shall have been given to the Company and (ii) the Company shall have received the written opinion of its counsel to the effect that (a) the proposed disposition will not be in contravention of any of the registration provisions of the Securities Act or (b) appropriate action necessary for compliance with the registration provisions of the Securities Act has been taken. 5. I hereby authorize the Company to imprint an appropriate restrictive legend on the certificates representing the Shares acquired by me. 6. I acknowledge receipt of the following documents relating to the Company: a. Form 1OKSB for the year ended December 31, 2001; b. Form 1OQSB for the quarters ended March 31, 2001, June 30, 2001 and September 30,2001; c. Final Prospectus dated December 13,2001; d. Form 8-K dated August 20, 2001, August 29, 2001 and November 16, 2001. Dated: March , 2002 Very truly yours, --- ------------------------------------- Print Name Address: ------------------------------------- ------------------------------------- E-2 SCHEDULE 7.7 OPINION OF COUNSEL OF VENDORS To be delivered at Closing SCHEDULE 7.13 EMPLOYMENT CONTRACT See documents attached hereto. EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this ___ day of ____________, 2002, between Anapharm Inc., a Quebec company (the "Company") and ____________________ (the "Employee"). WHEREAS, in its business, the Company has acquired and developed certain trade secrets, including but not limited to proprietary processes, sales methods and techniques, and other like confidential business and technical information including but not limited to technical information, design systems, methods of recruiting subjects, pricing methods, pricing rates or discounts, process, procedure, formula, design of computer software or improvement of any portion or phase thereof, whether patented or not, that is of any value whatsoever to the Company, as well as certain unpatented information relating to the Company's Services (as herein defined), information concerning proposed new Services, market feasibility studies, proposed or existing marketing techniques or plans (whether developed or produced by the Company or by any other entity for the Company), other Confidential Information (as herein defined) and information about the Company's employees, officers, and directors, which necessarily will be communicated to the Employee by reason of Employee's employment by the Company; and WHEREAS, the Company has strong and legitimate business interests in preserving and protecting its investment in the Employee, its trade secrets and Confidential Information, and its substantial relationships with suppliers, and Customers (as herein defined) actual and prospective; and WHEREAS, the Company desires to preserve and protect its legitimate business interests further by restricting competitive activities of the Employee during the term of employment and following (for a reasonable time) termination of employment for any reason; and WHEREAS, the Company desires to employ the Employee and to ensure the continued availability to the Company of the Employee's services, and the Employee is willing to accept such employment and render such services, all upon and subject to the terms and conditions contained in this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Employee agree as follows: 1. Representations and Warranties. The Employee hereby represents and ------------------------------ warrants to the Company that Employee (i) is not subject to any written nonsolicitation or noncompetition agreement affecting Employee's employment with the Company (other than any prior agreement with the Company), (ii) is not subject to any written confidentiality or nonuse/nondisclosure agreement affecting Employee's employment with the Company (other than any prior agreement with the Company), and (iii) has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer or any other person. 2. Term of Employment. The Company hereby employs the Employee, and the ------------------ Employee hereby accepts employment with the Company for an initial __________ year period commencing on the date of this Agreement (the "Initial Term"), and this Agreement will automatically renew thereafter, from year to year, for additional one (1) year periods, on the same terms and conditions as those set forth herein, unless a party provides notice of termination to the other party no later than thirty (30)days prior to the expiration of such Initial Term or one (1) year renewal period, as the case may be, the whole subject to termination as set forth herein (collectively, the "Term"). 3. Board Membership. The Employee hereby agrees to serve as a member of the ---------------- Company's Board of Directors for the term of this Agreement or until otherwise determined by Parent. 4. Duties ------ (a) General Duties. The Employee shall serve as _________________ of the Company, with duties and responsibilities that are customary for such position. The Employee shall report directly to the Company's _________________ or as otherwise directed by the Company's board of directors. The Employee shall use Employee's best efforts to perform Employee's duties and discharge Employee's responsibilities pursuant to this Agreement competently, carefully and faithfully. (b) Devotion of Time. The Employee shall devote all of Employee's ---------------- time, attention and energies during normal business hours to the business of the Company. During the Term, the Employee shall not enter the employ of or serve as a consultant to, or in any way perform any services with or without compensation to, any other persons, business or organization without the prior written consent of the board of directors of the Company. (c) Adherence to Inside Information Policies. The Employee ---------------------------------------- acknowledges that the Company's indirect parent, SFBC International, Inc. (the "Parent") is publicly-held and, as a result, has implemented inside information policies designed to preclude its employees and those of its subsidiaries from violating the applicable securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company, the Parent, or any third party. The Employee shall promptly execute any agreements generally distributed by the Company or the Parent to its employees requiring such employees to abide by its inside information policies. Parent shall provide copy of the inside information policies. 5. Compensation and Expenses. -------------------------- (a) Salary. For the services of the Employee to be rendered under this ------ Agreement, the Company shall pay the Employee an annual gross salary of ____________ Canadian Dollars ($____________)(the "Base Salary")during the Term, payable in accordance with the Company's normal payroll practices and subject to applicable deductions at source required by law or the Company's ordinary course payroll practices. The Base Salary shall be increased as and when the Company meets targeted financial results, subject to approval of the Board of Directors. (b) Expenses. In addition to any compensation received pursuant to -------- Section 5(a) the Company shall reimburse funds to the Employee for all reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of Employee's duties under this Agreement and provided that the Employee properly provides a written accounting of such expenses to the Company in accordance with the Company's then current practices. Such reimbursement shall be made in accordance with policies and procedures of the Company in effect from time to time relating to reimbursement of Employees. 6. Benefits. All benefits are, subject to Sections 7 and 8, available -------- to Employee for the full Term of this Agreement. 2 (a) Vacation. During the first year of employment, the Employee shall -------- be entitled to ____ days of vacation, and to any additional number of days as specified by the Company in its sole discretion or based on any applicable requirements of law, in each instance without loss of compensation or other benefits to which Employee is entitled under this Agreement, to be taken at such times as the Employee may select and the affairs of the Company may permit. (b) Employee Benefit Programs. The Employee is entitled to participate ------------------------- in any pension, retirement savings plan, insurance or other employee benefit plan that is maintained by the Company for its executive officer employees, including programs of life, disability and medical insurance and reimbursement of membership fees in professional organizations. (c) Bonus. The parties agree that the Employee shall be entitled to a ----- bonus determined in accordance with sales targets and bonus rates and amounts set forth in Schedule A hereto. (d) Stock Options. The Parent shall grant the Employee _____ 10-year ------------- stock options, all of which shall be subject to the terms of the Parent's Second Amended and Restated 1999 Stock Option Plan. Subject to any applicable requirements of law, such options will be exercisable at the closing price of the Parent's common stock on the Nasdaq Stock Market on the last trading day prior to the execution of this Agreement, and shall vest over a three year term each June 30 and December 31 in equal increments of _____ options commencing on December 31, 2002, subject to continued employment at each applicable vesting date. All options shall be subject to execution of the Parent's then standard stock option agreement. Except in the event of Employee's termination of employment by the Company without Cause or in the event of non-renewal of this Agreement by the Company pursuant to Section 2 hereof, all unvested options expire at the Termination Date. In the event of the termination by the Company of Employee's employment without Cause, the vesting of those unvested options that would have vested during the Severance Period (herein defined) shall be accelerated and shall vest as of the Termination Date. In addition, as and when Parent has in place an executive stock option plan Employee shall have the right, subject to Board approval, to participate in that plan. All vested options (including those accelerated as provided above) must be exercised within three months of Employee's termination of employment (whatever the reason), failing which they expire. In the event of the non-renewal of this Agreement by the Company pursuant to Section 2 hereof, the Employee's options shall continue to vest in the ordinary course throughout the Severance Period, but subject to the earlier termination thereof in accordance with Sections 8(c) and 8(f) below. (e) Automobile. The Company shall provide the Employee with an ---------- automobile of a category and model in relation with his position with the Company, to be leased by the Company at a cost (excluding taxes) of at least $________ per month, and the Company shall pay all reasonable costs, including respecting licenses, insurances and maintenance, relating to the normal operation of such automobile. 7. Termination. ----------- (a) Notwithstanding anything contained herein to the contrary, it is agreed that the Employee's employment hereunder may be terminated with or without Cause (as defined below) at any time during the Term of the present Agreement and without any recourse, claim or cause of action by either party against the other with respect to such termination: (i) by the Company at any time, by 3 giving to the Employee written notice of termination (the date of such notice being herein called the "Notice Date"), which notice shall set forth the date upon which the Employee's employment shall terminate as determined by the Company in its sole discretion (which may be the Notice Date or any later date selected by the Company), or (ii) by the Employee at the expiration of thirty (30) days after the giving of written notice of termination to the Company, or at the expiration of such shorter notice period as the Company in its sole discretion may require and notify the Employee following the Company's receipt of such notice from the Employee. (b) For the purposes of this Agreement, the term "Cause" shall include: (i) a willful failure or refusal by the Employee to perform Employee's customary duties or services for the Company, or its Affiliates (as defined in the Canada Business Corporations Act), without lawful justification; (ii) the Employee's conviction for a criminal act or other offense pursuant to the provisions of the Criminal Code of Canada or any other criminal or penal statute of any jurisdiction which the Company reasonably determines may have an adverse effect upon the reputation or goodwill of the Company, or on the performance of the Employee's duties hereunder; (iii) a breach by the Employee of, or the Employee's failure or refusal to perform, in any material respect, any of Employee's obligations under any employment agreement, employee invention and confidentiality agreement or such other material written agreement between the Employee and the Company; (iv) the Employee's violation of any published employment policy or practice of the Company provided the Employee fails to adhere to such policy/practice within a reasonable period of time, but no later than thirty (30) days, after receipt of notice; (v) gross negligence or willful misconduct or fraud by the Employee in the performance of Employee's duties, (vi) breach by the Employee of any applicable securities laws; or (vii) any serious reason or just cause under Quebec law. (c) If the Employee becomes substantially incapacitated so as to be prevented from properly and continuously performing in full Employee's duties to the Company for a substantially continuous period of three (3) months or more in any consecutive twelve (12) month period, the Company will continue to pay the Employee's base salary for such three (3) month period. If the Employee is unable to return to work after such three (3) month period, the Company may, in its sole discretion, elect to terminate the Employee's employment at any time during the continuance of such incapacity by giving to the Employee written notice of termination or severance pay in lieu thereof and, if the Company gives such notice of termination or severance pay in lieu thereof, the Employee's employment with the Company shall terminate on the date set forth in such notice, without recourse by either party against the other with respect to such termination. (d) Upon termination of employment under paragraphs (a) or (c) above, the Employee shall have no right to compensation or reimbursement under Section 5 or to participate in any employee benefits under Section 6, except as provided for by applicable law or Section 8, for any period subsequent to the Termination Date. (e) Notwithstanding any termination of employment, the provisions of Sections 9 and 10 shall remain in full force and effect. 8. Payments in the Event of Termination. ------------------------------------ (a) In this Agreement, the expression "Termination Date" means (i) in the case of termination by the Company pursuant to Section 7(a)(i) or 7(c) hereof, the date of termination of the 4 Employee's employment set forth in the written notice of termination given by the Company pursuant to either of such sections (as the case may be); and (ii) in the case of termination by the Employee pursuant to Section 7(a)(ii) hereof, the date which is thirty (30) days following the date upon which the Employee has given notice of termination or, if the Company has required a shorter notice period, the last day of such shorter period. (b) In the event of termination of employment pursuant to Section 7 hereof, notwithstanding anything in this Agreement contained to the contrary, all payments and benefits to the Employee under this Agreement shall cease and terminate except that: (i) In the event of termination by the Employee pursuant to Section 7(a)(ii) hereof and in case of termination by the Company pursuant to Section 7(c) hereof or for Cause, the Employee's base salary shall be pro rated based on the number of days elapsed between the last date to which such salary was paid up to (but excluding) the Termination Date and shall be paid to the Employee up to the Termination Date; (ii) Subject to Sections 8(c) and 8(f)below, in the event of non-renewal of this Agreement by the Company pursuant to Section 2 hereof or if Employee's employment is terminated by the Company without Cause, the Employee will be entitled to receive an amount equal to Employee's Base Salary for twelve (12) months (such twelve (12) month period is herein referred to as the "Severance Period" and the said amount payable is herein referred to as the "Severance Pay") as full and final settlement of all claims, including for any employment related benefits and severance and termination pay or indemnities, against the Company or any of its Affiliates. (c) Payment of Severance Pay. The Severance Pay shall be paid in equal ------------------------ instalments over the Severance Period at the times and in accordance with the Company's customary pay periods and payroll practices as may be established or modified from time to time and shall be subject to all applicable federal, provincial and/or local payroll and withholding taxes. Notwithstanding anything to the contrary herein contained, the Severance Pay shall terminate once Employee finds "Alternative Employment" or in the event of a breach of any terms of this Agreement by Employee, including Sections 9 and 10. "Alternative Employment" means any employment(s) or other relationship(s) (such as consultant or contractor) with any other Person which in the aggregate provide Employee, directly or indirectly, with compensation equal to at least 80% of Employee's then applicable Base Salary. (d) Termination of Benefits. Except for any right of continuation of ----------------------- benefits coverage to the extent provided by the terms and conditions of the benefit programs relating to life, disability and medical insurance, by this Agreement or by applicable law, benefits shall terminate pursuant to the terms of the applicable benefit plans as of the Termination Date of the Employee's employment. (e) Release. Company's obligation to provide any of the amounts and ------- benefits hereunder shall be subject to, and conditioned upon, the Employee's execution of a full release of claims satisfactory to the Company releasing the Company, its Affiliates and their respective employees and agents from any claims arising from or related to the Employee's employment or severance from employment with the Company, including any claims arising from this Agreement 5 (f) Cessation of Severance Pay and Benefits. If the Employee breaches --------------------------------------- Employee's obligations under this Agreement, the Company may immediately cease payment of all severance (including Severance Pay) and benefits described in this Agreement. The cessation of these payments shall be in addition to, and not as an alternative to, any other remedies at law or in equity available to the Company, including the right to seek specific performance or an injunction. 9. Non-Competition on Agreement. ---------------------------- (a) Competition with the Company or the Parent. During the Term and ------------------------------------------ until the later of (i) _____ months commencing on the Termination Date (whatever the reason of the termination of employment) or (ii) the period during which the Company or Parent is paying Severance Pay to the Employee (the "Restricted Period"), the Employee, directly or indirectly or, in association with or as a stockholder, director, officer, consultant, employee, partner, joint venturer, member or otherwise of or through any person, firm, corporation, partnership, association or other entity (any of the foregoing defined as an "Affiliated Entity") shall not become employed by, lend money to, advise, become a shareholder of or otherwise become associated with any entity which competes with the Company or the Parent within the United States or the Province of Quebec. Provided, however, the foregoing provisions shall not prevent the -------- ------- Employee from accepting employment with an enterprise engaged in two or more lines of business, one of which is the same or similar to the Company's business (the "Prohibited Business") if the Employee's employment is totally unrelated to the Prohibited Business; provided, further, the foregoing shall not prohibit -------- ------- Employee from owning up to 5% of the securities of any publicly-traded enterprise provided the Employee is not an employee, director, officer, consultant to such enterprise or otherwise reimbursed for services rendered to such enterprise. In addition, the Employee may not, directly or indirectly including through any Affiliated Entity, obtain employment with or perform services for any Customer (as herein defined) of the Company or any affiliate of a Customer during the period commencing on the Termination Date and continuing for 12 months thereafter, except by prior written approval of the Company. This section 9(a) shall not apply where the Employee is terminated without Cause, unless the Company is satisfying its obligation to pay Severance Pay under Section 8. (b) Solicitation of Customers. During the Restricted Period, the ------------------------- Employee, directly or indirectly including through any Affiliated Entity, shall not seek Prohibited Business from any Customer (as defined below) on behalf of any enterprise or business other than the Company or any of its Affiliates, refer Prohibited Business from any Customer to any enterprise or business other than the Company or any of its Affiliates or receive commissions based on sales or otherwise relating to the Prohibited Business from any Customer, or any enterprise or business other than the Company or any of its Affiliates. For purposes of this Agreement, the term "Customer" means any person, firm, corporation, partnership, association or other entity to which the Company or any of its Affiliates, to the knowledge of the Employee, sold or provided goods or services during the 24-month period prior to the time at which any determination is required to be made as to whether any such person, firm, corporation, partnership, association or other entity is a Customer, or who or which has been approached by or who or which has, to the knowledge of the Employee, approached an employee or agent of the Company or any of its Affiliates for the purpose of doing business with the Company or any of its Affiliates, as the case may be. (c) Solicitation of Employees. During the Restricted Period, the ------------------------- Employee, directly or indirectly including through any Affiliated Entity shall not solicit, hire or contact any employee or 6 full-time consultant of the Company or any of its Affiliates for the purpose of hiring them or causing them to terminate their employment relationship with the Company or any of its Affiliates. This undertaking shall apply equally to any individual that was an employee or full-time consultant of the Company or any of its Affiliates at the time of the termination of Employee's employment with the Company. (d) No Payment. The Employee acknowledges and agrees that no separate ---------- or additional payment will be required to be made to Employee in consideration of Employee's undertakings in this Section. (e) For greater certainty, references to the "Company" in this Section 8 shall include the Company's Affiliates. 10. Non-Disclosure of Confidential Information. ------------------------------------------ (a) Confidential Information. "Confidential Information" includes, but ------------------------ is not limited to, trade secrets, processes, policies, procedures, techniques including recruiting techniques, designs, drawings, know-how, show-how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing and uses of the Services (as defined herein), the Company's or its Affiliates' budgets and strategic plans, and the identity and special needs of Customers, databases, data, all technology relating to the Company's or its Affiliates' businesses, systems, methods of operation, client or Customer lists, Customer information, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, names, home addresses and all telephone numbers and e-mail addresses of the Company's or its Affiliates' employees, former employees, clients and former clients. In addition, Confidential Information also includes the identity of Customers and the identity of and telephone numbers, e-mail addresses and other addresses of employees or agents of Customers who are the persons with whom the Company's employees and agents communicate in the ordinary course of business. Confidential Information also includes, without limitation, Confidential Information received from the Company's Affiliates. For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is available to the public through no act of the Employee, (ii) information set forth in the written records of the Employee prior to disclosure to the Employee by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is lawfully obtained by the Employee in writing from a third party (excluding any Affiliates) who did not acquire such confidential information or trade secret, directly or indirectly, from the Employee or the Company or the Company's Affiliates. As used herein, the term "Services" shall include all clinical or pre-clinical research, testing, protocol design, data management, medical writing or other Services relating to proposed or actual formulations, foods, drugs and medical devices engaged in by the Company or any Affiliate during the Term of the Employee's employment. (b) Legitimate Business Interests. The Employee recognizes that the ----------------------------- Company has legitimate business interests to protect and as a consequence, the Employee agrees to the restrictions contained in this Agreement because they further the Company's legitimate business interests. These legitimate business interests include, but are not limited to (i) trade secrets; (ii) valuable confidential business or professional information that otherwise does not qualify as trade secrets including all Confidential Information; (iii) substantial relationships with specific prospective or existing Customers 7 or clients; (iv) Customer or client goodwill associated with the Company's business; and (v) specialized training relating to the Company's technology, methods and procedures. (c) Confidentiality. For a period of five years following termination --------------- of employment (for whatever reason), or as otherwise required by client privilege, the Confidential Information shall be held by the Employee in the strictest confidence and shall not, without the prior written consent of the Company, be disclosed for whatever reason or purpose to any person or entity other than in connection with the Employee's employment by the Company. The Employee further acknowledges that such Confidential Information as is acquired and used by the Company or its Affiliates is a special, valuable and unique asset. The Employee shall exercise all due and diligent precautions to protect the integrity and confidentiality of the Confidential Information and to keep it confidential whether it is in written form, on electronic media or oral. The Employee shall not copy any Confidential Information except to the extent necessary to Employee's employment nor remove any Confidential Information or copies thereof (in whatever form) from the Company's premises except to the extent necessary to Employee's employment and then only with the authorization of an officer of the Company. All records, files, materials and other Confidential Information obtained by the Employee in the course of Employee's employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company. The Employee shall not, except in connection with and as required by Employee's performance of Employee's duties under this Agreement, for any reason use for Employee's own benefit or the benefit of any other person or entity any Confidential Information. (d) Employee agrees that Employee shall not acquire any right, title or interest in or to the Confidential Information. (e) No Effect on SPA. Employee further agrees that nothing herein ---------------- shall limit, lessen or otherwise affect Employee's obligations under Section ___ of the Share Purchase Agreement ("SPA") entered into between the Vendors and SFBC Canada, Inc. (as such term is defined in the SPA) (in consideration for the purchase of the shares therein described), and that you are bound concurrently to this Section 9 (in consideration of employment hereunder) and the said Section ___ of the SPA. (f) For greater certainty, references to the "Company" in this Section 10 shall include the Company's Affiliates. 11. Equitable Relief. ---------------- (a) The Company and the Employee recognize that the services to be rendered under this Agreement by the Employee are special, unique and of extraordinary character, and that in the event of the breach by the Employee of the terms and conditions of this Agreement or if the Employee, shall cease to be an employee of the Company for any reason and take any action in violation of Section 9 and/or Section 10, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 11 (b) below, to enjoin the Employee from breaching the provisions of Section 9 or Section 10. In such action, the Company shall not be required to plead or prove irreparable harm or lack of an adequate remedy at law or post a bond or any security. (b) The Employee irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of the Province of Quebec and agrees to take any and all future action 8 necessary to submit to the jurisdiction of such courts. The Company irrevocably and unconditionally submits to the jurisdiction of those same courts. The Employee and the Company irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against the Employee or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Employee or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise. 12. Conflicts of Interest. While employed by the Company, the Employee --------------------- shall not, directly or indirectly, unless approved in writing by the President: (a) participate as an individual in any way in the benefits of transactions with any of the Company's suppliers or Customers, including, without limitation, having a financial interest in the Company's suppliers or Customers, or making loans to, or receiving loans, from, the Company's suppliers or Customers; (b) realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Employee's employment with the Company for the Employee's personal advantage or gain; or (c) accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a technical capacity by, a person or entity which does business with the Company. (d) As used in Section 12(a), (b) or (c), the Company also includes its Affiliates. 13. Inventions, Ideas, Processes, and Designs. All inventions, ideas, ----------------------------------------- processes, programs, software, and designs (including all improvements) (i) conceived or made by the Employee during the course of Employee's employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months subsequent to the termination or expiration of such employment with the Company and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company, are hereby assigned by the Employee to the Company and shall be the sole and exclusive property of the Company. An invention, idea, process, program, software, or design (including an improvement) shall be deemed related to the business of the Company if (a) it was made with the Company's equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Employee for the Company, or (c) pertains to the current business or demonstrably anticipated research or development work of the Company. The Employee shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly sign all instruments and agreements to further ensure the assignment of all such inventions, ideas, processes, and designs to the Company. The decision to file for patent or copyright protection or to maintain such development as a trade secret shall be in the sole discretion of the Company, and the Employee shall be bound by such decision. The Employee shall provide as a schedule to this Agreement, a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or non-copyrighted, including a 9 brief description, which Employee made or conceived prior to Employee's employment with the Company and which therefore are excluded from the scope of this Agreement. 14. Indebtedness. If, during the course of the Employee's employment under ------------ this Agreement, the Employee becomes indebted to the Company for any reason, the Company may, if it so elects, set off any sum due to the Company from the Employee and collect any remaining balance from the Employee. 15. Assignability. The rights and obligations of the Company under this ------------- Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, provided that such successor or assign shall acquire all or substantially all of the securities (via merger or otherwise) or assets and business of the Company. The Employee's obligations hereunder may not be assigned or alienated and any attempt to do so by the Employee will be void. 16. Severability. ------------- (a) The Employee expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement are reasonable in light of the circumstances as they exist on the date hereof. Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement of the Employee and the Company that this Agreement shall be construed by the court in such a manner as to impose only those restrictions on the Employee's conduct that are reasonable in the light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement. (b) If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other. The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provision were not included. 17. Notices and Addresses. All notices, offers, acceptance and any other --------------------- acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipted delivery, by facsimile delivery or, if mailed, postage prepaid, by certified mail, return receipt requested, as follows: To the Company: Anapharm, Inc. 2050 Rene-Levesque Blvd. West Quebec, Quebec GIV 2K8 Facsimile: (418) 527-3456 Attention: Marc LeBel, President and CEO 10 With a Copy to: SFBC International, Inc. 11190 Biscayne Boulevard Miami, Florida 33181. Facsimile: (305) 895-8616 Email: ahantman@sfbci.com To the Employee: At the address contained in the Company's records. or to such other address as either of them, by notice to the other may designate from time to time. The transmission confirmation receipt from the sender's facsimile machine shall be evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing. 18. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature. 19. Governing Law. This Agreement and any dispute, disagreement, or issue ------------- of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the laws of the Province of Quebec and the laws of Canada applicable therein without regard to choice of law considerations. 20. Entire Agreement. This Agreement constitutes the entire agreement ---------------- between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. 21. Modifications, Waivers. This Agreement may be amended, modified, ---------------------- superseded, cancelled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument executed by both parties hereto, or in the case of a waiver, by the party waiving compliance. The failure by either party at any time or times to require performance of any provisions hereof shall in no way affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement whether by conduct or otherwise or in respect of any one or more instances, shall be deemed to be, or be construed as, a further or continuing waiver of any breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 22. Additional Documents. The parties hereto shall execute such additional -------------------- instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder. 23. Section and Paragraph Headings. The section and paragraph headings in ------------------------------ this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 24. Language. The Parties confirm that it is their wish that this -------- Employment Agreement, as well as any other documents relating to this Employment Agreement, including notices, schedules and 11 authorizations, have been and shall be drawn up in the English language only. Les signataires confirment leur volonte que la presente convention d'emploi, de meme que tous les documents s'y rattachant, y compris tout avis, annexe et autorisation, soient rediges en anglais seulement. IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as of the date and year first above written. ANAPHARM INC. By: By: ------------------------------ ------------------------------ ------------------------------ ---- [Employee] 12 SCHEDULE A Bonus (Section 6(c)) 13 SCHEDULE 7.18 FORM OF RESIGNATIONS AND RELEASES OF THE DIRECTORS AND OFFICERS OF THE COMPANY See documents attached hereto. RESIGNATION AND RELEASE ----------------------- BETWEEN: ---------------- (the "Director") AND: ANAPHARM INC. (the "Company") The Director hereby resigns as a director and [Title] of the --------------- Company effective immediately. The Director, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby release, resign and fully and forever discharge the Company and its directors, shareholders and officers (collectively, the "Released Parties") of and from any and all action(s), cause of action(s), suits, claims and demands of any kind whatsoever, either at law or in equity, against any of the Released Parties, which the Director ever had, now has or may have, or which the Director's heirs, executors, administrators, successors and assigns, to any of them, hereafter can, shall or may have, directly or indirectly, against any of the Released Parties for or by reason of any cause, matter or thing whatsoever existing up to the date hereof. The terms of this Resignation and Release shall ensure to the benefit of each of the parties hereto and their respective heirs, executors, administrators, successors and assigns and shall be binding upon each of them. The present Resignation and Release is governed by the laws of the Province of Quebec and the laws of Canada applicable therein. Each of the undersigned parties acknowledges having had an opportunity to review this Resignation and Release and fully understands all the terms contained herein. IN WITNESS WHEREOF the parties have executed this Resignation and Release on this day of , 2002. --------- ANAPHARM INC. Per: ---------------------------- -------------------------------- -------------------------------- -------------------------------- RESIGNATION AND RELEASE ----------------------- BETWEEN: ---------------- (the "Director") AND: DANAPHARM CLINICAL RESEARCH INC. (the "Company") The Director hereby resigns as a director and [Title] of the --------------- effective immediately. The Director, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby release, resign and fully and forever discharge the Company and its directors, shareholders and officers (collectively, the "Released Parties") of and from any and all action(s), cause of action(s), suits, claims and demands of any kind whatsoever, either at law or in equity, against any of the Released Parties, which the Director ever had, now has or may have, or which the Director's heirs, executors, administrators, successors and assigns, to any of them, hereafter can, shall or may have, directly or indirectly, against any of the Released Parties for or by reason of any cause, matter or thing whatsoever existing up to the date hereof. The terms of this Resignation and Release shall ensure to the benefit of each of the parties hereto and their respective heirs, executors, administrators, successors and assigns and shall be binding upon each of them. The present Resignation and Release is governed by the laws of the Province of Quebec and the laws of Canada applicable therein. Each of the undersigned parties acknowledges having had an opportunity to review this Resignation and Release and fully understands all the terms contained herein. IN WITNESS WHEREOF the parties have executed this Resignation and Release on this day of ,2002. ------- ---------- DANAPHARM CLINICAL RESEARCH INC. Per: ---------------------------- -------------------------------- -------------------------------- -------------------------------- SCHEDULE 7.21 EMPLOYEES' COVENANTS See document attached hereto. EX-21 9 dex21.txt SUBSIDIARIES EXHIBIT 21 ---------- SFBC SUBSIDIARIES ----------------- SFBC Charlotte, Inc. - -------------------- Incorporated: Florida SFBC Ft. Myers, Inc. - -------------------- Incorporated: Florida South Florida Kinetics, Inc. - ---------------------------- Incorporated: Florida Doing business as South Florida Bioavailability Clinic SFBC Canada, Inc. - ----------------- Incorporated: Qualified: Canada : Anapharm, Inc. - -------------- Incorporated: Province of Quebec - - EX-23.1 10 dex231.txt CONSENT OF GRANT THORNTON LLP Exhibit 23.1 AUDITOR'S CONSENT We have issued our report dated February 15, 2002, accompanying the consolidated financial statements appearing in the Annual Report of SFBC International, Inc. and Subsidiaries on Form 10-KSB for the year ended December 31, 2001. We hereby consent to the incorporation by reference of the aforementioned report in the Registration Statement of SFBC International, Inc. and Subsidiaries on Form S-3 (Registration No. 333-69112). Grant Thornton LLP Miami, Florida March 29, 2002 EX-23.2 11 dex232.txt CONSENT OF KAUFMAN, ROSSIN & CO Exhibit 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in Registration Statement No. 333- 69112 on Form S-3 of SFBC International, Inc. of our report dated March 7, 2001 on the consolidated financial statements for the year ended December 31, 2000 which appears in this annual report on Form 10-KSB of SFBC International, Inc. for the year ended December 31, 2001. KAUFMAN, ROSSIN & CO. Miami, Florida March 27, 2002 -----END PRIVACY-ENHANCED MESSAGE-----