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Diagnos Inc — M&A Activity 2023
Sep 8, 2023
43030_rns_2023-09-08_305a128d-ef01-4849-9b78-e524fe124fb4.pdf
M&A Activity
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Execution Version
Strictly Private and Confidential
August 31, 2023
From: Richard Patricio (the “Shareholder”)
To: Otsuka America, Inc. and 1435816 B.C. Ltd.
Attention: Tsuyoshi Nakamura
Dear Sirs/Madams:
Re: Support and Voting Agreement
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The Shareholder understands that Otsuka America, Inc. (“ Parent ”), 1435816 B.C. Ltd. (“Purchaser ”) and Mindset Pharma Inc. (the “ Company ”) have entered into an arrangement agreement dated as of the date hereof (the “ Arrangement Agreement ”) contemplating an arrangement (the “ Arrangement ”) of the Company pursuant to Division 5 of Part 9 of the Business Corporations Act (British Columbia), the result of which, subject to the conditions set out in the Arrangement Agreement, shall be Parent’s direct or indirect acquisition of all the outstanding equity securities of the Company. The Shareholder is the registered and/or beneficial owner of the securities of the Company set out in Schedule A attached hereto (collectively, the “ Subject Securities ”, which expression shall include any other securities of the Company directly or indirectly acquired by or issued to the Shareholder, or in which the Shareholder becomes interested or acquires the right to direct the exercise of the voting rights, after the date hereof (including without limitation any common shares issued upon the exercise of options or warrants to purchase common shares)).
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This letter agreement (this “ Agreement ”) will take effect on the date hereof, and will terminate and be of no further force or effect upon the earliest of: (a) the mutual written agreement of the parties hereto, (b) the termination of the Arrangement Agreement in accordance with its terms, (c) any amendment of the Arrangement Agreement: to reduce the amount of or the form of the Arrangement Consideration without the Shareholder’s prior written consent, (d) the Effective Time, and (e) the Outside Date (the date on which such event occurs, being the “ Termination Date ”).
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Terms used but not defined in this Agreement that are defined in the Arrangement Agreement shall have the respective meanings ascribed to them in the Arrangement Agreement.
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The Shareholder hereby irrevocably and unconditionally undertakes to Parent and Purchaser, from the date hereof until the Termination Date:
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(a) to vote or to cause to be voted all voting rights attaching to the Subject Securities in favour of the Arrangement and any other matter necessary or advisable for the consummation of the Arrangement or otherwise to promote the success thereof, at any meeting of securityholders of the Company held to consider the Arrangement or any adjournment or postponement thereof (each a “ Meeting ”);
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(b) to vote or cause to be voted all voting rights attaching to the Subject Securities against any resolution proposed at any meeting of securityholders of the Company (including any adjournment or postponement thereof) that is in support of any Acquisition Proposal, or any action, agreement, transaction or proposal that might otherwise reasonably be expected to frustrate or impede the consummation of the Arrangement in accordance with the terms of the Arrangement Agreement, or that would result in a breach of any representation, warranty, covenant, agreement or other obligation of the Shareholder in this Agreement;
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(c) as soon as practicable and at least ten (10) days prior to the deadline for the delivery of proxies in relation to any Meeting, to deliver or to cause to be delivered to the Company (with a copy to you), a duly executed proxy or proxies directing the holder of such proxy or proxies to vote in favour of the Arrangement, or other similar arrangements to the extent the Subject Securities are held through a broker or other intermediary, and not to amend or revoke such proxy or proxies;
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(d) not to exercise any rights to dissent in connection with the Arrangement;
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(e) not to intentionally take any action that may reasonably be expected to in any way adversely affect the successful completion of the Arrangement;
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(f) not to, directly or indirectly, (i) make or participate in or take any action that may reasonably be expected to result in an Acquisition Proposal, or (ii) engage in any discussion, negotiation or inquiries relating thereto, or accept, assist or otherwise further the successful completion of any Acquisition Proposal;
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(g) not to, directly or indirectly, sell, transfer, gift, pledge, encumber, grant any option over, assign or otherwise dispose of, or agree to sell, transfer, gift, pledge, encumber, grant any option over or assign any of the Subject Securities or any interest therein, without the prior written consent of Parent; and
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(h) not to grant any proxies or power of attorney, deposit any of its Subject Securities into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to its Subject
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Securities, other than pursuant to this Agreement, or agree to take any of such actions.
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The Shareholder shall not, directly or indirectly, or, if applicable, through any officer, director, employee, representative or agent of the Shareholder:
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(a) solicit, assist, initiate, encourage or facilitate (including, without limitation, by way of furnishing non-public information, entering into any form of written or oral agreement, arrangement or understanding or soliciting proxies) any inquiries, proposals or offers regarding an Acquisition Proposal;
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(b) engage in or facilitate any discussions or negotiations regarding, or provide any confidential information with respect to, any Acquisition Proposal;
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(c) approve or recommend, or propose publicly to approve or recommend, any Acquisition Proposal;
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(d) tender or cause to be tendered any of its Subject Securities to any Acquisition Proposal;
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(e) withdraw support, or propose publicly to withdraw support, from the transactions contemplated by the Arrangement Agreement;
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(f) subject to section 8, influence the board of directors of the Company to withdraw or modify in a manner adverse to Purchaser or Parent its approval of the transactions contemplated in the Arrangement Agreement;
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(g) knowingly make any public comments or statements, written or verbal, in its capacity as a shareholder of the Company, that are inconsistent with the obligations of the Shareholder under this Agreement;
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(h) enter, or propose publicly to enter, into any agreement related to any Acquisition Proposal; or
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(i) join in the requisition of any meeting of the securityholders of the Company for the purpose of considering any resolution related to any Acquisition Proposal and/or any matter that could reasonably be expected to delay, prevent or frustrate the successful completion of the Arrangement or any of the transactions contemplated by the Arrangement Agreement.
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The Shareholder shall immediately cease and cause to be terminated any existing solicitation, discussion or negotiation commenced prior to the date of this Agreement with any Person (other than Purchaser, Parent and their respective Affiliates) by the Shareholder or, if applicable, any of the officers, directors, employees, representatives or agents of the Shareholder with respect to any potential Acquisition Proposal, whether or not initiated by the Shareholder or any of the officers, directors, employees, representatives or agents of the Shareholder.
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Until the Termination Date, the Shareholder shall promptly notify Parent of any inquiry, proposal or offer received by the Shareholder in its capacity as a shareholder of the Company that constitutes or could reasonably be expected to constitute or lead to an Acquisition Proposal, including a description of the material terms and conditions thereof, the identity of all Persons making the inquiry, proposal or offer, and copies of all documents, correspondence or other material received in respect of, from or on behalf of any such Person. The Shareholder shall promptly advise Parent, at first orally and then in writing, of any development that causes, or that would reasonably be expected to cause, a breach by the Shareholder of any representation, warranty, covenant or agreement contained in this Agreement.
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Notwithstanding any provision of this Agreement to the contrary, the Shareholder or a shareholder, officer or director of the Shareholder that is a director or officer of the Company shall not be limited or restricted in any way whatsoever in the exercise of his or her fiduciary duties as a director or officer of the Company, including, without limitation, in responding in his or her capacity as a director of the Company to an Acquisition Proposal in the manner contemplated by Article 5 of the Arrangement Agreement, or that is otherwise permitted by, and done in compliance with, the terms of the Arrangement Agreement. Parent acknowledges and agrees that the Shareholder is not making any agreement or understanding herein in any capacity other than its capacity as a securityholder of the Company.
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The Shareholder hereby represents and warrants that:
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(a) the Shareholder is the sole beneficial owner of the Subject Securities, with good and marketable title thereto free of any and all encumbrances and demands of any nature or kind whatsoever, and has the sole right to vote and sell (in the case of transferable Subject Securities) all of the Subject Securities;
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(b) except for the Arrangement Agreement, no person has any agreement or option, or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option for the purchase, acquisition or transfer from the Shareholder of any of the Subject Securities or any interest therein or right thereto;
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(c) the only securities of the Company beneficially owned, directly or indirectly, by the Shareholder on the date hereof are the Subject Securities;
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(d) the Shareholder has the power and capacity to execute and deliver this Agreement and to perform its obligations hereunder;
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(e) to the extent that the Shareholder is not an individual, the execution, delivery and performance of this Agreement by the Shareholder have been duly authorized by its board of directors or other authorized decision-making
body and no other internal approvals or proceedings on its part are necessary to authorize this Agreement;
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(f) this Agreement has been duly executed and delivered by the Shareholder and constitutes its legal, valid and binding obligation, enforceable against the Shareholder in accordance with its terms, subject to bankruptcy, insolvency and other similar Laws affecting creditors’ rights generally, and to general principles of equity; and
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(g) neither the execution and delivery of this Agreement by the Shareholder, nor the compliance by the Shareholder with any of the provisions hereof, will: (i) result in any breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default), or give rise to any third-party right of termination, cancellation, material modification, acceleration, purchase or right of first refusal, under any term or provision of any constating or governing documents, by-laws or resolutions of the Shareholder (to the extent that the Shareholder is not an individual), or under any of the terms, conditions or provisions of any contract to which the Shareholder is a party or by which the Shareholder or any of its properties or assets (including the Subject Securities) may be bound; (ii) require on the part of the Shareholder any filing with (other than pursuant to the requirements of applicable securities legislation) or permit, authorization, consent or approval of, any governmental entity or any other Person; or (iii) subject to compliance with any approval contemplated by the Arrangement Agreement and applicable Laws, violate or conflict with any judgement, order, notice, decree, statute, law, ordinance, rule or regulation applicable to the Shareholder or any of its properties or assets.
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If this Agreement is terminated in accordance with paragraph 2, the provisions of this Agreement will become void and no party shall have liability to any other party, except in respect of a breach of a representation, warranty or covenant of this Agreement that occurred prior to such termination.
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The parties hereby agree that irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached, and that money damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the parties acknowledge and hereby agree that in the event of any breach or threatened breach by the Shareholder, on the one hand, or Parent and Purchaser, on the other hand, of any of their respective covenants or obligations set forth in this Agreement, Parent and Purchaser, on the one hand, or the Shareholder, on the other hand, shall be entitled to an injunction or injunctions to prevent or restrain breaches or threatened breaches of this Agreement by the other, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other under this Agreement, without any requirement to prove actual damages and without any requirement for the securing or posting of
any bond in connection with the obtaining of any such injunction. Each of the parties hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of this Agreement by it, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other parties under this Agreement. The parties hereto further agree that by seeking the remedies provided for in this paragraph 12, a party shall not in any respect waive its right to seek any other form of relief that may be available to a party under this Agreement in the event that this Agreement has been terminated or in the event that the remedies provided for in this paragraph 12 are not available or otherwise are not granted.
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Each of the parties hereby acknowledges that it has been afforded the opportunity to obtain independent legal advice and confirms by the execution and delivery of this Agreement that it has either done so or waived its right to do so in connection with the entering into of this Agreement.
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This Agreement shall be governed by the laws of the Province of British Columbia and the federal laws of Canada applicable therein. This Agreement may only be amended, supplemented or otherwise modified by written agreement signed by the parties hereto. This Agreement may be executed in any number of counterparts (including counterparts by facsimile or electronic mail) and all such counterparts taken together shall be deemed to constitute one and the same instrument. The parties shall be entitled to rely upon delivery of an executed facsimile or similar executed electronic copy of this Agreement, and such facsimile or similar executed electronic copy shall be legally effective to create a valid binding agreement between the parties. This Agreement is entered into for the exclusive benefit of Parent, Purchaser and their successors and assigns. No party may assign, delegate or otherwise transfer any of its rights, interests or obligations under this Agreement without the prior written consent of the other parties hereto, except that Parent may assign, delegate or otherwise transfer any of its rights, interests or obligations under this Agreement to an affiliate, without reducing its own obligations hereunder. The provisions of this Agreement will be severable in the event that any of the provisions hereof are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions will remain enforceable to the fullest extent permitted by law.
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The parties expressly acknowledge that they have requested that this Agreement and all ancillary and related documents thereto be drafted in the English language only. Les parties aux présentes reconnaissent avoir exigé que la présente entente et tous les documents qui y sont accessoires soient rédigés en anglais seulement.
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If the foregoing is in accordance with your understanding and is agreed to by you, please signify your acceptance by executing the enclosed copies of this letter where indicated below and returning the same to the Shareholder, upon which this letter as so accepted shall constitute an agreement among us.
Yours truly,
"Richard Patricio" Richard Patricio
Accepted and agreed on this day of 31[st] day of August, 2023.
OTSUKA AMERICA, INC.
"Tsuyoshi Nakamura" Name: Tsuyoshi Nakamura
1435816 B.C. LTD.
"Tsuyoshi Nakamura" Name: Tsuyoshi Nakamura
[Signature Page –Voting Support Agreement]
SCHEDULE A SUBJECT SECURITIES
| Type of Subject Securities | Number of Subject Securities |
|---|---|
| Company Shares | 1,150,750 |
| Company Options | 2,350,000 |
| Company Compensation Options | 0 |
| Company Warrants | 66,700 |