SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
Under Section 13(e) of the Securities Exchange Act of 1934
(Amendment No. 1)
PATHEON INC.
(Name of Issuer)
Patheon Inc.
JLL/Delta Patheon Holdings, L.P.
JLL/Delta Patheon GP, Ltd.
JLL Patheon Co-Investment Fund, L.P.
JLL Patheon Holdings, Coöperatief U.A.
JLL Patheon Holdings, LLC
JLL Partners Fund V (Patheon), L.P.
JLL Associates V (Patheon), L.P.
JLL Associates G.P. V (Patheon), Ltd.
JLL Partners Fund VI, L.P.
JLL Partners Fund V, L.P.
JLL Partners Fund VI (Patheon), L.P.
JLL Partners Fund V (New Patheon), L.P.
Koninklijke DSM N.V.
JLL/Delta Canada Inc.
James C. Mullen
Stuart Grant
Michael E. Lytton
(Name of Persons Filing Statement)
Restricted Voting Shares
(Title of Class of Securities)
70319W108
(CUSIP Number of Class of Securities)
Michael E. Lytton Executive Vice President, Corporate Development and Strategy, and General Counsel Patheon Inc. c/o Patheon Pharmaceuticals Services Inc. 4721 Emperor Boulevard, Suite 280 Durham, NC 27703 (919) 226-3325 |
Hugh C. Welsh President and General Counsel DSM North America c/o DSM Pharmaceutical Products, Inc. 45 Waterview Boulevard Parsippany, NJ 07054 (973) 257-8300 |
Daniel Agroskin Managing Director JLL Partners, Inc. 450 Lexington Avenue, 31st Floor New York, NY 10017 (212) 286-8600 |
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Persons Filing Statement)
With copies to:
John R. LeClaire Joseph L. Johnson III Adam P. Small Goodwin Procter LLP Exchange Place Boston, MA 02109 (617) 570-1000 |
Edward Sonnenschein M. Adel Aslani-Far Shaun Hartley Latham & Watkins LLP 885 Third Avenue New York, New York 10022 (212) 906-1200 |
Robert B. Pincus Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 (302) 651-3000 | ||
Andrea Johnson Dentons Canada LLP 99 Bank Street Suite 1420 Ottawa, Ontario K1P 1H4 Canada (613) 783-9600 |
Amar Leclair-Ghosh Norton Rose Fulbright Canada LLP 1, Place Ville Marie, Suite 2500, Montréal, QC H3B 1R1, Canada (514) 286-5474 |
Paul A.D. Mingay Jason Saltzman Borden Ladner Gervais LLP Scotia Plaza 40 King Street West, Suite 4400 Toronto, Canada M5H 3Y4 | ||
Chris Hewat Blake, Cassels & Graydon LLP 199 Bay Street Suite 4000, Commerce Court West Toronto ON M5L 1A9 Canada (416) 863-2761 |
This statement is filed in connection with (check the appropriate box):
x | The filing of solicitation materials on an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934. |
¨ | The filing of a registration statement under the Securities Act of 1933. |
¨ | A tender offer. |
¨ | None of the above. |
Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: x
Check the following box if the filing is a final amendment reporting the results of the transaction: ¨
CALCULATION OF FILING FEE
Transaction Valuation* |
Amount of Filing Fee | |
$1,386,374,772 | $178,565.08 |
* | Set forth the amount on which the filing fee is calculated and state how it was determined. |
* | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: In accordance with Exchange Act Rule 0-11(c), the filing fee of $178,565.08 was determined by multiplying 0.0001288 by the aggregate arrangement consideration of $1,386,374,772. The aggregate arrangement consideration was calculated by adding (x) the product of (I) the 140,936,525 Restricted Voting Shares that are proposed to be acquired in the arrangement and (II) the consideration of US$9.32 in cash per Restricted Voting Share, plus (y) $72,846,359 expected to be paid to holders of 11,011,225 options to purchase Restricted Voting Shares with an exercise price of less than US$9.32 per share in exchange for cancellation of such options. |
x | Check the box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule, and the date of its filing. |
Amount Previously Paid: $178,565.08
Form or Registration No.: Schedule 14A
Filing Party: Patheon Inc.
Date Filed: December 5, 2013
Introduction
This Amendment No. 1 to Rule 13e-3 Transaction Statement on Schedule 13E-3 together with the exhibits hereto (the Transaction Statement) is being filed with the Securities and Exchange Commission (the SEC) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act), by Patheon Inc., a Canadian corporation (the Company), JLL/Delta Patheon Holdings, L.P., a exempted limited partnership organized under the laws of the Cayman Islands (the Purchaser), JLL/Delta Patheon GP, Ltd., a company limited by shares organized under the laws of the Cayman Islands, JLL Patheon Co-Investment Fund, L.P., an exempted limited partnership organized under the laws of the Cayman Islands, JLL Patheon Holdings, Coöperatief U.A., cooperative organized under the laws of The Netherlands, JLL Patheon Holdings, LLC, a Delaware limited liability company, JLL Partners Fund V (Patheon), L.P., an exempted limited partnership organized under the laws of the Cayman Islands, JLL Associates V (Patheon), L.P., an exempted limited partnership organized under the laws of the Cayman Islands, JLL Associates G.P. V (Patheon), Ltd., a company limited by shares organized under the laws of the Cayman Islands, JLL Partners Fund VI, L.P., a Delaware limited partnership, JLL Partners Fund V, L.P., a Delaware limited partnership, JLL Partners Fund VI (Patheon), L.P., an exempted limited partnership organized under the laws of the Cayman Islands, JLL Partners Fund V (New Patheon), L.P., an exempted limited partnership organized under the laws of the Cayman Islands, JLL/Delta Canada Inc., a Canadian corporation, Koninklijke DSM N.V., a corporation organized under the laws of The Netherlands, James C. Mullen, Chief Executive Officer of the Company, Michael E. Lytton, Executive Vice President of Corporate Development and Strategy and General Counsel of the Company, and Stuart Grant, Executive Vice President and Chief Financial Officer of the Company (collectively, the Filing Persons).
This Transaction Statement relates to the Arrangement Agreement, dated November 18, 2013 (the Arrangement Agreement), between the Company and the Purchaser, which is attached hereto as Exhibit (d)(1), and the related plan of arrangement (the Plan of Arrangement), which is attached hereto as Exhibit (d)(2). If shareholders of the Company pass the special resolution approving the Plan of Arrangement and the other conditions to closing set forth in the Arrangement Agreement are satisfied or waived, including the issuance of the final court order approving the Plan of Arrangement, the Purchaser will acquire all the Restricted Voting Shares issued and outstanding of Patheon, directly or indirectly, all as more particularly described in the Proxy Statement (as defined below) (the Arrangement).
Concurrently with the filing of this Transaction Statement, the Company is filing with the SEC a preliminary proxy statement (which includes a management information circular) on Schedule 14A (the Proxy Statement) pursuant to Section 14(a) of the Exchange Act, which is attached hereto as Exhibit (a)(1), relating to a special meeting of the shareholders of the Company. The Company will also be filing this Transaction Statement and the Proxy Statement in Canada through SEDAR.
The cross-references below are being supplied pursuant to General Instruction G to Schedule 13E-3 and show the location in the Proxy Statement of the information required to be included in response to the items of Schedule 13E-3. Pursuant to General Instruction F to Schedule 13E-3, the information in the Proxy Statement, including all annexes thereto, is expressly incorporated by reference herein in its entirety, and responses to each item herein are qualified in their entirety by the information contained in the Proxy Statement and the annexes thereto. Capitalized terms used but not defined herein have the meanings assigned to them in the Proxy Statement.
All information contained in, or incorporated by reference into, this Transaction Statement concerning each Filing Person was supplied by such Filing Person.
While each of the Filing Persons acknowledges that the Arrangement is a going private transaction for purposes of Rule 13e-3 under the Exchange Act, the filing of this Transaction Statement shall not be construed as an admission by any Filing Person, or by any affiliate of a Filing Person, that the Company is controlled by any other Filing Person.
Item 1. Summary Term Sheet
The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
Item 2. Subject Company Information
(a) Name and Address. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
SUMMARY TERM SHEET
(b) Securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
INFORMATION CONCERNING PATHEONVoting Shares and Principal Shareholders
(c) Trading Market and Price. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
INFORMATION CONCERNING PATHEONMarket Price and Trading Volume Data
(d) Dividends. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
INFORMATION CONCERNING PATHEONDividend Policy
INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS OTHER THAN THE ARRANGEMENTArrangements with JLL PartiesSpecial Approval Rights
(e) Prior Public Offerings. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS OTHER THAN THE ARRANGEMENTArrangements with JLL PartiesSobel Equity Commitment Letter
(f) Prior Stock Purchases. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS OTHER THAN THE ARRANGEMENTArrangements with JLL PartiesSobel Equity Commitment Letter
INFORMATION CONCERNING PATHEONPrevious Purchases and Sales
INFORMATION CONCERNING PATHEONTransactions in Restricted Voting Shares
Item 3. Identity and Background of Filing Persons
(a) Name and Address. Patheon Inc. is the subject company. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
INFORMATION CONCERNING PATHEON
INFORMATION CONCERNING THE JLL PARTIES, THE MANAGEMENT PARTIES AND DSM
(b) Business and Background of Entities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
INFORMATION CONCERNING PATHEON
INFORMATION CONCERNING THE JLL PARTIES, THE MANAGEMENT PARTIES AND DSMBusiness and Background
(c) Business and Background of Natural Persons. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
INFORMATION CONCERNING THE JLL PARTIES, THE MANAGEMENT PARTIES AND DSMBusiness and Background
Item 4. Terms of the Transaction
(a) | Material Terms. |
(1) | Tender Offers. Not applicable. |
(2) Mergers or Similar Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
SPECIAL FACTORSBackground to the Arrangement
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
SPECIAL FACTORSPurposes and Reasons for the Arrangement from the Perspective of the JLL Parties, the Management Parties and DSM
SPECIAL FACTORSPosition of the JLL Parties, the Management Parties and DSM Regarding the Fairness of the Arrangement
SPECIAL FACTORSPlans for Patheon after the Arrangement
SPECIAL FACTORSCompletion of the Arrangement
SPECIAL FACTORSCertain Effects of the Arrangement
SPECIAL FACTORSInterests of our Directors and Executive Officers in the Arrangement
THE ARRANGEMENTPrincipal Steps of the Arrangement
THE ARRANGEMENTProcedure for Surrender of Restricted Voting Shares and Payment of Consideration
GENERAL PROXY INFORMATIONHow a Vote is Passed
GENERAL PROXY INFORMATIONWho can Vote?
THE ARRANGEMENT AGREEMENTShare Consideration
THE ARRANGEMENT AGREEMENTMutual Conditions
SPECIAL FACTORSCertain Tax Considerations
(c) Different Terms. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSCertain Effects of the Arrangement
SPECIAL FACTORSInterests of our Directors and Executive Officers in the Arrangement
SPECIAL FACTORSAgreements of Certain Persons with JLL Holdco and the Purchaser
THE ARRANGEMENTPrincipal Steps of the Arrangement
THE ARRANGEMENT AGREEMENTShare Consideration
INTERESTS OF INFORMED PERSONS IN MATTERS TO BE ACTED UPON
(d) Appraisal Rights. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
DISSENT RIGHTS
ANNEX HPLAN OF ARRANGEMENT
ANNEX IRIGHT TO DISSENTSECTION 190 OF THE CANADA BUSINESS CORPORATIONS ACT
ANNEX KINTERIM ORDER
(e) Provisions for Unaffiliated Security Holders. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
PROVISIONS FOR UNAFFILIATED SHAREHOLDERS
(f) | Eligibility for Listing or Trading. Not applicable. |
Item 5. Past Contacts, Transactions, Negotiations and Agreements
(a) Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSBackground to the Arrangement
SPECIAL FACTORSInterests of our Directors and Executive Officers in the Arrangement
INTERESTS OF INFORMED PERSONS IN MATTERS TO BE ACTED UPON
INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS OTHER THAN THE ARRANGEMENT
ANNEX CARRANGEMENT AGREEMENT
(b)(c) Significant Corporate Events; Negotiations or Contacts. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
SPECIAL FACTORSBackground to the Arrangement
(e) Agreements Involving the Subject Companys Securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
SPECIAL FACTORSBackground to the Arrangement
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
SPECIAL FACTORSPurposes and Reasons for the Arrangement from the Perspective of the JLL Parties, the Management Parties and DSM
SPECIAL FACTORSPlans for Patheon after the Arrangement
SPECIAL FACTORSCompletion of the Arrangement
SPECIAL FACTORSCertain Effects of the Arrangement
SPECIAL FACTORSInterests of our Directors and Executive Officers in the Arrangement
SPECIAL FACTORSVoting Agreements
THE ARRANGEMENTPrincipal Steps of the Arrangement
THE ARRANGEMENT AGREEMENT
INTERESTS OF INFORMED PERSONS IN MATTERS TO BE ACTED UPON
INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS OTHER THAN THE ARRANGEMENT
ANNEX CARRANGEMENT AGREEMENT
Item 6. Purposes of the Transaction, and Plans or Proposals
(b) Use of Securities Acquired. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSCertain Effects of the Arrangement
SPECIAL FACTORSPlans for Patheon after the Arrangement
THE ARRANGEMENTPrincipal Steps of the Arrangement
ANNEX CARRANGEMENT AGREEMENT
(c)(1)(8) Plans. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
SPECIAL FACTORSBackground to the Arrangement
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
SPECIAL FACTORSPurposes and Reasons for the Arrangement from the Perspective of the JLL Parties, the Management Parties and DSM
SPECIAL FACTORSPlans for Patheon after the Arrangement
SPECIAL FACTORSContribution Agreement
SPECIAL FACTORSCompletion of the Arrangement
SPECIAL FACTORSCertain Effects of the Arrangement
SPECIAL FACTORSSources of Funds
THE ARRANGEMENTPrincipal Steps of the Arrangement
THE ARRANGEMENTRegulatory Law Matters and Securities Law Matters
INTERESTS OF INFORMED PERSONS IN MATTERS TO BE ACTED UPON
ANNEX CARRANGEMENT AGREEMENT
Item 7. Purposes, Alternatives, Reasons and Effects
(a) Purposes. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
SPECIAL FACTORSBackground to the Arrangement
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
SPECIAL FACTORSPurposes and Reasons for the Arrangement from the Perspective of the JLL Parties, the Management Parties and DSM
SPECIAL FACTORSPlans for Patheon after the Arrangement
SPECIAL FACTORSContribution Agreement
THE ARRANGEMENTPrincipal Steps of the Arrangement
(b) Alternatives. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSBackground to the Arrangement
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
SPECIAL FACTORSPurposes and Reasons for the Arrangement from the Perspective of the JLL Parties, the Management Parties and DSM
(c) Reasons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSBackground to the Arrangement
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
SPECIAL FACTORSPurposes and Reasons for the Arrangement from the Perspective of the JLL Parties, the Management Parties and DSM
SPECIAL FACTORSPlans for Patheon after the Arrangement
SPECIAL FACTORSContribution Agreement
SPECIAL FACTORSCertain Effects of the Arrangement
(d) Effects. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
SPECIAL FACTORSCertain Effects of the Arrangement
SPECIAL FACTORSPlans for Patheon After the Arrangement
SPECIAL FACTORSAgreements of Certain Persons with JLL Holdco and the Purchaser
SPECIAL FACTORSInterests of our Directors and Executive Officers in the Arrangement
THE ARRANGEMENTPrincipal Steps of the Arrangement
THE ARRANGEMENTRegulatory Law Matters and Securities Law Matters
THE ARRANGEMENTFees and Expenses
SPECIAL FACTORSCertain Tax Considerations
DISSENT RIGHTS
ANNEX CARRANGEMENT AGREEMENT
ANNEX HPLAN OF ARRANGEMENT
ANNEX IRIGHT TO DISSENTSECTION 190 OF THE CANADA BUSINESS CORPORATIONS ACT
ANNEX KINTERIM ORDER
Item 8. Fairness of the Transaction
(a)(b) Fairness; Factors Considered in Determining Fairness. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSBackground to the Arrangement
SPECIAL FACTORSPosition of the Independent Committee as to Fairness
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
SPECIAL FACTORSFormal Valuation and Fairness Opinion of BMO Capital Markets
SPECIAL FACTORSFairness Opinion of RBC
SPECIAL FACTORSPurposes and Reasons for the Arrangement from the Perspective of the JLL Parties, the Management Parties and DSM
SPECIAL FACTORSPosition of the JLL Parties and the Management Parties Regarding the Fairness of the Arrangement
WHERE YOU CAN FIND MORE INFORMATION
ANNEX DFORMAL VALUATION AND FAIRNESS OPINION OF BMO CAPITAL MARKETS
ANNEX EFAIRNESS OPINION OF RBC
(c) Approval of Security Holders. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
SPECIAL FACTORSPosition of the Independent Committee as to Fairness
GENERAL PROXY INFORMATIONHow a Vote is Passed
THE ARRANGEMENT AGREEMENTMutual Conditions
ANNEX CARRANGEMENT AGREEMENT
(d) Unaffiliated Representative. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSPosition of the Independent Committee as to Fairness
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
SPECIAL FACTORSFormal Valuation and Fairness Opinion of BMO Capital Markets
(e) Approval of Directors. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
SPECIAL FACTORSBackground to the Arrangement
SPECIAL FACTORSPosition of the Independent Committee as to Fairness
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
(f) | Other Offers. Not applicable. |
Item 9. Reports, Opinions, Appraisals and Negotiations
(a)(c) Report, Opinion or Appraisal; Preparer and Summary of the Report, Opinion or Appraisal; Availability of Documents. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSBackground to the Arrangement
SPECIAL FACTORSPosition of the Independent Committee as to Fairness
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
SPECIAL FACTORSFormal Valuation and Fairness Opinion of BMO Capital Markets
SPECIAL FACTORSFairness Opinion of RBC
SPECIAL FACTORSAdditional Disclosure Required by Schedule 13E-3Opinion of JLL Fund VIs Financial Advisor
WHERE YOU CAN FIND MORE INFORMATION
ANNEX DFORMAL VALUATION AND FAIRNESS OPINION OF BMO CAPITAL MARKETS
ANNEX EFAIRNESS OPINION OF RBC
ANNEX FOPINION OF JEFFERIES LLC
Item 10. Source and Amounts of Funds or Other Consideration
(a)(b), (d) Source of Funds; Conditions; Borrowed Funds. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSSource of Funds
SPECIAL FACTORSLimited Guarantees
SPECIAL FACTORSInterests of our Directors and Officers in the Arrangement
SPECIAL FACTORSAgreements of Certain Persons with JLL Holdco and the Purchaser
THE ARRANGEMENT AGREEMENTCovenants of the PurchaserFinancing
(c) Expenses. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
THE ARRANGEMENTFees and Expenses
THE ARRANGEMENT AGREEMENTExpense Reimbursement
Item 11. Interest in Securities of the Subject Company
(a) Securities Ownership. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSInterests of our Directors and Executive Officers in the Arrangement
INFORMATION CONCERNING PATHEON
INFORMATION CONCERNING THE JLL PARTIES, THE MANAGEMENT PARTIES AND DSM
INTERESTS OF INFORMED PERSONS IN MATTERS TO BE ACTED UPON
INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS OTHER THAN THE ARRANGEMENT
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
(b) Securities Transactions. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
INFORMATION CONCERNING PATHEONTransactions in Restricted Voting Shares
Item 12. The Solicitation or Recommendation
(d)(e) Intent to Tender or Vote in a Going-Private Transaction; Recommendations of Others. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
SPECIAL FACTORSReasons for the Recommendation
SPECIAL FACTORSRecommendation of the Independent Committee
SPECIAL FACTORSRecommendation of the Board
SPECIAL FACTORSPurposes and Reasons for the Arrangement from the Perspective of the JLL Parties, the Management Parties and DSM
SPECIAL FACTORSPosition of the JLL Parties and the Management Parties Regarding the Fairness of the Arrangement
SPECIAL FACTORSVoting Agreements
Item 13. Financial Statements
(a) Financial Information. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SELECTED HISTORICAL FINANCIAL DATA OF PATHEON INC.
WHERE YOU CAN FIND MORE INFORMATION
(b) | Pro Forma Information. Not applicable. |
Item 14. Persons/Assets, Retained, Employed, Compensated or Used
(a)(b) Solicitations or Recommendations; Employees and Corporate Assets. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT
THE ARRANGEMENTFees and Expenses
GENERAL PROXY INFORMATIONSolicitation of Proxies
Item 15. Additional Information
(b) Golden Parachute Compensation. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
SPECIAL FACTORSGolden Parachute Compensation
(c) Other Material Information. The entirety of the Proxy Statement, including all annexes thereto, is incorporated herein by reference.
Item 16. Exhibits
(a)(1) | Preliminary Proxy Statement of Patheon Inc., incorporated herein by reference to the Schedule 14A filed with the SEC on January 7, 2014 (the Proxy Statement). | |
(a)(2) | Letter to Shareholders of Patheon Inc., incorporated herein by reference to the Proxy Statement. | |
(a)(3) | Notice of Special Meeting of Shareholders of Patheon Inc., incorporated herein by reference to the Proxy Statement. | |
(a)(4) | Form of Preliminary Proxy Card, incorporated herein by reference to the Proxy Statement. | |
(a)(5) | Form of Letter of Transmittal, incorporated by reference to Annex L of the Proxy Statement. | |
(a)(6) | Press Release, dated November 19, 2013, incorporated by reference to the Schedule 14A filed by JLL Associates V (Patheon), L.P. with the SEC on November 19, 2013. | |
(a)(7) | Press Release, dated November 19, 2013, incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by Patheon Inc. with the SEC on November 19, 2013. | |
(b)(1)* | Commitment Letter, dated as of November 18, 2013, by and among UBS AG, Stamford Branch, UBS Securities LLC, JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC, Jefferies Finance LLC, KeyBank National Association and Morgan Stanley Senior Funding, Inc. and JLL/Delta Patheon Holdings, L.P. | |
(c)(1) | Formal Valuation and Fairness Opinion of BMO Nesbitt Burns Inc., dated November 18, 2013, incorporated by reference to Annex D of the Proxy Statement. |
(c)(2) | Fairness Opinion of RBC Dominion Securities Inc., dated November 18, 2013, incorporated by reference to Annex E of the Proxy Statement. | |
(c)(3) | Opinion of Jefferies LLC, dated November 17, 2013, incorporated by reference to Annex F of the Proxy Statement. | |
(c)(4)* | Presentation of BMO Nesbitt Burns Inc. to the Independent Committee and Board of Directors of Patheon Inc., dated November 18, 2013. | |
(c)(5)* | Discussion Materials of RBC Dominion Securities Inc. to the Board of Directors of Patheon Inc. and the Independent Committee of the Board of Directors of Patheon Inc., dated November 18, 2013. | |
(c)(6)* | Discussion Materials of Jefferies LLC to JLL Associates VI, L.P. as general partner of JLL Partners Fund VI, L.P., dated November 17, 2013. | |
(c)(7) | Presentation of BMO Nesbitt Burns Inc. to the Independent Committee and Board of Directors of Patheon Inc., dated October 16, 2013. | |
(c)(8) | Presentation of BMO Nesbitt Burns Inc. to the Independent Committee and Board of Directors of Patheon Inc., dated October 23, 2013. | |
(d)(1) | Arrangement Agreement, dated November 18, 2013, by and between Patheon Inc. and JLL/Delta Patheon Holdings, L.P., incorporated herein by reference to Annex C to the Proxy Statement. | |
(d)(2) | Plan of Arrangement under Section 192 of the Canada Business Corporations Act, incorporated by reference to Annex H to the Proxy Statement. | |
(d)(3) | Guarantee Letter, dated November 18, 2013, by and between Patheon Inc. and JLL Partners Fund VI, L.P., incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by Patheon Inc. with the SEC on November 19, 2013. | |
(d)(4) | Guarantee Letter, dated November 18, 2013, by and between Patheon Inc. and Koninklijke DSM N.V., incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by Patheon Inc. with the SEC on November 19, 2013. | |
(d)(5) | Equity Commitment Letter, dated November 18, 2013, by and among JLL Partners Fund VI, L.P., JLL Partners Fund V, L.P., JLL Associates V (Patheon), L.P., JLL Patheon Co-Investment Fund, L.P., JLL/Delta Patheon Holdings, L.P. and Patheon Inc., incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by Patheon Inc. with the SEC on November 19, 2013. | |
(d)(6) | Voting and Support Agreement, dated November 18, 2013, by and among Patheon Inc., JLL/Delta Patheon Holdings, L.P. and JLL Patheon Holdings, LLC. | |
(d)(7) | Form of Voting and Support Agreement by and among Patheon Inc., JLL/Delta Patheon Holdings, L.P. and the shareholders party thereto, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by Patheon Inc. with the SEC on November 19, 2013. | |
(d)(7)(i) | Voting and Support Agreement, dated November 18, 2013, by and among Patheon Inc., JLL/Delta Patheon Holdings, L.P. and James C. Mullen. | |
(d)(7)(ii) | Voting and Support Agreement, dated November 18, 2013, by and among Patheon Inc., JLL/Delta Patheon Holdings, L.P. and Michael E. Lytton and Meghan Lytton, jointly. | |
(d)(7)(iii) | Voting and Support Agreement, dated November 18, 2013, by and among Patheon Inc., JLL/Delta Patheon Holdings, L.P. and Brian G. Shaw. |
(d)(7)(iv) | Voting and Support Agreement, dated November 18, 2013, by and among Patheon Inc., JLL/Delta Patheon Holdings, L.P. and David E. Sutin. | |
(d)(7)(v) | Voting and Support Agreement, dated November 18, 2013, by and among Patheon Inc., JLL/Delta Patheon Holdings, L.P. and Joaquin B. Viso and Olga Lizardi, jointly. | |
(d)(7)(vi) | Voting and Support Agreement, dated November 18, 2013, by and among Patheon Inc., JLL/Delta Patheon Holdings, L.P. and DJW Investment Holdings Limited. | |
(d)(7)(vii) | Voting and Support Agreement, dated November 18, 2013, by and among Patheon Inc., JLL/Delta Patheon Holdings, L.P. and Derek J. Watchorn. | |
(d)(8)* | Management Agreement, dated as of November 18, 2013, by and among JLL Patheon Co-Investment Fund, L.P., JLL/Delta Patheon Holdings, L.P. and James C. Mullen. | |
(d)(9)* | Option Waiver and Termination Agreement, dated as of November 18, 2013, by and between Patheon Inc. and James C. Mullen. | |
(d)(10)* | Interim Shareholders Agreement, dated as of November 18, 2013, by and among JLL/Delta Patheon GP, Ltd., JLL Patheon Co-Investment Fund, L.P., Koninklijke DSM N.V. and, solely for the purposes of Sections 1.06 and 1.08 thereof, JLL Partners Fund VI, L.P. | |
(d)(11)* | Contribution Agreement, dated as of November 18, 2013, by and among JLL Patheon Co-Investment Fund, L.P., Koninklijke DSM N.V. and JLL/Delta Patheon Holdings, L.P. | |
(f)(1) | Section 190 of the Canada Business Corporations Act, incorporated herein by reference to Annex I of the Proxy Statement. | |
(g) | None. | |
* Previously Filed by this Transaction Statement on December 5, 2013. |
SIGNATURE
After due inquiry and to the best of each of the undersigneds knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated as of January 7, 2014
PATHEON INC. | ||
By: | /s/ Michael E. Lytton | |
Name: | Michael E. Lytton | |
Title: | Executive Vice President, Corporate Development and Strategy, and General Counsel | |
JLL/DELTA PATHEON HOLDINGS, L.P. | ||
By: JLL/DELTA PATHEON GP, LTD., its general partner | ||
By: | /s/ Michel Lagarde | |
Name: | Michel Lagarde | |
Title: | Authorized Person | |
JLL/DELTA PATHEON GP, LTD. | ||
By: | /s/ Michel Lagarde | |
Name: | Michel Lagarde | |
Title: | Authorized Person | |
JLL PATHEON CO-INVESTMENT FUND, L.P. | ||
By: JLL PARTNERS FUND VI (PATHEON), L.P. its general partner | ||
By: JLL ASSOCIATES VI (PATHEON), L.P. its general partner | ||
By: JLL ASSOCIATES G.P. V (PATHEON), LTD. its general partner | ||
By: | /s/ Paul S. Levy | |
Name: | Paul S. Levy | |
Title: | Authorized Person |
JLL PATHEON HOLDINGS, COÖPERATIEF, U.A. | ||
By: | /s/ Daniel Agroskin | |
Name: | Daniel Agroskin | |
Title: | Authorized Person | |
JLL PATHEON HOLDINGS, LLC | ||
By: | /s/ Daniel Agroskin | |
Name: | Daniel Agroskin | |
Title: | Authorized Person | |
JLL PARTNERS FUND V (PATHEON), L.P. | ||
By: JLL ASSOCIATES V (PATHEON), L.P. its general partner | ||
By: JLL ASSOCIATES G.P. V (PATHEON), LTD. its general partner | ||
By: | /s/ Paul S. Levy | |
Name: | Paul S. Levy | |
Title: | Authorized Person | |
JLL ASSOCIATES V (PATHEON), L.P. | ||
By: JLL ASSOCIATES G.P. V (PATHEON), LTD. its general partner | ||
By: | /s/ Paul S. Levy | |
Name: | Paul S. Levy | |
Title: | Authorized Person | |
JLL ASSOCIATES G.P. V (PATHEON), LTD. | ||
By: | /s/ Paul S. Levy | |
Name: | Paul S. Levy | |
Title: | Authorized Person |
JLL PARTNERS FUND VI, L.P. | ||
By: JLL ASSOCIATES VI, L.P. its general partner | ||
By: JLL ASSOCIATES G.P. VI, L.L.C. its general partner | ||
By: | /s/ Paul S. Levy | |
Name: | Paul S. Levy | |
Title: | Managing Member | |
JLL PARTNERS FUND V, L.P. | ||
By: JLL ASSOCIATES V, L.P. its general partner | ||
By: JLL ASSOCIATES G.P. V, L.L.C. its general partner | ||
By: | /s/ Paul S. Levy | |
Name: | Paul S. Levy | |
Title: | Managing Member | |
JLL PARTNERS FUND VI (PATHEON), L.P. | ||
By: JLL ASSOCIATES VI (PATHEON), L.P. its general partner | ||
By: JLL ASSOCIATES G.P. V (PATHEON), LTD. its general partner | ||
By: | /s/ Paul S. Levy | |
Name: | Paul S. Levy | |
Title: | Authorized Person | |
JLL PARTNERS FUND V (NEW PATHEON), L.P. | ||
By: JLL ASSOCIATES V (NEW PATHEON), L.P. its general partner | ||
By: JLL ASSOCIATES G.P. V (PATHEON), LTD. its general partner | ||
By: | /s/ Paul S. Levy | |
Name: | Paul S. Levy | |
Title: | Authorized Person | |
JLL/DELTA CANADA INC. | ||
By: | /s/ Michel Lagarde | |
Name: | Michel Lagarde | |
Title: | Authorized Person |
KONINKLIJKE DSM N.V. | ||
By: | /s/ Hugh C. Welsh | |
Name: | Hugh C. Welsh | |
Title: | President, DSM North America | |
JAMES C. MULLEN | ||
/s/ James C. Mullen | ||
MICHAEL E. LYTTON | ||
/s/ Michael E. Lytton | ||
STUART GRANT | ||
/s/ Stuart Grant |
Exhibit (c)(7)
DRAFT: For discussion purposes only Not to be distributed to third parties without consent of BMO
Presentation to the Special Committee
Preliminary Perspectives
October 16, 2013
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Situation Overview
? BMO Nesbitt Burns Inc. (BMO or BMO Capital Markets) understands that Patheon Inc. (Patheon or the Company) was advised in July 2013 by the Companys controlling shareholder, JLL Partners, Inc. (JLL), that a buying group which includes a fund or funds under common control with JLL and one or more affiliates of Royal DSM B.V. (DSM) (collectively, the Offeror) is considering a transaction that would include the acquisition of 100% of the Companys issued and outstanding equity securities by way of a plan of arrangement or alternative transaction structure (the Transaction) JLL currently holds 56% of the issued and outstanding restricted voting shares (RVS) and all of the special voting Class I, preferred shares, Series D (Preferred Shares) of the Company
BMO further understands that on September 16, 2013, JLL submitted a non-binding proposal (the Proposal) to the Companys committee of independent directors (the Special Committee) proposing the Transaction at a price of US$8.25 per RVS in cash (the Offer) The Offer represented a 32% premium to the Companys closing price at September 16, 2013 and a 43% premium to the Companys three month VWAP on the TSX
BMO understands that JLL advised the Special Committee that JLL is solely interested in pursuing the Transaction contemplated by its Offer and currently is not willing to consider any other transaction
BMO Capital Markets has been retained by the Special Committee as independent valuator to prepare and deliver to the Special Committee: a) a confidential preliminary analysis, which is being provided pursuant to this document; b) a formal valuation of the Companys RVS and Preferred Shares in accordance with the standards and requirements of MI 61-101, the standards for formal valuations in the Dealer Member Rules of the Investment Industry Regulatory Organization of Canada; and any other applicable rules, regulations and standards (the Valuation); and c) an opinion as to whether the consideration payable pursuant to the Transaction is fair, from a financial point of view, to the holders of RVS and Preferred Shares, other than JLL and any other holders that would customarily be excluded from such an opinion (the Opinion)
This document does not constitute an Opinion or a Valuation and is being provided solely to assist the Special Committee in understanding a preliminary assessment and analysis that might form the basis for the Valuation
PROJECT CALCULUS 1
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Situation Overview (Contd)
In preparing this presentation, we have relied upon the information provided to us by the Company, discussions with representatives of the Company and publicly available information on the Company, the Offer and potential bidders BMO was provided access to the Companys secondary virtual data room on September 18, 2013 and the Companys original virtual data room on September 24, 2013 BMO has had a number of calls and meetings with the Company to request additional information and to discuss the information provided
We have not attempted to independently verify the accuracy or completeness of any information or representations presented to us by the Company
The analysis herein is based upon the securities markets, economic and general business and financial conditions prevailing as at this date, any of which may vary considerably in the future
The views summarized in this presentation are made based on information available as at October 11, 2013 and are based on the closing share price of the Company and comparable companies as at October 11, 2013
PROJECT CALCULUS 2
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Assumptions and Limitations
With your approval and agreement, BMO Capital Markets has relied upon and assumed, among other things:
The completeness, accuracy and fair presentation of all financial and other information (the Information) obtained by us from public sources or provided to us by the Company That all forecasts, projections, estimates and budgets related to the Company are reasonable in the circumstances and consistent with industry practices That all forecasts, projections, estimates and budgets reflect the best currently available information and estimates, assumptions and judgments as to the matters covered thereby That there has been no material change in the financial condition, assets, liabilities, business, operations or prospects of the Company That there are no plans or proposals that could reasonably be expected to have a material effect on the financial condition, assets, liabilities, prospects or affairs of the Company That there are no circumstances or developments that could reasonably be expected to have a material effect on the financial condition, assets, liabilities, prospects or affairs of the Company That there are no actions, suits, proceedings or inquiries pending or threatened which may in any way materially adversely affect the Company The provision of the Valuation and the Opinion will be subject to, among other things, the receipt of a letter of representation to be provided by the Senior Officers of the Company as to certain factual matters and the completeness and accuracy of the Information upon which the Valuation and the Opinion will be based
PROJECT CALCULUS 3
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Scope of Review In connection with rendering these perspectives, we have reviewed and relied upon, or carried out, among other things, the following: Certain internal financial, operating, corporate and other information prepared or provided by or on behalf of the Company, concerning the business operations, assets, liabilities and prospects of the Company and the Transaction Internal management forecasts, development and operating projections, estimates and budgets prepared or provided by or on behalf of the Company Discussions with management of the Company relating to the Companys current business plan, business operations, financial condition, prospects and the Transaction, including with respect to assets to be acquired from DSM BMO understands that a third party consulting firm has been engaged to conduct an analysis of potential synergies that will accrue to the pro forma entity upon completion of the Transaction BMO has not been provided a written copy of such analysis and has had to rely on discussions with Companys management and JLL to estimate the potential cost synergies, including timing and implementation costs provided in this analysis Public information relating to the business and financial condition of the Company Public information with respect to selected public companies we considered relevant Public information with respect to selected precedent transactions we considered relevant Various equity research reports and industry sources we considered relevant Such other information, investigations, analyses and discussions (including discussions with the management of the Company, the Companys external legal counsel, and other third parties) as we considered necessary or appropriate in the circumstances PROJECT CALCULUS 4
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Patheon Business Overview Business Overview Products and Services Provider of pharmaceutical development and Contract Manufacturing Pharmaceutical Development Banner Life Sciences commercial manufacturing outsourcing services Outsourcing (CMO) Services (PDS) (Soft-Gel Drug Delivery) (Banner) for both prescription (Rx) and over-the-counter (OTC) drugs Manufactures various sterile, Offers a broad range of Capabilities include solid, conventional and development services across proprietary soft-gel Serves approximately 300 clients, including 19 specialized dosage forms approximately 40 different formulations of the 20 largest pharmaceutical companies, 8 Also offers specialized dosage forms Offers over 70 products of the top 10 biotech companies, and 8 of the capabilities in high potency, Supports customers across across OTC, Rx and 10 largest specialty pharmaceutical companies controlled substance and various stages of drug nutritionals Operates 14 facilities globally Employs approximately people modified release products development process 6,000 Geographic Footprint Segmentation Toronto, Canada Whitby, Canada Revenue by Geography (YTD Q213) Revenue by Business Segment (2013E) (PDS, CMO solids) (PDS, CMO solids) Swindon, England (PDS, CMO sterile) (US$467.4 mm) (US$1.1 bn) Tilburg, Durham, Milton Park, England Netherlands Mexico City, NC (HQ) (PDS development) Mexico Tokyo, Japan Monza, Italy Revenue by Customer (YTD Q213) Revenue by Product (YTD Q213) High Point, (PDS, CMO solid/sterile) NC Legend Manatí, Puerto Rico Ferentino, Italy Legacy (PDS, CMO sterile) (CMO solids) Banner Cincinnati, USA Bourgoin, France (PDS, CMO solid/sterile) (PDS, CMO solids) Source: Company filings, Company confidential information package and Company management presentation. PROJECT CALCULUS 6
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Recent Financial Developments
Introduced company-wide in 2011 to streamline PF 2013E Adjusted EBITDA Bridge operations and boost margins
US$ millions
Assessing operations across all business segments to
Operational eliminate bottlenecks while significantly reducing costs Balance 137.8 147.0 141.4 149.4 149.6 149.6 156.0 157.8 168.8 182.6 185.8 177.8 177.8
Excellence through elimination of redundant labour and overhead Change 22.5 9.3 (5.7) 8.0 0.3 6.4 1.8 11.0 13.7 3.2 (8.0)
Initiatives costs
(OE) Focused site missions and investment in state-of-the-art 177.8 capabilities has freed up 40-50% of capacity to support 149.6 future growth initiatives
115.2
$29.9mm of cost savings realized in FY2012
Completed on December 14, 2012 for total cash consideration of approximately US$269 mm 10.9x EV / LTM EBITDA
Estimated $12.5 mm of synergies, 9.8% of PF CMO PDS OE PDS
+
EBITDA EBITDA Banner Bonus Income EBITDA Savings EBITDA Savings (Banner) Bonus Reduction Shutdown Shutdown 2013E
2012A Other 2013EIntegration Banner CMO OE Caguas (Patheon) Normalized
In connection with the acquisition, the Company Adjusted Adjusted Synergies Olds Site Site PF Adjusted completed a refinancing, including: Banner
Banner US$660 mm senior secured facilities Organic / Operational Efficiencies Pro Forma
Arranged
Acquisition (US$575 mm Secured Term Loan and US$85 mm Secured Credit Facility) Completed US$30 mm transferable rights offering at
C$3.19 per share (backstopped by JLL) Reported Pro Forma
EBITDA EBITDA
Banner provides the Company with access to a portfolio of 60+ soft gel products, 7 proprietary technologies and extensive pipeline of 27 products Increases capabilities / scale in complex dosage formats
Source: Company filings, Financial Forecast
Financial Forecast Adjusted EBITDA incorporates the Banner acquisition, in addition to savings from various OE initiatives across all business segments
PROJECT CALCULUS 7
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Consolidated Financial Perspectives
Both historical figures and Financial Forecast are shown pro forma the acquisition of Banner; corporate expenses allocated to segments pro-rata revenue
PF Revenue Growth (31-Oct Year End) PF Adjusted EBITDA Growth (31-Oct Year End)
(US$ millions)
CMO PDS Banner (US$ millions)
CAGR 10A-13E 13E-17E CMO PDS Banner Margin
CAGR 10A-13E 13E-17E
CMO 6.3% 6.4% CMO 24.1% 13.0% 20.8%
PDS 5.3% 7.0% $1,376 19.9%
PDS 4.4% 11.1% 18.9% Banner 2.4% 7.8% $1,295 Banner 6.5% 13.9% 17.8% $1,218 $287
Total 5.2% 6.8% $1,144 Total 15.2% 12.7% 16.8% $257
344 49 $1,057 322 $230 $1,020 $961 277 299 12.8% 43 $909 $204 269 255 182 193 11.4% 11.3% 38 57
EBITDA $178
261 171 33 52 237 162 Revenue 138 147 29 48 127 44
126 $116 $115 37
Adjusted $110
24 17 15
792 840 181
705 747 21 26 162
613 655 33 144 545 573 127
111
71 74
58
FY2010A FY2011A FY2012A PF FY2014E FY2015E FY2016E FY2017E FY2010A FY2011A FY2012A PF FY2014E FY2015E FY2016E FY2017E FY2013E FY2013E
Other Key Metrics
Capex (1) $48.8 $44.5 $48.5 $49.2 $53.1 $56.3 $59.7 $63.2 Capex / Revenue 5.4% 4.6% 4.8% 4.7% 4.6% 4.6% 4.6% 4.6%
Source: Company data, Financial Forecast
Note: Historical data shown PF Banner as per 2.1.4 Banner_Historical PL.xlsx; Corporate expenses allocated between CMO, PDS and Banner based on revenue contribution.
Meaningful revenue growth expected EBITDA growth and margin expansion to be driven by in all business segments Operational Excellence and Banner acquisition
PROJECT CALCULUS 8
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO RVS Price & Capitalization Price & Volume Analysis Summary Statistics Volume Price Peer Group (Indexed) Capitalization(1) $10.00 Reports Q3/13 results; adjusted 5 EBITDA of $41.0 mm vs. consensus Current At Offer of $41.4 mm JLL Offer Price (US$8.25 / C$8.57) RVS Price (C$ / sh) $6.13 $8.57 Reports Q2/13 results; adjusted RVS Price (1.0386x) (US$ / sh) $5.90 $8.25 EBITDA of $34.4 mm, more than (2) $8.00 double of Q2/12 4 F.D. Shares (mm) 146.9 148.3 JLL offer at US$2.00 per share Reports Q1/13 results; adjusted F.D. Market Cap (US$ mm) $867 $1,224 EBITDA of $19.8 mm compared to Directors advise shareholders to ($1.9) mm in Q1/12 Add: Face Value of Debt (US$ mm) 621 621 reject the JLL offer (3) Add: Pref. Shares (US$ mm) Non-binding proposal from Lonza $ ) Group AG at US$3.55 per share Reports F2012 results; adjusted $6.00 EBITDA of $71.1 mm, an increase of 3 Add: Fair Value of FX Liab. (US$ mm) 3 3 (C 7.1% from prior FY Volume Add: AT Pension Liability (US$ mm) 29 29 Price Announces acquisition of Banner Pharmacaps for US$255 mm Less: Cash (US$ mm) (41) (41)
(4) RVS Less: Investments (US$ mm) (9) (9) $4.00 JLL takes up 33.9 mm shares of Stock continued to decline due to 2 (millions) Patheon slow implementation of growth Enterprise Value (US$ mm) $1,470 $1,827 intiatives and continued restruturing costs Leverage(5) Debt / 14E EBITDA (ratio) 3.6x Share price has Net Debt / 14E EBITDA (ratio) 3.4x $2.00 1 Lonza Group withdrawls proposal significantly outperformed due to new managements Market Data (Exchange: Toronto) execution of Operational Announces independent valuation of Appoints Excellence Intiative plans 52-Week High (C$ / sh) $6.80 US$4.20 to US$5.00 per share James C. Mullen as CEO (C$5.29 to C$6.30) 52-Week Low (C$ / sh) $3.00 20-Day VWAP (C$ / sh) $6.38 11-Oct-08 11-Oct-09 11-Oct-10 11-Oct-11 11-Oct-12 11-Oct-13 90-Day VWAP (C$ / sh) $6.12 1-Year Avg. Daily Vol (k) 45 Actual Adjusted EBITDA Margins Source: Company data, Company filings, FactSet and Select Street Research Note: Peer Group consists of Albany Molecular Research, Biocon, Cambrex, Cangene, Charles River, Covance, ICON, Jubliant, Lonza, Parexel, Quintiles and 18.1% WuXi. 17.1% 16.3% 17.0% 15.7% 14.5% 16.1% 15.4% 1. Balance sheet as at 31-Jul-13 13.5% 12.7% 12.1% 2. Treasury stock method applied 10.4% 8.7% 9.1% 9.3% 3. Preferred Shares are non-transferrable, have no dividend and a wind up value 8.2% 7.6% 8.0% 6.0% 6.0% of C$0.0001 4. 18% interest in two Italian entities known as BSP Pharmaceuticals, as well as (1.2%) immaterial interests in certain U.S. retirement plans 5. Based on Street Consensus FY2014E EBITDA of US$172.8 mm, as CY2014E Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2009 2010 2011 2012 2013 is not available PROJECT CALCULUS 9
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Total Return Relative Performance
2011 2012 2013 YTD
CRO CMO
Cambrex 39% Patheon 167% Albany Molecular 139%
S&P 500Health Care 13% Albany Molecular 80% Wuxi PharmaTech 85% Parexel International (2%) ICON 62% Patheon 76%
S&P/TSX (11%) Cambrex 58% Parexel International 73% Covance (11%) Parexel International 43% Lonza 56% ICON (22%) Wuxi PharmaTech 43% Covance 48%
Charles River (23%) Charles River 37% ICON 43%
Lonza (24%) Covance 26% S&P 500Health Care 30% Wuxi PharmaTech (32%) Jubilant Life Sciences 23% Cambrex 30% Cangene (36%) S&P 500Health Care 18% Cangene 30% Biocon S&P/TSX 10% Charles River 22%
(45%)
Biocon 3% Biocon 8%
Patheon (46%)
Cangene (4%) S&P/TSX 2%
Jubilant Life Sciences (46%)
Lonza (5%) Jubilant Life Sciences (68%)
Albany Molecular (48%)
Source: FactSet
Note: Total return analysis includes impact of dividends paid; returns shown in US$.
Patheon has outperformed its peers over the last two years on the back of Operational Excellence initiatives and the Banner acquisition
PROJECT CALCULUS 10
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Research Analyst Perspectives Research Analysts Price Targets Current Research Analyst Themes Broker Date Target Price Business Transformation Gaining Momentum TD Newcrest 09-Sep-13 $8.00 Continued momentum highlighted by strong Q3/13 revenue and adjusted EBITDA performance Euro Pacific Canada 06-Sep-13 7.50 Justification for trading multiple expansion with growth and profitability performance expected to be in RBC Capital Markets 05-Sep-13 7.00 line with CRO peer group Median (C$) $7.50 Expectations of Continued Margin Expansion Current Share Price (C$) $6.13 Looking forward, opportunities for significant cost savings, contributed from Banner M&A synergies and Premium (Discount) to Share Price 22.3% the wind down of certain facilities in Alberta and Puerto Rico Sell Hold Buy Further upside exists as management continues to integrate and optimize Banner Positive Industry Trends to Continue Well positioned to take advantage of increased R&D spending as global economic recovery continues Both the CMO and CRO industries are performing well in the current macro-environment Large pharmaceutical companies continue to increase outsourcing of product development and manufacturing processes Target Price Methodology Peer Research Analysis Sell Hold Buy 3 1 12 12 23 3 15 16 17 19 19 15 2 22% 11% (4%) 165% 7% 29% 12% 14% 21% 6% 9% (6%) 4% 25% 8% 7% 6% 6% 5% 11% 13% 17% 27% 33% 27% 31% 35% 42% 63% 100% 100% 73% 100% 75% 75% 73% 67% 67% 63% 59% 53% 26% 13% Life ICON River Patheon Albany Molecular Research Wuxi PharmaTech Jubilant Sciences Biocon Cambrex Parexel International Quintiles Transnational Holdings Covance Charles Laboratories Lonza Cangene Source: FactSet and select Street Research Number of Research Analysts in Coverage Universe Note: Total number of research analysts include brokers with unknown ratings. Target Price Premium / (Discount) to Current Stock Price PROJECT CALCULUS 11
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Ownership Summary
Shareholder Registry Holdings by Investor Class
Investor Information Current Holdings Investor Name Country Style WAC Basic
(USD) (mm) (%)
Top Strategic & Insider
JLL Partners 78.5 55.7% Joaquin Viso 11.7 8.3% James Mullen 2.3 1.6% Others 0.8 0.6%
Top 10 Institutions
CI Investments Canada GARP $3.86 10.7 7.6% OppenheimerFunds United States Growth 3.64 2.6 1.8%
TDAM USA Canada Yield 4.29 2.0 1.4% Source: FactSet and Company filings
Hesperian Capital Management Canada Growth 3.96 1.7 1.2% Altrinsic Global Advisors LLC United States Value 4.26 1.4 1.0%
Fiera Capital Corp. Canada GARP 4.92 1.2 0.9% Institutional Holdings by Country AGF Investments Canada Growth 3.66 0.3 0.2% Dimensional Fund Advisors United States Value 2.42 0.1 0.1% AXA Rosenberg Investment Management Canada GARP 3.66 0.0 0.0% Picton Mahoney Asset Management Canada Yield 3.60 0.0 0.0% Other Identified Institutions 0.0 0.0%
Summary
Strategic & Insider 93.3 66.2% Institutional Holders 20.1 14.3% Unidentified Institutional & Retail 27.5 19.5%
Total Basic Shares Outstanding 140.9 100.0%
Options 11.0
Total F.D. Shares Outstanding F.D. ITM Shares Outstanding of 146.9 Using Treasury Method 151.9
Source: FactSet and Company filings
Source: FactSet and Company filings Note: Weighted average cost base (WAC) estimated based on quarterly position changes and average prices since 31-Dec-00; directional arrows indicate change
Note: United Kingdom holds 0.3% of institutional holdings in holder position over most recent quarter. F.D. shares outstanding does not assume use of treasury method.
66% of Patheons stock is controlled by JLL and other Insiders
PROJECT CALCULUS 12
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Comparable Trading Performance Over Time
Median Consensus Average EV / NTM EBITDA
Patheon CMO Peer Average CRO Peer Average
16.0x
14.0x
12.0x
10.9x
10.0x
8.7x
8.0x 7.5x
6.0x
4.0x
2.0x
31-Oct-08 30-Apr-09 31-Oct-09 30-Apr-10 31-Oct-10 30-Apr-11 31-Oct-11 30-Apr-12 31-Oct-12 30-Apr-13
Source: FactSet
Note: Estimates taken monthly and based on Street Consensus; CMO Peer Average consists of the average multiple of Albany Molecular Research, Biocon, Cambrex, Cangene, Jubilant Life Sciences and Lonza Group; CRO Peer Average consists of the average multiple of Charles River Laboratories, Covance, Quintiles, Parexel, ICON and WuXi
Patheon has historically traded at a discount to its CMO and CRO peers; and now trades between its CMO and CRO peers
PROJECT CALCULUS 13
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile
Financial Forecast Review and Benchmarking
Consolidated Forecast CMO Forecast PDS Forecast Banner Forecast Other Considerations
Financial Perspectives
Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Background to the Financial Forecast
BMO was provided a financial forecast (the Financial Forecast) Financial Forecast Assumptions from the Company, which has formed the basis for these
perspectives Segment build-up (CMO, PDS, Banner and Corporate)
General Four year forecast period, FY2014E FY2017E (the Forecast
BMOs review has Period) As part of of the Financial Forecast, BMO participated in detailed discussions with certain members of the Segment revenue is based on a detailed customer-by-customer Companys management team, including: product build-up for FY2014E
Revenue
FY2015E FY2017E based on estimated industry growth rates
A guided review of the Financial Forecast design on Friday and segment market share September 20, 2013;
A discussion focused on Managements key Financial Standard product costing model with various operating efficiencies
COGS implied throughout the Forecast Period
Forecast assumptions on Tuesday September 24, 2013; A formal in-person Management Presentation on
Wednesday October 2, 2013, which included discussions on Based on historical levels and assumed to be a fixed percentage
SG&A of sales throughout the Forecast Period
Financial Forecast assumptions; and
Discussions focused on tax and other Financial Forecast Based on historical levels of capital intensity
assumptions on October 4, 2013 and October 8, 2013 Maintenance vs. growth expenditures based on historical Capex levels
In addition to discussions with the Companys management, Growth capex relates to new products; no acquisitions
contemplated in Financial Forecast
BMO has also considered the Financial Forecast from the Cash tax rate of 20% through the Forecast Period perspective of publicly traded companies with similar operating
characteristics and third party industry benchmarking research Tax Weighted average of statutory tax rates for Companys profitable and taxable entities (incorporates NOLs / tax assets and other tax shields)
Net
Fixed percentage of revenue (14%) based on historical levels, pro
Working forma Banner acquisition
Capital
PROJECT CALCULUS 15
For discussion purposes onlyNot to be distributed to third parties without consent of BMO Consolidated Financial Forecast Summary Acutal (Pro Forma) Pro Forma Projected CAGR (US$ millions) FY2010A FY2011A FY2012A FY2013E FY2014E FY2015E FY2016E FY2017E 10A-13E 13E-17E CMO Revenue $545 $573 $613 $655 $705 $747 $792 $840 6.3% 6.4% PDS Revenue $126 $127 $138 $147 $162 $171 $182 $193 5.3% 7.0% Banner Revenue $237 $261 $269 $255 $277 $299 $322 $344 2.4% 7.8% Consolidated Revenue $909 $961 $1,020 $1,057 $1,144 $1,218 $1,295 $1,376 5.2% 6.8% % Growth 5.7% 6.2% 3.5% 8.3% 6.5% 6.4% 6.2% Cost of Goods Sold (excl. D&A) Growth rate Raw Materials $220 $233 $252 $247 $268 $287 $306 $325 in-line with Inventory/API Provisions $8 $11 $12 $10 $10 $11 $12 $13 industry Direct Labor $103 $111 $123 $117 $127 $135 $143 $152 forecasts Factory Overhead $209 $228 $233 $214 $225 $234 $243 $252 Quality $76 $82 $86 $83 $88 $92 $96 $101 Technical Affairs / PDSS $46 $50 $50 $48 $51 $53 $56 $60 Total Cost of Goods Sold (excl. D&A) $660 $713 $756 $719 $769 $812 $856 $902 2.9% 5.8% COGS (% of revenue) 72.6% 74.3% 74.1% 68.1% 67.2% 66.6% 66.1% 65.6% Gross Margin (excl. D&A) $249 $247 $265 $337 $375 $406 $439 $474 10.7% 8.9% Gross Margin (%) 27.4% 25.7% 25.9% 31.9% 32.8% 33.4% 33.9% 34.4% SG&A (excl. D&A and stock comp) $122 $128 $136 $145 $156 $160 $165 $169 5.8% 4.0% SG&A (% of revenue) 13.5% 13.3% 13.3% 13.7% 13.6% 13.2% 12.7% 12.3% R&D $12 $15 $14 $14 $15 $16 $17 $18 Other Expense (Income) ($2) ($5) $0 $0 Adj. EBITDA $116 $110 $115 $178 $204 $230 $257 $287 15.2% 12.7% % Margin 12.8% 11.4% 11.3% 16.8% 17.8% 18.9% 19.9% 20.8% Total D&A $64 $63 $50 $52 $52 $55 $58 $62 Adj. EBITDA margins are Adj. EBIT $52 $46 $65 $126 $152 $175 $199 $225 comparatively higher % Margin 5.7% 4.8% 6.4% 12.0% 13.3% 14.4% 15.4% 16.3% versus historicals and peer margins Capital Expenditure Growth $20 $23 $26 $27 $29 $31 $33 $35 Maintenance $28 $21 $23 $22 $24 $25 $26 $28 Total $49 $44 $49 $49 $53 $56 $60 $63 0.3% 6.5% Capex (% of sales) 5.4% 4.6% 4.8% 4.7% 4.6% 4.6% 4.6% 4.6% Growth Capex (% of capex) 41.8% 52.2% 53.5% 55.2% 55.4% 55.6% 55.7% 55.9% NWC (% of sales) 6.6% 9.0% 6.7% 14.0% 14.0% 14.0% 14.0% 14.0% Source: Financial Forecast Note: Historical data shown PF Banner as per 2.1.4 Banner_Historical PL.xlsx; 2013E shown PF impact from OE savings, site closures, unrealized Banner synergies and bonus reversals; Corporate expenses allocated between CMO, PDS and Banner based on revenue contribution. EBITDA margins expanding from 17% to 21%, with capex increasing to $63 million by FY2017E PROJECT CALCULUS 16
cussion purposes onlyNot to be distributed to third parties without consent of BMO Financial Forecast Versus Street Estimates Revenue (31-Oct Year End) Adjusted EBITDA (31-Oct Year End) (US$ millions) (US$ millions) Financial Forecast Street Consensus Financial Forecast Street Consensus $1,218 Financial Forecast Margin Street Margin $1,144 $230 $1,122 $204 $1,057 $1,014 $178 $173 US$149 mm $141 18.9% 17.8% EBITDA 16.8% Margin at 14.2% 15.4% US$149 mm 13.9% n.a. n.a. PF FY2014E FY2015E PF FY2014E FY2015E FY2013E FY2013E Source: Financial Forecast, select Street research Patheons Financial Forecast is relatively in line with street estimates at the revenue level, but more aggressive with respect to EBITDA growth and margin PROJECT CALCULUS 17
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Industry Perspectives
Benchmarking Industry Growth Statistics
Financial Forecast 2012A2017E Industry Growth Forecasts
Third Party Research Forecasts Revenue CAGR By Segment Patheon Management Presentation
Revenue EBITDA CMO
19.7% 16.9% 25.9% Patheon CMO
Revenue CAGR (12A-17E): 6.5% PDS CRO
Patheon Banner Revenue
CAGR (12A-17E): 5.1% Patheon PDS Revenue CAGR (12A-17E): 6.8%
11.0%
9.0%
6.8% 7.0% 7.0% 6.6%
6.5% 6.0% 6.3% 6.1% 5.5% 6.3%
5.1%
3.4%
CMO PDS Banner 2012A2017E 2012A2016E 2012A2014E 2010A2018E 2012A2017E 2011A 2016E 2011A2016E 2012A2017E 2012A2016E 2013E2016E 2010A-2015E CMO PDS U.S. Soft-Gel GBI Research Frost & Sullivan PharmSource PharmSource Jefferies Parexel Sterne Agee Wells Fargo
Industry Competitive Landscape
Contract Manufacturing Outsourcing Pharmaceutical Development Services Soft-Gel Drug Delivery
32%
11% All 10% Others
All
Others 5% 73% 9% All 16%
79% Others
5% 41%
8%
11%
$14B Market Size (2012A) $2B Market Size (2012A) $6B Market Size (U.S.) (2012A)
Sources: Company filings; Company confidential information package; Company management presentation; Company market intelligence presentation; Global Pharmaceutical Contract Manufacturing Market, Frost & Sullivan, August 2013; GBI Research, April 2012; Jefferies equity research, March 2013; Wells Fargo equity research, September 2011; Sterne Agee equity research, June 2013; and PAREXEL International Investor Day Presentation, June 2013.
PROJECT CALCULUS 18
FT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Business Mix Perspectives US$ millions PF 2010A PF 2013E 2017E FY2010A$909 FY2013E$1,057 FY2017E$1,376 26% 24% 25% CMO PDS 60% 62% 61% Revenue Banner 14% 14% 14% FY2010A$116 FY2013E$178 FY2017E$287 16% 17% EBITDA 21% CMO PDS 51% 20% Banner 21% 63% 63% Adjusted 28% Source: Company data, Financial Forecast Note: 2010A is shown PF Banner acquisition. Patheons business mix is forecasted to remain relatively stable during the Forecast Period PROJECT CALCULUS 19
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile
Financial Forecast Review and Benchmarking
Consolidated Forecast CMO Forecast PDS Forecast Banner Forecast Other Considerations
Financial Perspectives
Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO CMO Financial Forecast Themes Favorable Global Diversification Strong Visibility / Long Contract Cycle 300+ PRODUCTS ACROSS 125 CUSTOMERS MINIMAL CONCENTRATION ~97% OF 2014 FORECAST UNDER CONTRACT Revenue by Product (YTD 2Q13) Revenue by Customer(1) (2014E) Revenue Under Contract 97% 80% 65% 2014E 2015E 2016E Source: Company data 1. 2014E customer details for revenue under contract Source: Data per management estimates provided on October 1, 2013 Customer base spanning large pharma to emerging biotech Good visibility to short-term revenue and gross margin forecast Comprehensive Manufacturing Capabilities Product Mix Provides Sustainable Gross Margins SPECIALIZED CAPABILITIES PROVIDE COMPETITIVE ADVANTAGE DOSAGE FORMS WEIGHTED TOWARDS HIGHLY PROFITABLE PRODUCTS PhIII ORAL Complex ORAL Patheon can make 50% Sterile Compounds Compounds Patheon cannot make 45% Lyo Vials(1) (261) (108)(1) Non-Sterile Cytotoxic 40% Other Sterile Vaccine (2) 35% Complex Sterile Liquid Vials 30% Pre-Filled Syringes Controlled Substance AVG. CMO GROSS MARGIN (41%) Margin 25% Capsules Non-Coated Tablets Coated Tablets Controlled Release 20% Other Non-Sterile Hormone Gross 15% Biologic Product #365 10% Powders / Granulations Simple Potential High Potency (59%) 5% Fixed Dose Combination Sterile Liquid Ampoules 0% Potential Low Solubility 050 100 150 200 Revenue ($M)(3) Orals Complex Source: Company data Source: Company data 1. Excludes Product #365 (lyo vial); 2. Gross margin based on 2013 budget and standard costs, excluding D&A and other / 1. Select compounds may be included in more than one category pro forma adjustments; 3. Excludes other / miscellaneous revenue Capability to produce 98% of PhIII oral compounds with known formulation Expanding mix to high-margin sterile products PROJECT CALCULUS 21
RAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO CMO Financial Summary Acutal (Pro Forma) Pro Forma Projected CAGR (US$ millions) FY2010A FY2011A FY2012A FY2013E FY2014E FY2015E FY2016E FY2017E 10A-13E 13E-17E Revenue $545 $573 $613 $655 $705 $747 $792 $840 6.3% 6.4% % Growth 5.0% 7.1% 6.8% 8.0% 6.0% 6.0% 6.0% Growth rate Cost of Goods Sold (excl. D&A) in-line with Raw Materials $123 $122 $135 $142 $153 $162 $172 $182 Inventory/API Provisions $6 $8 $9 $7 $8 $8 $9 $10 industry Direct Labor $76 $80 $91 $91 $98 $104 $110 $117 forecasts Factory Overhead $153 $164 $168 $159 $165 $170 $175 $181 Quality $50 $52 $57 $57 $61 $63 $66 $69 Technical Affairs / PDSS $4 $4 $3 $5 $5 $5 $5 $5 Total Cost of Goods Sold (excl. D&A) $412 $430 $463 $461 $489 $513 $537 $563 3.8% 5.1% COGS (% of revenue) 75.6% 75.2% 75.6% 70.5% 69.4% 68.6% 67.8% 67.1% Gross Margin (excl. D&A) $133 $142 $150 $193 $216 $235 $255 $277 13.3% 9.4% Gross Margin (%) 24.4% 24.8% 24.4% 29.5% 30.6% 31.4% 32.2% 32.9% SG&A (excl. D&A and stock comp) $59 $58 $54 $57 $59 $60 $62 $63 3.9% 3.7% CMO business is SG&A (% of revenue) 13.5% 12.8% 12.3% 12.6% 12.6% 12.2% 11.7% 11.4% the main driver of consolidated R&D EBITDA Other Expense (Income) $1 ($2) $1 ($0) expansion and Segment Adj. EBITDA $72 $86 $95 $136 $157 $174 $193 $213 23.5% 11.9% FCF generation % Margin 13.3% 15.1% 15.5% 20.8% 22.3% 23.3% 24.4% 25.4% Corporate G&A Allocation ($14) ($15) ($21) ($25) ($30) ($31) ($31) ($32) Segment Adj. EBITDA (Post-Allocation) $58 $71 $74 $111 $127 $144 $162 $181 24.1% 13.0% % Margin 10.7% 12.4% 12.0% 17.0% 18.0% 19.2% 20.4% 21.6% Total D&A $49 $46 $35 $32 $35 $37 $39 $42 Adj. EBIT $9 $25 $39 $79 $92 $107 $123 $140 % Margin 1.7% 4.3% 6.3% 12.0% 13.0% 14.3% 15.5% 16.6% Capital Expenditure Growth $9 $13 $17 $20 $22 $23 $24 $26 Maintenance $19 $10 $12 $15 $16 $17 $18 $19 Total $27 $23 $30 $35 $38 $40 $42 $45 8.5% 6.5% Capex (% of sales) 5.0% 4.0% 4.8% 5.3% 5.3% 5.3% 5.3% 5.3% Growth Capex (% of capex) 31.6% 57.4% 58.5% 57.6% 57.6% 57.6% 57.7% 57.8% Source: Financial Forecast Note: 2013E shown PF impact from OE savings, Caugas site closure and bonus reversals; Corporate expenses allocated between CMO, PDS and Banner based on revenue contribution. EBITDA margins expanding from 17% to 22%, with capex increasing to $45 million by FY2017E PROJECT CALCULUS 22
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO CMO Benchmarking the Financial Forecast Revenue Growth EBITDA(1) Growth Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR) Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR) 12.8% 31.2% 8.4% 7.2% 6.0% 13.8% 12.5% 10.4% Patheon CMO Median of (2) Patheon CMO Median of (2) Patheon CMO Median of (2) Patheon CMO Median of (2) Comparable CMOs Financial Forecast Comparable CMOs Comparable CMOs Financial Forecast Comparable CMOs EBITDA(1) Margin Capital Intensity(3) 2012A 2014E 2012A 3 Yr Avg 2014E 2014E 20.5% 18.9% 18.0% 8.0% 7.0% 12.0% 5.3% 4.8% Patheon CMO Median of Patheon CMO Median of Patheon CMO Median of Patheon CMO Median of (2) (2) (2) (2) Comparable CMOs Financial Forecast Comparable CMOs Comparable CMOs Financial Forecast Comparable CMOs Source: Company filings, Financial Forecast 1. Excludes synergies and repositioning expenses 2. Average of CMOs based on calendarized financial metrics. CMOs include Albany Molecular Research, Biocon, Cambrex, Cangene, Jubilant Life Sciences and Lonza Group 3. Capital intensity defined as capital expenditures divided by revenue Patheon EBITDA growth outpacing peers; growth driven by OE initiatives that expand EBITDA margins to be more in-line with peers PROJECT CALCULUS 23
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile
Financial Forecast Review and Benchmarking
Consolidated Forecast CMO Forecast PDS Forecast Banner Forecast Other Considerations
Financial Perspectives
Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
PDS Financial Forecast Themes
Significant Diversification Project-Based / CRO-Like Visibility
450+ PROJECTS ACROSS 260 CUSTOMERS MINIMAL CONCENTRATION LESS CERTAINTY OF REVENUE GIVEN PROJECTS SIZE / TERM
Revenue by Product (YTD Q213) 2014E PDS Revenue
Source: Company data Source: Company data
Full Spectrum of Drug Development Services Strong Pipeline of New Business
COMPREHENSIVE OFFERING CREATES A ONE-STOP SHOP +$100 mm BACKLOG SUPPORTS A CRITICAL SOURCE OF CMO BUSINESS
Clinical trial material manufacturing and packaging PDS Backlog CMO Revenue by Source
+$100 0+MM mm
Pre-formulation Analytical development Formulation Stability Scale-up and validation
Product registration PDS Backlog
Source: Data per management estimates provided on October 1, 2013
28 NMEs worldwide since 2001 >1/3 of CMO business originates in PDS sticky business model
PROJECT CALCULUS 25
For discussion purposes onlyNot to be distributed to third parties without consent of BMO PDS Financial Summary Acutal (Pro Forma) Pro Forma Projected CAGR (US$ millions) FY2010A FY2011A FY2012A FY2013E FY2014E FY2015E FY2016E FY2017E 10A-13E 13E-17E Revenue $126 $127 $138 $147 $162 $171 $182 $193 5.3% 7.0% % Growth 1.2% 8.7% 6.1% 10.0% 6.0% 6.0% 6.0% Cost of Goods Sold (excl. D&A) Growth rate Raw Materials $1 $1 $2 $2 $2 $2 $2 $2 in-line with Inventory/API Provisions $0 $0 $0 $0 $0 $0 $0 $0 industry Direct Labor $5 $6 $6 $7 $7 $8 $8 $9 forecasts Factory Overhead $20 $23 $23 $22 $24 $25 $27 $28 Quality $10 $12 $11 $10 $11 $12 $12 $13 Technical Affairs / PDSS $41 $46 $46 $44 $46 $48 $51 $54 Total Cost of Goods Sold (excl. D&A) $77 $88 $89 $85 $91 $96 $101 $107 3.1% 5.9% COGS (% of revenue) 61.5% 69.1% 64.2% 57.8% 56.0% 55.9% 55.7% 55.5% Gross Margin (excl. D&A) $48 $39 $49 $62 $71 $76 $81 $86 8.5% 8.4% Gross Margin (%) 38.5% 30.9% 35.8% 42.2% 44.0% 44.1% 44.3% 44.5% SG&A (excl. D&A and stock comp) $14 $17 $19 $20 $20 $21 $21 $22 13.0% 3.5% SG&A (% of revenue) 13.9% 15.7% 16.9% 17.2% 16.7% 16.1% 15.6% 15.0% R&D Other Expense (Income) ($2) ($1) $0 ($0) Segment Adj. EBITDA $36 $24 $31 $43 $51 $55 $59 $64 4.4% 11.1% % Margin 28.6% 18.9% 22.2% 29.1% 31.5% 32.1% 32.7% 33.3% Corporate G&A Allocation ($3) ($3) ($5) ($6) ($7) ($7) ($7) ($7) Segment Adj. EBITDA (Post-Allocation) $33 $21 $26 $37 $44 $48 $52 $57 4.4% 11.1% % Margin 26.0% 16.2% 18.8% 25.3% 27.3% 28.0% 28.8% 29.5% Total D&A $6 $6 $5 $4 $4 $5 $5 $5 PDS segment continues to be Adj. EBIT $27 $15 $21 $33 $40 $43 $47 $51 Patheons highest margin segment % Margin 21.3% 11.7% 15.3% 22.6% 24.5% 25.3% 26.0% 26.7% Capital Expenditure Growth $7 $5 $3 $3 $4 $4 $4 $5 Maintenance $2 $4 $2 $3 $3 $3 $3 $3 Total $9 $9 $5 $6 $7 $7 $7 $8 (11.5%) 7.0% Capex (% of sales) 6.9% 6.9% 3.4% 4.1% 4.1% 4.1% 4.1% 4.1% Growth Capex (% of capex) 78.3% 55.3% 68.3% 57.6% 57.6% 57.6% 57.7% 57.8% Source: Financial Forecast Note: 2013E shown PF impact from OE savings and bonus reversals; Corporate expenses allocated between CMO, PDS and Banner based on revenue contribution. EBITDA margins expanding from 25% to 30%, with capex increasing to $8 million by FY2017E PROJECT CALCULUS 26
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
PDS Benchmarking the Financial Forecast
Revenue Growth EBITDA(1) Growth
Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR) Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR)
11.0%
9.7%
8.1% 30.3%
4.8% 20.5%
11.1%
Patheon PDS Median of Patheon PDS Median of Patheon PDS Median of Patheon PDS Median of
(2) (2) (2) (2)
Comparable CROs Financial Forecast Comparable CROs Comparable CROs Financial Forecast Comparable CROs (10.9%)
EBITDA(1) Margin Capital Intensity(3)
2012A 2014E 2012A 3 Yr Avg 2014E 2014E
27.3%
18.8%
16.1%
12.6%
3.4% 4.1% 4.1% 4.5%
Patheon PDS Median of (2) Patheon PDS Median of (2) Patheon PDS Median of Patheon PDS Median of
(2) (2)
Comparable CROs Financial Forecast Comparable CROs Comparable CROs Financial Forecast Comparable CROs
Source: Company filings, Financial Forecast
1. Excludes synergies and repositioning expenses
2. Average of CROs based on calendarized financial metrics. CROs include Charles River Laboratories, Covance, Quintiles, Parexel, ICON and WuXi
3. Capital intensity defined as capital expenditures divided by revenue
Patheons OE initiatives driving margin outperformance versus peers
PROJECT CALCULUS 27
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile
Financial Forecast Review and Benchmarking
Consolidated Forecast CMO Forecast PDS Forecast Banner Forecast Other Considerations
Financial Perspectives
Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Banner Financial Forecast Themes
Significant Revenue from Existing Customers / Products Favorable Product Portfolio
80% OF 2014 REVENUE PROJECTED FROM EXISTING BUSINESS 70+ PRODUCTS IN PORTFOLIO ACROSS 60 CUSTOMERS (MANY OWNED)
tail Largely private label OTC and nutritional products 7 proprietary soft-gel technologies
Source: Company data
Stable, recurring stream of revenue diversified across geographic footprint High margin proprietary technology portfolio in soft-gels
Product Concentration Strong Pipeline of New Products
RISK OF PRODUCT CONCENTRATION RELATIVE TO OTHER SEGMENTS IMPROVED BUSINESS MIX TOWARDS HIGHER MARGIN RX PRODUCTS
Revenue by Product (2014E)
Product Filing Date Expected Approval
Rx December 2010 November 2013 OTC June 2011 January 2014 Rx January 2011 January 2014 Rx November 2012 November 2015 Rx May 2010 January 2017
Source: Company data Source: Company data
Pipeline of 27 Rx, OTC and nutritional products
PROJECT CALCULUS 29
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Banner Financial Summary Acutal (Pro Forma) Pro Forma Projected CAGR (US$ millions) FY2010A FY2011A FY2012A FY2013E FY2014E FY2015E FY2016E FY2017E 10A-13E 13E-17E Revenue $237 $261 $269 $255 $277 $299 $322 $344 2.4% 7.8% % Growth 8.5% 9.9% 3.1% (5.2%) 8.7% 8.0% 7.5% 7.0% Cost of Goods Sold (excl. D&A) Strong growth through Raw Materials $96 $110 $115 $103 $114 $123 $132 $141 soft-gel product Inventory/API Provisions $2 $2 $2 $2 $2 $2 $3 $3 launches in large and Direct Labor $22 $25 $26 $20 $21 $23 $25 $27 growing markets Factory Overhead $35 $40 $42 $33 $35 $38 $41 $43 Quality $16 $18 $19 $15 $16 $17 $18 $19 Technical Affairs / PDSS Total Cost of Goods Sold (excl. D&A) $170 $195 $203 $173 $189 $203 $218 $232 0.5% 7.7% COGS (% of revenue) 71.8% 74.8% 75.6% 67.9% 68.1% 67.9% 67.7% 67.5% Gross Margin (excl. D&A) $67 $66 $65 $82 $88 $96 $104 $112 7.0% 8.1% Gross Margin (%) 28.2% 25.2% 24.4% 32.1% 31.9% 32.1% 32.3% 32.5% SG&A (excl. D&A and stock comp) $25 $28 $28 $28 $28 $30 $31 $32 6.0% 4.7% SG&A (% of revenue) 13.2% 13.5% 13.8% 14.7% 14.5% 14.0% 13.5% 13.1% R&D $12 $15 $14 $14 $15 $16 $17 $18 Other Expense (Income) ($1) ($1) ($1) $1 Segment Adj. EBITDA $30 $24 $25 $39 $45 $50 $56 $62 6.5% 13.9% % Margin 12.7% 9.3% 9.2% 15.2% 16.2% 16.9% 17.5% 18.0% Corporate G&A Allocation ($6) ($7) ($9) ($10) ($12) ($12) ($13) ($13) Segment Adj. EBITDA (Post-Allocation) $24 $17 $15 $29 $33 $38 $43 $49 6.5% 13.9% % Margin 10.1% 6.6% 5.7% 11.4% 11.9% 12.7% 13.5% 14.2% Total D&A $9 $10 $10 $12 $11 $12 $13 $14 Adj. EBIT $15 $7 $6 $17 $22 $26 $30 $35 Operational improvements driving EBITDA % Margin 6.3% 2.8% 2.2% 6.8% 7.9% 8.7% 9.4% 10.1% margin expansion in Banner segment Capital Expenditure Growth $5 $5 $5 $4 $4 $4 $5 $5 Maintenance $7 $7 $7 $3 $3 $3 $3 $4 Total $12 $12 $13 $6 $7 $7 $8 $9 (18.2%) 7.7% Capex (% of sales) 4.9% 4.6% 4.8% 2.5% 2.5% 2.5% 2.5% 2.5% Growth Capex (% of capex) 42.7% 42.5% 42.2% 57.6% 57.6% 57.6% 57.7% 57.8% Source: 2.1.4 Banner_Historical PL.xlsx, Financial Forecast Note: Historical COGS breakdown based on 2013E COGS split; 2013E shown PF impact from unrealized Banner synergies, OE savings, Olds site closure and bonus reversals; Corporate expenses allocated between CMO, PDS and Banner based on revenue contribution EBITDA margins expanding from 11% to 14%, with capex increasing to $9 million by FY2017E PROJECT CALCULUS 30
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Banner Benchmarking the Financial Forecast
Revenue Growth EBITDA(1) Growth
Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR) Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR)
12.8%
46.3% 8.4% 6.4%
13.8% 10.4% 1.5%
PatheonBanner Average of Patheon Banner Average of PatheonBanner Average of Patheon Banner Average of (2) (2) Comparable CMOs(2) Financial Forecast Comparable CMOs(2) Comparable CMOs Financial Forecast Comparable CMOs (19.9%)
EBITDA(1) Margin Capital Intensity(3)
2012A 2014E 2012A 3 Yr Avg 2014E 2014E
20.5% 18.9%
8.0%
7.0% 11.9% 4.8% 5.7% 2.5%
PatheonBanner Average of (2) Patheon Banner Average of (2) PatheonBanner Average of Patheon Banner Average of
(2) (2)
Comparable CMOs Financial Forecast Comparable CMOs Comparable CMOs Financial Forecast Comparable CMOs
Source: Company filings, Financial Forecast
1. Excludes synergies and repositioning expenses
2. Average of CMOs based on calendarized financial metrics. CMOs include Albany Molecular Research, Biocon, Cambrex, Cangene, Jubilant Life Sciences and Lonza Group
3. Capital intensity defined as capital expenditures divided by revenue.
Short term revenue CAGR artificially low due to subpar 2013 revenue CAGR at ~8% throughout Forecast Period; Capital Intensity lower than peers as Patheons focus is on applying OE initiatives to expand margins
PROJECT CALCULUS 31
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile
Financial Forecast Review and Benchmarking
Consolidated Forecast CMO Forecast PDS Forecast Banner Forecast Other Considerations
Financial Perspectives
Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Foreign Exchange Considerations
Financial Forecast was built with a flat FX assumption, based on 2013 YTD exchange rates as at June 2013
Foreign Exchange Historical and Forecast Foreign Exchange Sensitivity 2014E
USD / EUR (1)
2013 2017 US$ millions At Original Rates Impact of Mark-to-Consensus on Plan
1.5
Financial Forecast 1.3000x 1.3000x
Bloomberg Consensus 1.3200x 1.2800x 2014E Revenue2014E CostsRevenue Cost Net
1.3 Reduction Reduction Impact
US$1,143.8 mm US$939.8 mm
3% Consolidated (12.7) 7.3 (5.4)
1.1
USD / CAD 2% 0% 0%
1.1 2013 2017 USD EUR (13.2) 9.7 (3.5)
Financial Forecast 0.9600x 0.9600x 20% Bloomberg Consensus 0.9615x 0.9091x GBP
3% MXN (0.1) 0.1 0.0
1.0 EUR 30%
43% MXN 62%
0.9 JPY 0.1 0.1
USD / GBP CAD 27%
JPY GBP (0.4) 0.2 (0.2)
1.8 2013 2017 3%
Financial Forecast 1.5200x 1.5200x
Bloomberg Consensus 1.5700x 1.5400x 7%
1.6 Source: Company data CAD (2.1) 0.3 (1.7)
1.4 EBITDA Bridge Analysis
MXN / USD US$ millions FY2014E FY2015E FY2016E FY2017E
16.0 2013 2017
Financial Forecast 12.30x 12.30x
14.0 Bloomberg Consensus Financial Forecast 12.82x 12.00x
Revenue $1,144 $1,218 $1,295 $1,376 12.0 Adjusted EBITDA $204 $230 $257 $287 10.0 Mark-to-Consensus (FX)(1) JPY / USD Revenue ($13) ($5) ($6) ($7)
110.0
Adjusted EBITDA ($5) ($2) $2 $7 90.0 2013 2017 Financial ForecastFX Adjusted
Financial Forecast 101.15x 101.15x
Revenue $1,131 $1,213 $1,289 $1,369
70.0 Bloomberg Consensus 101.00x 100.00x
2011 2012 2013 2014 2015 2016 2017 Adjusted EBITDA $199 $228 $260 $294
Source: Bloomberg, Financial Forecast 1. Revenue and Adjusted EBITDA adjusted to reflect Bloomberg Consensus FX estimates
Revenue and EBITDA are somewhat sensitive to exchange rates forecast adjustment; Mark-to-Consensus has a ~US$5 mm negative impact on FY2014E EBITDA
PROJECT CALCULUS 33
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Other Considerations
Working Capital Tax
Financial Forecast assumes net working capital as a percentage of The Company is currently organized through 25 legal entities and files tax Revenue is consistent over Forecast Period returns in 11 jurisdictions
Net working capital estimated at 14.0% of revenue, an increase to the Company is currently a tax payer in only four jurisdictions, including Italy, Companys historical run rate of approximately 7.5% Netherlands, Japan and Mexico Increase primarily related to significant working capital requirements at Tax planning strategies include the use of net operating loss carry forwards, the Banner segment due to inventory requirements to support retail R&D credits and double-dip tax shields, and are expected to keep cash distribution taxes at a minimum throughout the Forecast Period Net working capital of US$146 mm at July 31, 2013 equal to approximately Sufficient tax assets and other tax strategies implemented to maintain 14% of annualized Q2 and Q3 FY2013A revenue low marginal tax rates beyond Forecast Period Q2 and Q3 F2013A are the only two quarters with 100% revenue Management estimates 20% marginal cash tax rate in Forecast Period; contribution from Banner (i.e. no stub period)
22.5% marginal cash tax rate in Terminal Period
FY2013E FY2015E estimated cash taxes are illustrated below
(US$ millions) Historical Forecasted Implied Cash Tax Rate
FY2010A FY2011A FY2012A Q3 FY2013A FY2014E
FY2013E FY2014E FY2015E
(1) |
|
Current Assets
(US$ mm) (US$ mm) (US$ mm)
Accounts Receivable $140 $158 $162 $182
Inventory $73 $82 $82 $144 Revenue $1,057 $1,144 $1,218
Income taxes receivable $6 $3 $0 $21
Prepaid Expenses $10 $11 $12 $22 Adjusted EBITDA 150 204 230
(2) |
|
D&A (52) (52) (55) |
Current Liabilities
(1) |
|
(42) (42) (42) |
Accounts Payable ($157) ($182) ($186) ($206) Interest Expense
Income taxes payable ($0) ($6) ($2) EBT $56 $111 $133 Deferred Revenues ($27) ($9) ($14) ($15) Cash Taxes 10.0(2) 20.0(2) 26.7 Net Working Capital $45 $63 $51 $146 $160
(3) |
|
(3) |
Actual Patheon Revenue $671 $700 $752 $1,039 $1,144 Implied Cash Tax Rate 17.7% 18.1% 20.0%
NWC% Revenue 6.6% 9.0% 6.7% 14.0% 14.0%
Source: Company filings, Financial Forecast Source: Company filings, Financial Forecast
1. Excl. Deferred tax assets-short term of $9.0mm, $8.1mm, $4.3mm & $6.6mm in FY2010-Q3 FY2013A, respectively 1. Q3 FY2013A interest expense annualized
2. Excl. Deferred tax liabilities-short term of $0.3mm in Q3 FY2013A 2. Based on Patheon Management estimate
3. Q2-Q3 FY2013A annualized revenue 3. Patheon Management estimate for FY2015E-FY2017E
PROJECT CALCULUS 34
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
BMO Capital Markets Approach to Financial Perspectives
Financial Perspectives
Discounted Cash Flow Precedent Transactions Comparable Trading
Fundamentals Fundamentals Fundamentals
Evaluates business as a going concern Analysis of precedent CMO, CRO and Analysis based on publicly-traded based on expected unlevered free cash other pharmaceutical service transactions comparable CMO / CRO market flows Advantages participants Synergies estimated and incorporated Reflects strategic investors perception of Advantages the business Advantages Reflects current trends in market prices Provides objective information and profitability / growth of similar Free cash flow projections capture Generally includes a control premium companies company specific long-term business Disadvantages outlook Availability of public and objective financial improvement opportunities, Different perceptions of risk and returns information Reflects allows for adjustments for non-recurrent events Limited information on comparable Disadvantages transactions Riskiness and duration of cash flows Limited number of direct comparables reflected in weighted average cost of Economic backdrop at time of comparable transaction can be different Comparable companies may have different capital business prospects and capital structures
Disadvantages
Could be affected by exogenous market Subjected to different perceptions of the events Companys future performance Does include a not control premium Requires an in-depth understanding of the company and underlying business drivers
PROJECT CALCULUS 36
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Capital Structure Considerations
Description Implications Restricted 140.9 mm basic RVS outstanding as at July 31, 2013 146.9 mm after adjusting for ITM options (Treasury stock method) n.a.
Voting Shares
Shareholders entitled to elect six of nine Directors of the Company
150,000 Preferred Shares outstanding (100% held by JLL) as at July 31, 2013
Series D Entitles JLL to designate three Directors of the Company No value ascribed based on Special Voting On liquidation, dissolution or winding-up of the Company, holders of each Preferred Share receive minimal liquidation value and Preferred Shares C$0.0001 non-transferability(1) Not transferable, except to an affiliate of JLL
Senior Secured Term loanFloating LIBOR plus 6.00% with LIBOR floor of 1.25% due December 14, 2018 US$570.7 mm outstanding as at July 31, 2013 Senior Secured Revolving FacilityUS$85 mm maturing December 14, 2017, bearing interest
Net Debt ranging from 5.8% to 7.75% Face value of
Debt less book (Debt less Cash) US$42.3 mm outstanding as at July 31, 2013 value of Cash and equivalents Italian Bank Loans Two loans outstanding as at July 31, 2013 Loan 1: Subsidized loan of US$7.0 mm, interest rate of 0.5%, maturity date of June 30, 2020 Loan 2: US$1.0 mm with interest rate of Euribor 6-month +7.1%, maturity date of June 30, 2020 Cash and equivalentsUS$40.9 mm as at July 31, 2013 Defined benefit pension plan deficit (US$22.3 mm), Other post-employment benefit deficit (US$7.8 mm) and unfunded termination indemnities (US$5.7 mm) October 31, 2012 book value
Pension Liability
(tax affected) No significant changes in plan deficits since October 31, 2012 actuarial valuations Holds 18% interest in two Italian entities known as BSP Pharmaceuticals
Investments Book value
Immaterial interests in certain U.S. retirement plans Financial Foreign exchange forward contracts and collars
Net liability position of US$2.8 mm as at July 31, 2013 Book value Instruments No significant changes in related underlying exchange rates since July 31, 2013
Source: Company filings
1. MI 61-101 defines fair market value as the monetary consideration that, in an open and unrestricted market, a prudent and informed buyer would pay to a prudent and informed seller, each acting at arms length with the other and under no compulsion to act
PROJECT CALCULUS 37
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives
DCF Analysis
Precedent Transaction Analysis Comparable Trading Analysis
Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Discounted Cash Flow Analysis Assumptions
Key Assumptions Terminal Growth Rate
FY2014E based on Patheons Precedent Fairness Opinions OECD Economic Data Street Consensus
FY2017E projections
Financial Forecast Real Nominal
Operating
3.90% 3.90% 4.00%
Assumptions Assumed $25mm of unlevered free cash flow in Q4
3.50%
FY2013E, as per Patheon Management 3.20%
Discounted to October 20, 2013 Selected Terminal Growth Rate: 2.50%
Discount 2.00% 2.50% 2.00%
Mid-year discounting applied
Period 2.20% 1.50%
2.10% 2.00%
Four year Forecast Period, ending October 31, 2017
Selected WACC range of 10.25%11.25% 1.00% 1.00% 1.00%
Discount
Rate Based on comparable beta analysis and adjustments
PPD / Kendle / inVentiv / OECDOECDOECDStreet CMO Street CRO
(1) |
|
(1) (1) for size premium H&F, INC THL Canada United States Europe Industry Industry Carlyle Forecast Forecast |
Based on perpetual growth of normalized terminal year Source: Company filings, OECD Economic Outlook May 2013, select Street research Terminal Value unlevered free cash flow 1. Represent 2018-2030 Real GDP CAGR plus estimated Inflation rates
Terminal growth rate of 2.5% assumed MI 61-101 Approach to Synergies
Capex 4.5% annual capital intensity into perpetuity Assess any distinctive material benefit that might accrue to an interested party as a consequence of the transaction
Flat cash tax rate of 20% in the Forecast Period
Tax Required to be disclosed in our Valuation 22.5% cash tax rate in Terminal Period
Assess what synergies should be included in the Valuation Net Working Guiding principal is the concept of Fair Market Value Net working capital requirements of 14% of revenue
Capital The monetary consideration that, in an open and unrestricted market, a prudent and informed buyer would pay to a prudent and 50% of pre-tax net identified synergies included Synergies informed seller, each acting at arms length with the other and 50% of US$32.9 mm on a run-rate basis under no compulsion to act Repositioning Repositioning expenses in FY2014E associated with Expenses closure of Olds, Caugas and Swindon facilities FX Bloomberg Consensus FX forecasts
PROJECT CALCULUS 39
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Synergy Perspectives
Description Est. Pre-Tax Synergies Selected Precedent Transaction Analysis
savings from redundant US$2.0 mm per year
Cost Ann. Target / EV Synergies /
leadership Integration costs of US$3.0 mm in Description
Date Acquiror PF EBITDA
Leadership (US$)
Patheons management to Year 1; US$0.5 mm in Year 2 team largely run combined company $32.9 mm run-rate annual Phased in over 2 years Patheon / pre-tax synergies Pending $1.8 bn 14.0% Elimination of corporate charges JLL year 2014E Adjusted EBITDA of from DSM parent company Net US$6.0 mm per $234.3 mm (1)
DSM any incremental costs Integration costs of US$10.5 mm in
Corporate Excludes
Year 1; US$5.3 mm in Year 2 $12.5 mm / $19.2 mm Charges required by combined company to replace required services currently Banner / Phased in over 2 years Oct-12 $269 mm 9.8% 15.1% Headcount reduction provided by DSM Patheon Other operational synergies Reduction of senior FTEs in US$7.0 mm per year Aptuit marketing, quality, sales and other (Clinical Trial FTE Integration costs of US$5.3 mm in Aug-11 $407 mm n.a. functions due to proximity of Business) / 4.0% Reductions Year 1; US$1.8 mm in Year 2 Greenville facility to Patheons Catalent existing operations Phased in over 2 years $20.0 mm US$15.0 mm per year Procurement savings through Dow Pharma Core R&D savings Dec-08 $308 mm 11.7% Procurement increased volumes and strategic Phased in over 4 years / Valeant sourcing Non-core R&D, G&A and No integration costs facility consolidation
US$1.0 mm per year commencing in 1. 2014E Pro Forma for 2012A DSM DPP EBITDA (EUR 23 mm) as per Patheon Management presentation; Year 2 converted from EUR to USD at a rate of 1.3200x
Combined company will no longer
Real Estate utilize office space currently Integration costs of US$1.5 mm in Minimum Synergies Strategic Buyer occupied by DSM senior leadership Year 2
A strategic buyer could reasonably be expected to accrue ~US$10 mm of synergies Phased in over 2 years from executive compensation and board fees following a transaction with the Public Company (exclusive of integration costs)
Company Patheon public company costs US$1.9 mm per year Synergy Description Amount
Costs
(US$ mm)
Total Executive compensation (inclusive of stock based rewards)(1) $7.5
Run-Rate US$32.9 mm per year (1)
Synergies Director compensation (inclusive of stock based rewards) 1.5 Other public company costs(2) 1.4
Total
Aggregate integration costs in Year Total $10.4
Integration US$27.9 mm
1 |
|
and Year 2 Source: Company filings, Patheon Management estimates |
Costs 1. From Companys Management Information Circular dated 4-Mar-13 Source: JLL and Patheon Management estimates 2. Other public company costs exclusive of board fees
PROJECT CALCULUS 40
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Weighted Average Cost of Capital Analysis Comparable Beta Analysis Illustrative Cost of Capital In US$ million unless otherwise noted Company Beta R2 Total Debt(1) Equity Value(2) Debt Ratio Tax Rate Beta (3) BARRA Beta Selected Beta ?U = 0.90 ?U = 1.05 ?U = 1.20 Levered Unlevered Unlevered Covance 1.25 0.36 $325 $4,932 6% 35% 1.20 0.85 Cost of Debt Lonza Group 0.83 0.13 2,539 3,508 42% 22% 0.53 0.66 Nominal Risk Free Rate (4) 2.69% 2.69% 2.69% Parexel Intnl 1.46 0.29 444 2,959 13% 35% 1.33 1.01 Borrowing Spread (5) 4.50% 4.50% 4.50% ICON 0.65 0.11 2,471 13% 0.65 0.83 (6) Country Risk Premium Charles River 1.19 0.35 636 2,280 22% 35% 1.01 0.77 Pre-tax Cost of Debt 7.19% 7.19% 7.19% WuXi Pharma 1.69 0.36 65 2,123 3% 25% 1.65 1.06 Tax Rate 23% 23% 23% Biocon 1.09 0.43 61 1,101 5% 30% 1.05 0.97 After-Tax Cost of Debt 5.6% 5.6% 5.6% Cambrex 1.41 0.21 144 461 24% 35% 1.17 0.73 Albany Molecular Research 1.49 0.26 17 413 4% 35% 1.45 1.27 Cost of Equity Jubilant Life Sciences 1.31 0.44 554 198 74% 30% 0.44 0.63 Nominal Risk Free Rate (4) 2.69% 2.69% 2.69% Cangene (0.27) 0.01 162 27% (0.27) 0.36 (7) 6.11% 6.11% 6.11% 2 Equity Risk Premium Mean (R > 0.2) 1.36 $281 $1,808 19% 1.16 0.91 (6) Country Risk Premium Selected BetaLow 0.90 Size Premium (8) 1.73% 1.73% 1.73% Selected BetaHigh 1.20 Selected Unlevered Beta 0.90 1.05 1.20 Patheon (B3 / B+) 1.32 0.11 $610 $867 41% 23% 0.85 0.52 Optimal Debt in Capital Structure 25% 25% 25% Levered Beta (3) 1.13 1.32 1.51 Cost of Equity (9) 11.3% 12.5% 13.6% Implied WACC (10) 9.9% 10.8% 11.6% Source: Company filings, Bloomberg, BMO CM estimates Note: Levered Betas are Bloomberg 5-year monthly raw Betas, unless otherwise noted; excludes Quintiles Transnational Holdings, due to limited historical trading data. 1. Total Debt (including preferred shares) at book value. 6. Assets and operations mainly located in the U.S. and Canada, not applicable. 2. Equity value as of 11-Oct-13. 7. BMO CM estimate based on data from Ibbotson Risk Premia Over Time report. 3. ?U = ?L / (1 + (1tax rate) x Debt/Equity). 8. BMO CM estimate based on data from Ibbotson Risk Premia Over Time report. 4. Yield on 10-year U.S. Treasury. 9. Cost of equity = risk free rate + ? x market risk premium + size premium + country risk premium. 5. BMO CM estimate of 10-year borrowing spread at the optimal capital structure. 10. WACC = debt/(debt + equity) x((1tax rate) x cost of debt) + equity/(debt + equity) x cost of equity. Implied WACC range of 10.25% to 11.25% PROJECT CALCULUS 41
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Discounted Cash Flow Analysis Financial Forecast
Discounted Cash Flow Summary Selected Range
Projected Fiscal Year Ending Oct-31 Sensitivity Q4 2013E 2014E 2015E 2016E 2017E Terminal Low High
Adjusted EBITDA (US$ mm) $204 $230 $257 $287 $294 WACC (%) 11.25% 10.25% y-o-y growth 36.3% 12.7% 12.0% 11.4% 14.2% (%)
Terminal Growth Rate 2.50% 2.50% margin 17.8% 18.9% 19.9% 20.8% 20.8% (US$ mm)
PV of Projected CF $475 $484
Other Items: (US$ mm)
PV of Terminal Value 1,453 1,693
Less: Unlevered Cash Taxes (US$ mm) (30) (35) (40) (45) (52)
Enterprise Value (US$ mm) $1,928 $2,177
Add / (Less): Change in Working Capital (US$ mm) (12) (10) (11) (11) (12) (1)
Less: Net Debt (US$ mm) (580) (580)
Less: After-Tax Repositioning Expenses (US$ mm) (10)
Less: Preferred Shares (US$ mm)
Add / (Less): Impact of After-Tax FX Forecast (US$ mm) (4) (2) 2 5 5
(1) |
|
Less: Pension Solvency Deficit (US$ mm) (29) (29) |
Add: Realized After-Tax Net Synergies (US$ mm) (2) 6 12 13 13
(2) |
|
Less: Fair Value of FX Liabilities (US$ mm) (3) (3) |
Less: Capex (US$ mm) (53) (56) (60) (63) (64)
Capital Intensity 4.6% 4.6% 4.6% 4.6% 4.5% Add: Proceeds from ITM Options (US$ mm) 30 30
Unlevered Free Cash Flow $25 $92 $133 $161 $186 $185 Add: Inv. in Unconsol. Affiliates (US$ mm) 9 9
(2) |
|
Terminal Value $2,362 Impled Equity Value (US$ mm) $1,355 $1,604
F.D. Shares Outstanding (mm) 152 152
Assumptions: Present Value of Projected Cash Flows $480
Implied Equity Value per Share (US$ / sh) $8.92 $10.56
WACC 10.75% Present Value of Terminal Value $1,565
Terminal Growth Rate 2.50% Enterprise Value $2,045 1. Based on Face Value of debt
2. Balance sheet figures as at 31-Jul-13
Sensitivity Analysis
Enterprise Value Implied Share Price Implied Terminal Multiple Terminal Growth Rate Terminal Growth Rate Terminal Growth Rate WACC 2.0% 2.5% 3.0% WACC 2.0% 2.5% 3.0% WACC 2.0% 2.5% 3.0%
11.25% $1,841 $1,928 $2,026 11.25% $8.34 $8.92 $9.56 11.25% 6.6x 7.0x 7.5x
10.75% $1,947 $2,045 $2,156 10.75% $9.04 $9.69 $10.42 10.75% 7.0x 7.4x 7.9x
10.25% $2,065 $2,177 $2,305 10.25% $9.82 $10.56 $11.40 10.25% 7.4x 7.9x 8.4x
Source: Financial Forecast
1. Assuming (US$5.7) mm, US$15.8 mm and US$29.2 mm of pre-tax net synergies in FY2014E, FY2015E and FY2016E, respectively; $32.9 mm of pre-tax run-rate annual synergies are realized thereafter, which are grown by the assumed terminal growth rate in the Terminal Period; the DCF incorporates 50% of after-tax net synergies
2. 4.5% capital intensity in Terminal Period provided by Patheon Management
Selected DCF range of $8.92$10.56 per RVS
PROJECT CALCULUS 42
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Discounted Cash Flow Analysis Key Sensitivities Sensitivity to Financial Forecast All figures in US$ $8.92 $9.69 $10.56 WACC: 11.25% to 10.25% TGR: 2.5% Implied Terminal Multiple: 7.0x to 7.9x Implied FY2013E EBITDA ($149.6 mm): 12.9x to 14.6x Implied FY2014E EBITDA ($203.9 mm): 9.5x to 10.7x Metric Benchmark Change Share Sensitivity Terminal Growth Rate 2.5%/ + 1.0% ($1.22) $1.55 WACC 10.75% + /0.5% ($0.84) $0.84 6.2%8.3% Revenue Growth/ + 1.0% ($0.83) $0.83 in Forecast Period 17.8%20.8% EBITDA Margin/ + 1.0% ($0.82) $0.82 in Forecast Period (1) FX Forecast Bloomberg Consensus + /10.0% ($0.60) $0.60 $58.1 mm Total Capex + /10.0% ($0.40) $0.40 (Forecast Period average) Terminal Period Tax Rate 22.5% + /2.5% ($0.35) $0.35 $32.9 mm (2) Synergies Realized (2)/ + $10.0 mm ($0.31) $0.31 (Pre-Tax Run Rate) 1. A 10% increase in FX forecast implies a 10% weakening of the USD against each of the EUR, CAD, GBP, MXN and JPY, respectively 2. Incorporating 50% of pre-tax synergies in DCF DCF highly sensitive to Terminal Growth Rate and WACC assumptions PROJECT CALCULUS 43
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives
DCF Analysis
Precedent Transaction Analysis Comparable Trading Analysis
Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Precedent Transactions Contract Manufacturing Organizations (7) 14.3x (4) 13.5x 10.9x (3) 11.9x (5) 11.3x 11.2x EV / 10.1x 9.6x 10.1x 9.4x LTM 7.5x 8.0x 6.2x 8.1x EBITDA Ann. 21-May-13 06-Mar-13 31-Dec-12 29-Oct-12 04-Oct-12 06-Aug-12 09-Jan-12 22-Aug-11 04-Apr-11 24-Feb-11 30-Apr-08 06-Feb-08 01-Aug-07 25-Jul-07 24-Apr-07 25-Jan-07 Median Date Xellia Lancaster Xellia Brookwood Lipa Hollister Stier Target Althea JHP Pharma Banner Metrics Aenova BioReliance Aptuit Capsugel BASF Catalent Pharma Labs Pharma Pharma Pharma Labs Warburg Mayne Sigma- CK Acquiror Novo Group Ajinomoto Patheon BC Partners Catalent KKR Eurofins Dr. Reddys 3i Group SurModics Jubiliant Blackstone Pincus Pharma Aldrich Life Sciences Enterprise $700 $175 $195 $269 $120 (1) $618(2) $353 $407 $2,375 $200 $40 $395 $40 $100 $123(6) $3,217 $233 Value EV / 3.2x 3.3x 1.0x 2.3x 2.0x 2.8x 2.1x 3.2x 1.7x 0.9x 2.1x 2.6x 1.3x 2.2x 2.0x 2.2x LTM Revenue EV / - 2.7x 2.4x NTM Revenue EV / - 11.3x 10.3x NTM EBITDA LTM EBITDA Margin - 9.2% 31.2% 21.2% 23.5% 20.4% 28.0% 21.7% 15.0% 26.1% 19.5% 13.4% 19.8% 13.9% 20.1% 1 Day Premium - 18.0% 19.7% 1 Week Premium - 21.0% 22.1% 30 Day Premium - 20.3% 38.0% Sources: Company public filings, press releases, Street research, MergerMarket and Deal Pipeline 1. Enterprise value excludes $15 million milestone payment. 2. Converted in US$ as per exchange rate at announcement date. 3. Based on estimate FY 2012 EBITDA. 4. LTM EBITDA implied based on NTM EBITDA margin. 5. Based on FY 2011 revenue and EBITDA. 6. Enterprise value excludes $16 million that Jubilant will pay for CapEx expansion reimbursement. 7. Based on FY 2006 EBITDA. Selected CMO range of 10.0x to 11.0x EV / LTM EBITDA PROJECT CALCULUS 45
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Precedent Transactions Contract Research Organizations (3) 17.4x 14.9x 13.0x 13.7x (5) 13.4x 11.8x 12.6x (2) 10.5x 11.0x 11.4x 10.6x 11.4x EV / 9.8x 10.0x 8.0x 8.5x LTM EBITDA Ann. 24-Jun-13 31-Oct-12 02-Oct-11 09-May-11 04-May-11 28-Feb-11 27-Dec-10 19-Aug-10 06-May-10 02-Sep-09 03-Feb-09 20-Mar-08 03-Jan-08 21-Dec-07 24-Jul-07 18-Jul-07 Median Date ReSearch MDS Pharma Diosynth / INC inVentiv Premier Apptec Lab Quintiles WIL Target PRA Intl Sygene Intl Medpace Kendle Intl Pharma Analytical Pharmanet PRA Intl Product Dev. MSD Research Health Research Services Transntl Research Services Tech. INC Warburg Avista / Thomas H. 3i Group / Genstar American Acquiror KKR GE Capital H&F / Carlyle CCMP FUJIFILM Danaher JLL Partners ECI Partners WuXi Research Pincus Teachers Lee Bain / TPG Capital Capital Enterprise (1) (1) (4) (1) $1,300 $301 $3,404 $688 $348 $329 $254 $600 $1,164 $650 $186 $177 $164 $2,860 $758 $500 $550 Value EV / - 9.0x 12.6x 8.0x 11.4x 9.5x 7.1x 15.0x 9.5x NTM EBITDA LTM EBITDA Margin - 34.0% 20.3% 5.9% 6.2% 13.4% 15.6% 4.8% 10.8% 13.4% 12.6% 14.8% 25.4% 13.4% 1Day Premium - 29.6% 53.9% 52.4% NM 12.4% 13.1% 29.6% 1 Week Premium - 29.1% 50.7% 58.0% NM 40.8% 10.9% 40.8% 30 Day Premium - 6.7% 42.3% 80.0% NM 58.7% 24.4% 42.3% Sources: Company public filings, press releases, Wall Street equity research, MergerMarket and Deal Pipeline 1. Converted in US$ as per exchange rate at announcement date. 2. LTM revenue and EBITDA implied based on management estimates of growth and margins. 3. EBITDA is inclusive of fee and costs associated with the European acquisitions and Paramax acquisition. 4. Cash inclusive of restricted cash related to security deposits for the London office in the inVentiv Communications segment 5. Based on FY 2006 revenue and EBITDA. Selected CRO range of 11.0x to 13.0x EV / LTM EBITDA PROJECT CALCULUS 46
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives
DCF Analysis
Precedent Transaction Analysis Comparable Trading Analysis
Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Comparable Trading Analysis CMO PEERS CRO PEERS EV / 11.9x 11.5x 2014E 11.1x 11.0x 10.4x 11.0x 10.1x 9.4x EBITDA 8.3x 8.3x 8.0x 8.3x 8.5x 7.2x 3.5x n.a. Albany Jubilant Quintiles Lonza CMO Parexel WuXi Charles CRO PatheonPatheon - Company Molecular Cambrex Biocon Life Cangene ICON Covance Transntl (1) Group Median Intnl Pharma River Median Street Model Research Sciences Holdings Country USA Switzerland USA India India Canada Ireland USA USA USA China USA USA Enterprise Value (US$ mm) $391 $5,781 $570 $952 $708 $105 $639 $2,289 $4,812 $7,157 $3,130 $1,870 $2,817 $2,973 Med $1,470 Equity Value (US$ mm) $413 $3,508 $461 $1,101 $198 $162 $437 $2,471 $4,932 $5,721 $2,959 $2,123 $2,280 $2,715 Med $867 % Buy Ratings (%) 100% 13% 67% 73% 75% 70% 63% 53% 59% 67% 75% 26% 61% Med 100.0% Target Price (%) 11% (6%) 29% 7% 165% 4% 9% 14% 6% 21% 12% (4%) 9% 10% Med 22% Prem. / (Disc.) P / E 2014E (x) 20.3x 12.7x 14.8x 15.2x 2.6x n.a. 14.8x 20.6x 22.8x 18.8x 22.9x 16.6x 14.9x 19.7x n.a. 12A14E (%) 15.8% 9.2% 9.6% 10.7% 10.4% n.a. 10.4% 28.6% 29.2% 14.3% 24.2% 16.8% 2.1% 20.5% High 63.0% 33.0% EBITDA CAGR 2013E EBITDA (%) 16.9% 18.1% 20.7% 22.0% 18.4% n.a. 18.4% 12.6% 15.3% 15.6% 13.1% 28.5% 22.6% 15.5% Low 13.9% 16.8% Margin Total Debt / (x) 0.4x 3.7x 2.1x 0.5x 2.7x 1.3x 0.8x 3.2x 1.6x 0.4x 2.3x 1.2x High 3.6x 3.0x 2014E EBITDA 2014E Capex (2) (2) (2) (%) 4.3% 7.8% 6.2% 10.6% 4.4% 3.4% 5.3% 3.0% 6.0% 2.5% 4.6% 10.1% 4.3% 4.5% Low 5.8% 4.7% Intensity Source: FactSet and Company Filings Note: Estimates are based on CY2013 & CY2014 EBITDA and EPS Street Consensus estimates. 1. Based on FY2014E EBITDA 2. LTM Capex Intensity used as a proxy, as 2014E capex estimates are unavailable Selected CMO range of 7.5x 8.5x EV / 2014E EBITDA; Selected CRO range of 10.5x 11.5x EV / 2014E EBITDA PROJECT CALCULUS 48
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO
Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives Summary Perspectives
PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Summary Perspectives TRADING PERSPECTIVES EN BLOC PERSPECTIVES DCF ANALYSIS PRECEDENT CAPITAL MARKETS TRADING COMPARABLES TRANSACTIONS Shown in US$ per share, unless otherwise indicated $10.56 $9.43 JLL Current Offer: $8.25 $7.70 $8.20 $8.92 $8.09 $6.55 $6.86 $6.38 (1) $6.74 20-Day VWAP: $6.13 $5.24 $2.89 Based on FY2014E EBITDAStreet DCF CMO: 7.5x8.5x (2) CMO: 10.0x11.0x 52 Week High / Low (1) Analyst Target Price Range CRO: 10.5x11.5x CRO: 11.0x13.0x (2) WACC: (C$7.00C$8.00) (1) (3) 10.25%11.25% FY2014E EBITDAModel LTM PF EBITDAModel TGR: 2.5% Implied Premium to (53%)7% 10%26% 12%34% 32%54% 45%72% 20-Day VWAP Implied EV / 2013E 6.8x10.5x 10.7x11.7x 10.8x12.2x 12.0x13.4x 12.9x14.6x EBITDAModel ($149.6 mm) Implied EV / PF 2013E 5.7x8.8x 9.0x9.8x 9.1x10.2x 10.1x11.3x 10.8x12.2x EBITDAModel ($177.8 mm) Implied EV / 2014E 5.0x7.7x 7.8x8.6x 7.9x8.9x 8.8x9.8x 9.5x10.7x EBITDAModel ($203.9 mm) Implied EV / 2014E 0.9x1.4x 1.4x1.5x 1.4x1.6x 1.6x1.8x 1.7x1.9x RevenueModel ($1.1 bn) Note: 20-Day VWAP of C$6.38/share, converted to US$ at the closing rate of the respective previous 20 trading days. 1. Converted to US$ at 1.0386x (as at 11-Oct-13 close) 2. Selected CMO and CRO multiples based on observed comparable peer trading and precedent transaction multiples. Applied Patheons 2014E CMO and CRO EBITDA weighting to the selected Trading Comparables multiple range and Patheons 2013E CMO and CRO EBITDA weighting to the selected Transaction Comparables multiple range . 3. FY2013E used as a proxy for LTM PROJECT CALCULUS 50
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO PROJECT CALCULUS Disclaimer This Presentation has been provided to the Special Committee of the Board of Directors of Patheon Inc. (Patheon or the Company) (the Board) formed to consider a potential transaction involving JLL Partners, Inc., in their capacity as members of the Special Committee, by BMO Nesbitt Burns Inc. (BMO Capital Markets) pursuant to the engagement letter dated September 11, 2013 (the Engagement Letter) and, except as contemplated by the Engagement Letter, may not be used or relied upon for any purpose without the written consent of BMO Capital Markets. The information contained herein (the Information) is confidential. By accepting this Information, the Board agrees that, except as contemplated by the Engagement Letter, it and its agents and representatives shall use it for informational purposes only and, except as set forth in the Engagement Letter, will not divulge any such Information to any other party. This presentation has not been prepared with a view toward public disclosure under federal, provincial or territorial securities laws or otherwise. Except as contemplated by the Engagement Letter, reproduction, dissemination, quotation, summarization or reference to this Information, in whole or in part, is prohibited. Without the consent of BMO Capital Markets, these contents are proprietary and a product of BMO Capital Markets. The information contained in these materials is not intended to constitute a report, statement or opinion of an expert for purposes of the securities legislation of any province or territory of Canada. Moreover, the information contained in these materials summarizes certain background work completed by BMO Capital Markets in connection with the preparation of a potential formal valuation and although we have undertaken financial analysis that we believe is appropriate, we have not made or prepared any valuation (including, without limitation, a formal valuation of the Company, as such term is defined in the Canadian Securities Administrators Multilateral Instrument 61-101 (MI 61-101)) or appraisal of the securities, assets or liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) of the Company, nor have we been furnished with any such valuations or appraisals, and the information contained in these materials should not be construed as any such valuation or appraisal. Furthermore, the Company has informed us that there have not been any prior valuations, as such term is defined in MI 61-101, of the Company, its material assets or its securities in the past twenty-four month period. In preparing this presentation, BMO Capital Markets has made certain assumptions regarding the information contained herein, and certain limitations apply to such information. The information used in preparing these materials may have been obtained from or through the Company or the Companys representatives or from public sources as of the date hereof. BMO Capital Markets assumes no responsibility for independent investigation or verification of such information and has relied on such information being complete and accurate in all material respects. To the extent such information includes estimates and/or forecasts of future financial performance (including estimates of potential cost savings and synergies) prepared by or reviewed or discussed with the management of the Company and/or other potential transaction participants or obtained from public sources, we have assumed that such estimates and forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of such managements (or, with respect to estimates and forecasts obtained from public sources, represent reasonable estimates). BMO Capital Markets has no obligation (express or implied) to update` any or all of the Information or to advise you of any changes; nor do we make any express or implied warranties or representations as to the completeness or accuracy of the information or accept responsibility for errors. These materials were designed for use by specific persons familiar with the business and affairs of the Company and are being furnished and should be considered only in connection with other information, oral or written, being provided by BMO Capital Markets in connection herewith. These materials are not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. Prior to entering into any transaction the Company should determine, without reliance on BMO Capital Markets or its affiliates, the economic risks and merits as well as the legal, tax and accounting characterizations and consequences of any such transaction. BMO Capital Markets is not acting in any other capacity or as a fiduciary to the Company or the Board or the Special Committee. 51
Exhibit (c)(8)
DRAFT: For discussion purposes only Not to be distributed to third parties without consent of BMO Presentation to the Special Committee Preliminary Perspectives October 23, 2013 PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Situation Overview BMO Nesbitt Burns Inc. (BMO or BMO Capital Markets) understands that Patheon Inc. (Patheon or the Company) was advised in July 2013 by the Companys controlling shareholder, JLL Partners, Inc. (JLL), that a buying group which includes a fund or funds under common control with JLL and one or more affiliates of Royal DSM B.V. (DSM) (collectively, the Offeror) is considering a transaction that would include the acquisition of 100% of the Companys issued and outstanding equity securities by way of a plan of arrangement or alternative transaction structure (the Transaction) ?JLL currently holds 56% of the issued and outstanding restricted voting shares (RVS) and all of the special voting Class I, preferred shares, Series D (Preferred Shares) of the Company BMO further understands that on September 16, 2013, JLL submitted a non-binding proposal (the Proposal) to the Companys committee of independent directors (the Special Committee) proposing the Transaction at a price of US$8.25 per RVS in cash (the Offer) ?The Offer represented a 32% premium to the Companys closing price at September 16, 2013 and a 43% premium to the Companys three month VWAP on the TSX ?BMO understands that JLL advised the Special Committee that JLL is solely interested in pursuing the Transaction contemplated by its Offer and currently is not willing to consider any other transaction BMO Capital Markets has been retained by the Special Committee as independent valuator to prepare and deliver to the Special Committee: a) a confidential preliminary analysis, which is being provided pursuant to this document; b) a formal valuation of the Companys RVS and Preferred Shares in accordance with the standards and requirements of MI 61-101, the standards for formal valuations in the Dealer Member Rules of the Investment Industry Regulatory Organization of Canada; and any other applicable rules, regulations and standards (the Valuation); and c) an opinion as to whether the consideration payable pursuant to the Transaction is fair, from a financial point of view, to the holders of RVS and Preferred Shares, other than JLL and any other holders that would customarily be excluded from such an opinion (the Opinion) This document does not constitute an Opinion or a Valuation and is being provided solely to assist the Special Committee in understanding a preliminary assessment and analysis that might form the basis for the Valuation PROJECT CALCULUS 1
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Situation Overview (Contd) In preparing this presentation, we have relied upon the information provided to us by the Company, discussions with representatives of the Company and publicly available information on the Company, the Offer and potential bidders ?BMO was provided access to the Companys secondary virtual data room on September 18, 2013 and the Companys original virtual data room on September 24, 2013 ?BMO has had a number of calls and meetings with the Company to request additional information and to discuss the information provided We have not attempted to independently verify the accuracy or completeness of any information or representations presented to us by the Company The analysis herein is based upon the securities markets, economic and general business and financial conditions prevailing as at this date, any of which may vary considerably in the future The views summarized in this presentation are made based on information available as at October 22, 2013 and are based on the closing share price of the Company and comparable companies as at October 18, 2013 PROJECT CALCULUS 2
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Assumptions and Limitations With your approval and agreement, BMO Capital Markets has relied upon and assumed, among other things: ?The completeness, accuracy and fair presentation of all financial and other information (the Information) obtained by us from public sources or provided to us by the Company ?That all forecasts, projections, estimates and budgets related to the Company are reasonable in the circumstances and consistent with industry practices ?That all forecasts, projections, estimates and budgets reflect the best currently available information and estimates, assumptions and judgments as to the matters covered thereby ?That there has been no material change in the financial condition, assets, liabilities, business, operations or prospects of the Company ?That there are no plans or proposals that could reasonably be expected to have a material effect on the financial condition, assets, liabilities, prospects or affairs of the Company ?That there are no circumstances or developments that could reasonably be expected to have a material effect on the financial condition, assets, liabilities, prospects or affairs of the Company ?That there are no actions, suits, proceedings or inquiries pending or threatened which may in any way materially adversely affect the Company The provision of the Valuation and the Opinion will be subject to, among other things, the receipt of a letter of representation to be provided by the Senior Officers of the Company as to certain factual matters and the completeness and accuracy of the Information upon which the Valuation and the Opinion will be based PROJECT CALCULUS 3
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Scope of Review In connection with rendering these perspectives, we have reviewed and relied upon, or carried out, among other things, the following: ?Certain internal financial, operating, corporate and other information prepared or provided by or on behalf of the Company, concerning the business operations, assets, liabilities and prospects of the Company and the Transaction ?Internal management forecasts, development and operating projections, estimates and budgets prepared or provided by or on behalf of the Company ?Discussions with management of the Company relating to the Companys current business plan, business operations, financial condition, prospects and the Transaction, including with respect to assets to be acquired from DSM ?A third party consulting report analyzing potential synergies that could accrue to the pro forma entity upon completion of the Transaction ?Public information relating to the business and financial condition of the Company ?Public information with respect to selected public companies we considered relevant ?Public information with respect to selected precedent transactions we considered relevant ?Various equity research reports and industry sources we considered relevant ?Such other information, investigations, analyses and discussions (including discussions with the management of the Company, the Companys external legal counsel, and other third parties) as we considered necessary or appropriate in the circumstances PROJECT CALCULUS 4
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives Summary Perspectives PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Patheon Business Overview Business Overview Products and Services Provider of pharmaceutical development and Contract Manufacturing Pharmaceutical Development Banner Life Sciences commercial manufacturing outsourcing services Outsourcing (CMO) Services (PDS) (Soft-Gel Drug Delivery) (Banner) for both prescription (Rx) and over-the-counter (OTC) drugs Manufactures various sterile, Offers a broad range of Capabilities include solid, conventional and development services across proprietary soft-gel Serves approximately 300 clients, including 19 specialized dosage forms approximately 40 different formulations of the 20 largest pharmaceutical companies, 8 Also offers specialized dosage forms Offers over 70 products of the top 10 biotech companies, and 8 of the capabilities in high potency, Supports customers across across OTC, Rx and 10 largest specialty pharmaceutical companies controlled substance and various stages of drug nutritionals Operates 14 facilities globally Employs approximately people modified release products development process 6,000 Geographic Footprint Segmentation Toronto, Canada Whitby, Canada Revenue by Geography (YTD Q213) Revenue by Business Segment (2013E) (PDS, CMO solids) (PDS, CMO solids) Swindon, England (PDS, CMO sterile) (US$467.4 mm) (US$1.1 bn) Tilburg, Durham, Milton Park, England Netherlands Mexico City, NC (HQ) (PDS development) Mexico Tokyo, Japan Monza, Italy Revenue by Customer (YTD Q213) Revenue by Product (YTD Q213) High Point, (PDS, CMO solid/sterile) NC Legend Manatí, Puerto Rico Ferentino, Italy Legacy (PDS, CMO sterile) (CMO solids) Banner Cincinnati, USA Bourgoin, France (PDS, CMO solid/sterile) (PDS, CMO solids) Source: Company filings, Company confidential information package and Company management presentation. PROJECT CALCULUS 6
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Recent Financial Developments Introduced company-wide in 2011 to streamline PF 2013E Adjusted EBITDA Bridge operations and boost margins US$ millions Assessing operations across all business segments to Operational eliminate bottlenecks while significantly reducing costs Balance 137.8 147.0 141.4 149.4 149.6 149.6 156.0 157.8 168.8 182.6 185.8 177.8 177.8 Excellence through elimination of redundant labour and overhead Change 22.5 9.3 (5.7) 8.0 0.3 6.4 1.8 11.0 13.7 3.2 (8.0) Initiatives costs (OE) Focused site missions and investment in state-of-the-art 177.8 capabilities has freed up 40-50% of capacity to support 149.6 future growth initiatives 115.2 $29.9mm of cost savings realized in FY2012 Completed on December 14, 2012 for total cash consideration of approximately US$269 mm ?10.9x EV / LTM EBITDA ?Estimated $12.5 mm of synergies, 9.8% of PF CMO PDS OE PDS + EBITDA EBITDA Banner BonusIncome EBITDA Savings EBITDA Savings (Banner) Bonus Reduction Shutdown Shutdown 2013E 2012A Other 2013EIntegration Banner CMO OE Caguas (Patheon) Normalized In connection with the acquisition, the Company Adjusted Adjusted Synergies Olds Site Site PF Adjusted completed a refinancing, including: Banner Banner US$660 mm senior secured facilities Organic / Operational Efficiencies Pro Forma ?Arranged Acquisition (US$575 mm Secured Term Loan and US$85 mm Secured Credit Facility) ?Completed US$30 mm transferable rights offering at C$3.19 per share (backstopped by JLL) Reported Pro Forma EBITDA EBITDA Banner provides the Company with access to a portfolio of 60+ soft gel products, 7 proprietary technologies and extensive pipeline of 27 products Increases capabilities / scale in complex dosage formats Source: Company filings, Financial Forecast Financial Forecast Adjusted EBITDA incorporates the Banner acquisition, in addition to savings from various OE initiatives across all business segments PROJECT CALCULUS 7
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Consolidated Financial Perspectives Both historical figures and Financial Forecast are shown pro forma the acquisition of Banner; corporate expenses allocated to segments pro-rata revenue PF Revenue Growth (31-Oct Year End) PF Adjusted EBITDA Growth (31-Oct Year End) (US$ millions) CMO PDS Banner (US$ millions) CAGR 10A-13E 13E-17E CMO PDS Banner Margin CAGR 10A-13E 13E-17E CMO 6.3% 6.4% CMO 24.1% 13.0% 20.8% PDS 5.3% 7.0% $1,376 19.9% PDS 4.4% 11.1% 18.9% Banner 2.4% 7.8% $1,295 Banner 6.5% 13.9% 17.8% $1,218 $287 Total 5.2% 6.8% $1,144 Total 15.2% 12.7% 16.8% $257 344 49 $1,057 322 $230 $1,020 $961 277 299 12.8% 43 $909 $204 269 255 182 193 11.4% 11.3% 38 57 EBITDA $178 261 171 33 52 237 162 Revenue 138 147 29 48 127 44 126 $116 $115 37 Adjusted $110 24 17 15 792 840 181 705 747 21 26 162 613 655 33 144 545 573 127 111 71 74 58 FY2010A FY2011A FY2012A PF FY2014E FY2015E FY2016E FY2017E FY2010A FY2011A FY2012A PF FY2014E FY2015E FY2016E FY2017E FY2013E FY2013E Other Key Metrics Capex (1) $48.8 $44.5 $48.5 $49.2 $53.1 $56.3 $59.7 $63.2 Capex / Revenue 5.4% 4.6% 4.8% 4.7% 4.6% 4.6% 4.6% 4.6% Source: Company data, Financial Forecast Note: Historical data shown PF Banner as per 2.1.4 Banner_Historical PL.xlsx; Corporate expenses allocated between CMO, PDS and Banner based on revenue contribution. Meaningful revenue growth expected EBITDA growth and margin expansion to be driven by in all business segments Operational Excellence and Banner acquisition PROJECT CALCULUS 8
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO RVS Price & Capitalization Price & Volume Analysis Summary Statistics Volume Price Peer Group (Indexed) Capitalization(1) $10.00 Reports Q3/13 results; adjusted 5 EBITDA of $41.0 mm vs. consensus Current At Offer of $41.4 mm JLL Offer Price (US$8.25 / C$8.48) RVS Price (C$ / sh) $6.10 $8.48 Reports Q2/13 results; adjusted RVS Price (1.0284x) (US$ / sh) $5.93 $8.25 EBITDA of $34.4 mm, more than (2) $8.00 double of Q2/12 4 F.D. Shares (mm) 146.9 148.3 JLL offer at US$2.00 per share Reports Q1/13 results; adjusted F.D. Market Cap (US$ mm) $872 $1,224 EBITDA of $19.8 mm compared to Directors advise shareholders to ($1.9) mm in Q1/12 Add: Face Value of Debt (US$ mm) 621 621 reject the JLL offer (3) Add: Pref. Shares (US$ mm) Non-binding proposal from Lonza ) $ Group AG at US$3.55 per share Reports F2012 results; adjusted $6.00 EBITDA of $71.1 mm, an increase of 3 Add: Fair Value of FX Liab. (US$ mm) 3 3 (C 7.1% from prior FY Volume Add: AT Pension Liability (US$ mm) 29 29 Price Announces acquisition of Banner Pharmacaps for US$255 mm Less: Cash (US$ mm) (41) (41) (4) RVS Less: Investments (US$ mm) (9) (9) $4.00 JLL takes up 33.9 mm shares of Stock continued to decline due to 2 (millions) Patheon slow implementation of growth Enterprise Value (US$ mm) $1,475 $1,827 intiatives and continued restruturing costs Leverage(5) Debt / 14E EBITDA (ratio) 3.6x Share price has Net Debt / 14E EBITDA (ratio) 3.4x $2.00 1 Lonza Group withdrawls proposal significantly outperformed due to new managements Market Data (Exchange: Toronto) execution of Operational Announces independent valuation of Appoints Excellence Intiative plans 52-Week High (C$ / sh) $6.80 US$4.20 to US$5.00 per share James C. Mullen as CEO (C$5.29 to C$6.30) 52-Week Low (C$ / sh) $3.00 20-Day VWAP (C$ / sh) $6.22 18-Oct-08 18-Oct-09 18-Oct-10 18-Oct-11 18-Oct-12 18-Oct-13 90-Day VWAP (C$ / sh) $6.14 1-Year Avg. Daily Vol (k) 43 Actual Adjusted EBITDA Margins Source: Company data, Company filings, FactSet and Select Street Research Note: Peer Group consists of Albany Molecular Research, Biocon, Cambrex, Cangene, Charles River, Covance, ICON, Jubliant, Lonza, Parexel, Quintiles and 18.1% WuXi. 17.1% 16.3% 17.0% 15.7% 14.5% 16.1% 15.4% 1. Balance sheet as at 31-Jul-13 13.5% 12.7% 12.1% 2. Treasury stock method applied 10.4% 8.7% 9.1% 9.3% 3. Preferred Shares are non-transferrable, have no dividend and a wind up value 8.2% 7.6% 8.0% 6.0% 6.0% of C$0.0001 4. 18% interest in two Italian entities known as BSP Pharmaceuticals, as well as (1.2%) immaterial interests in certain U.S. retirement plans 5. Based on Street Consensus FY2014E EBITDA of US$172.8 mm, as CY2014E Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2009 2010 2011 2012 2013 is not available PROJECT CALCULUS 9
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Total Return Relative Performance 2011 2012 2013 YTD CRO CMO Cambrex 39% Patheon 167% Albany Molecular 148% S&P 500Health Care 13% Albany Molecular 80% WuXi PharmaTech 85% Parexel International (2%) ICON 62% Parexel International 80% S&P/TSX (11%) Cambrex 58% Patheon 77% Covance (11%) Parexel International 43% Lonza 63% ICON (22%) WuXi PharmaTech 43% Covance 55% Charles River (23%) Charles River 37% ICON 47% Lonza (24%) Covance 26% Cambrex 45% WuXi PharmaTech (32%) Jubilant Life Sciences 23% Cangene 41% Cangene (36%) S&P 500Health Care 18% S&P 500Health Care 34% Biocon S&P/TSX 10% Charles River 27% (45%) Biocon 3% Biocon 5% Patheon (46%) Cangene (4%) S&P/TSX 5% Jubilant Life Sciences (46%) Lonza (5%) Jubilant Life Sciences (69%) Albany Molecular (48%) Source: FactSet Note: Total return analysis includes impact of dividends paid; returns shown in US$. Patheon has outperformed its peers over the last two years on the back of Operational Excellence initiatives and the Banner acquisition PROJECT CALCULUS 10
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Research Analyst Perspectives Research Analysts Price Targets Current Research Analyst Themes Broker Date Target Price Business Transformation Gaining Momentum TD Newcrest 09-Sep-13 $8.00 Continued momentum highlighted by strong Q3/13 revenue and adjusted EBITDA performance Euro Pacific Canada 06-Sep-13 7.50 Justification for trading multiple expansion with growth and profitability performance expected to be in RBC Capital Markets 05-Sep-13 7.00 line with CRO peer group Median (C$) $7.50 Expectations of Continued Margin Expansion Current Share Price (C$) $6.10 Looking forward, ? opportunities for significant cost savings, contributed from Banner M&A synergies and Premium (Discount) to Share Price 23.0% the wind down of certain facilities in Alberta and Puerto Rico Sell Hold Buy Further upside exists as management continues to integrate and optimize Banner Positive Industry Trends to Continue Well positioned to take advantage of increased R&D spending as global economic recovery continues ?Both the CMO and CRO industries are performing well in the current macro-environment Large pharmaceutical companies continue to increase outsourcing of product development and manufacturing processes Target Price Methodology Peer Research Analysis Sell Hold Buy 3 1 23 11 15 12 3 16 17 19 19 15 2 23% 7% 11% 158% 7% (2%) 15% 11% 16% 0% 4% (10%) (4%) 10% 8% 7% 7% 6% 6% 15% 30% 23% 33% 33% 20% 27% 29% 38% 63% 100% 100% 69% 100% 70% 70% 69% 67% 67% 67% 64% 56% 31% 15% Life ICON River Patheon Albany Molecular Research Biocon Jubilant Sciences Parexel International WuXi PharmaTech Cambrex Quintiles Transnational Holdings Covance Charles Laboratories Lonza Cangene Source: FactSet and select Street Research Number of Research Analysts in Coverage Universe Note: Total number of research analysts include brokers with unknown ratings. Target Price Premium / (Discount) to Current Stock Price PROJECT CALCULUS 11
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Ownership Summary Shareholder Registry Holdings by Investor Class Investor Information Current Holdings Investor Name Country Style WAC Basic (USD) (mm) (%) Top Strategic & Insider JLL Partners 78.5 55.7% Joaquin Viso 11.7 8.3% James Mullen 2.3 1.6% Others 0.8 0.6% Top 10 Institutions CI Investments Canada GARP $3.86 10.7 7.6% OppenheimerFunds United States Growth 3.64 2.6 1.8% TDAM USA Canada Yield 4.29 2.0 1.4% Source: FactSet and Company filings Hesperian Capital Management Canada Growth 3.96 1.7 1.2% Altrinsic Global Advisors LLC United States Value 4.26 1.4 1.0% Fiera Capital Corp. Canada GARP 4.92 1.2 0.9% Institutional Holdings by Country AGF Investments Canada Growth 3.66 0.3 0.2% Dimensional Fund Advisors United States Value 2.42 0.1 0.1% AXA Rosenberg Investment Management Canada GARP 3.66 0.0 0.0% Picton Mahoney Asset Management Canada Yield 3.60 0.0 0.0% Other Identified Institutions 0.0 0.0% Summary Strategic & Insider 93.3 66.2% Institutional Holders 20.1 14.3% Unidentified Institutional & Retail 27.5 19.5% Total Basic Shares Outstanding 140.9 100.0% Options 11.0 Total F.D. Shares Outstanding F.D. ITM Shares Outstanding of 146.9 Using Treasury Method 151.9 Source: FactSet and Company filings Source: FactSet and Company filings Note: Weighted average cost base (WAC) estimated based on quarterly position changes and average prices since 31-Dec-00; directional arrows indicate change Note: United Kingdom holds 0.3% of institutional holdings in holder position over most recent quarter. F.D. shares outstanding does not assume use of treasury method. 66% of Patheons stock is controlled by JLL and other Insiders PROJECT CALCULUS 12
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Comparable Trading Performance Over Time Median Consensus Average EV / NTM EBITDA Patheon CMO Peer Average CRO Peer Average 16.0x 14.0x 12.0x 11.2x 10.0x 8.9x 8.0x 7.7x 6.0x 4.0x 2.0x 31-Oct-08 30-Apr-09 31-Oct-09 30-Apr-10 31-Oct-10 30-Apr-11 31-Oct-11 30-Apr-12 31-Oct-12 30-Apr-13 Source: FactSet Note: Estimates taken monthly and based on Street Consensus; CMO Peer Average consists of the average multiple of Albany Molecular Research, Biocon, Cambrex, Cangene, Jubilant Life Sciences and Lonza Group; CRO Peer Average consists of the average multiple of Charles River Laboratories, Covance, Quintiles, Parexel, ICON and WuXi Patheon has historically traded at a discount to its CMO and CRO peers; and now trades between its CMO and CRO peers PROJECT CALCULUS 13
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Consolidated Forecast CMO Forecast PDS Forecast Banner Forecast Other Considerations Financial Perspectives Summary Perspectives PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Background to the Financial Forecast BMO was provided a financial forecast (the Financial Forecast) Financial Forecast Assumptions from the Company, which has formed the basis for these perspectives Segment build-up (CMO, PDS, Banner and Corporate) General Four year forecast period, FY2014E FY2017E (the Forecast BMOs review has Period) As part of of the Financial Forecast, BMO participated in detailed discussions with certain members of the Segment revenue is based on a detailed customer-by-customer Companys management team, including: product build-up for FY2014E Revenue FY2015E FY2017E based on estimated industry growth rates A guided review of the Financial Forecast design on Friday and segment market share September 20, 2013; A discussion focused on Managements key Financial Standard product costing model with various operating efficiencies ?COGS implied throughout the Forecast Period Forecast assumptions on Tuesday September 24, 2013; ?A formal in-person Management Presentation on Wednesday October 2, 2013, which included discussions on Based on historical levels and assumed to be a fixed percentage SG&A of sales throughout the Forecast Period Financial Forecast assumptions; and ?Discussions focused on tax and other Financial Forecast Based on historical levels of capital intensity assumptions on October 4, 2013 and October 8, 2013 ?Maintenance vs. growth expenditures based on historical Capex levels In addition to discussions with the Companys management, ?Growth capex relates to new products; no acquisitions contemplated in Financial Forecast BMO has also considered the Financial Forecast from the Cash tax rate of 20% through the Forecast Period perspective of publicly traded companies with similar operating ? characteristics and third party industry benchmarking research Tax Weighted average of statutory tax rates for Companys profitable and taxable entities (incorporates NOLs / tax assets and other tax shields) Net Fixed percentage of revenue (14%) based on historical levels, pro Working forma Banner acquisition Capital PROJECT CALCULUS 15
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Consolidated Financial Forecast Summary Acutal (Pro Forma) Pro Forma Projected CAGR (US$ millions) FY2010A FY2011A FY2012A FY2013E FY2014E FY2015E FY2016E FY2017E 10A-13E 13E-17E CMO Revenue $545 $573 $613 $655 $705 $747 $792 $840 6.3% 6.4% PDS Revenue $126 $127 $138 $147 $162 $171 $182 $193 5.3% 7.0% Banner Revenue $237 $261 $269 $255 $277 $299 $322 $344 2.4% 7.8% Consolidated Revenue $909 $961 $1,020 $1,057 $1,144 $1,218 $1,295 $1,376 5.2% 6.8% % Growth 5.7% 6.2% 3.5% 8.3% 6.5% 6.4% 6.2% Cost of Goods Sold (excl. D&A) Growth rate Raw Materials $220 $233 $252 $247 $268 $287 $306 $325 in-line with Inventory/API Provisions $8 $11 $12 $10 $10 $11 $12 $13 industry Direct Labor $103 $111 $123 $117 $127 $135 $143 $152 forecasts Factory Overhead $209 $228 $233 $214 $225 $234 $243 $252 Quality $76 $82 $86 $83 $88 $92 $96 $101 Technical Affairs / PDSS $46 $50 $50 $48 $51 $53 $56 $60 Total Cost of Goods Sold (excl. D&A) $660 $713 $756 $719 $769 $812 $856 $902 2.9% 5.8% COGS (% of revenue) 72.6% 74.3% 74.1% 68.1% 67.2% 66.6% 66.1% 65.6% Gross Margin (excl. D&A) $249 $247 $265 $337 $375 $406 $439 $474 10.7% 8.9% Gross Margin (%) 27.4% 25.7% 25.9% 31.9% 32.8% 33.4% 33.9% 34.4% SG&A (excl. D&A and stock comp) $122 $128 $136 $145 $156 $160 $165 $169 5.8% 4.0% SG&A (% of revenue) 13.5% 13.3% 13.3% 13.7% 13.6% 13.2% 12.7% 12.3% R&D $12 $15 $14 $14 $15 $16 $17 $18 Other Expense (Income) ($2) ($5) $0 $0 Adj. EBITDA $116 $110 $115 $178 $204 $230 $257 $287 15.2% 12.7% % Margin 12.8% 11.4% 11.3% 16.8% 17.8% 18.9% 19.9% 20.8% Total D&A $64 $63 $50 $52 $52 $55 $58 $62 Adj. EBITDA margins are Adj. EBIT $52 $46 $65 $126 $152 $175 $199 $225 comparatively higher % Margin 5.7% 4.8% 6.4% 12.0% 13.3% 14.4% 15.4% 16.3% versus historicals and peer margins Capital Expenditure Growth $20 $23 $26 $27 $29 $31 $33 $35 Maintenance $28 $21 $23 $22 $24 $25 $26 $28 Total $49 $44 $49 $49 $53 $56 $60 $63 0.3% 6.5% Capex (% of sales) 5.4% 4.6% 4.8% 4.7% 4.6% 4.6% 4.6% 4.6% Growth Capex (% of capex) 41.8% 52.2% 53.5% 55.2% 55.4% 55.6% 55.7% 55.9% NWC (% of sales) 6.6% 9.0% 6.7% 14.0% 14.0% 14.0% 14.0% 14.0% Source: Financial Forecast Note: Historical data shown PF Banner as per 2.1.4 Banner_Historical PL.xlsx; 2013E shown PF impact from OE savings, site closures, unrealized Banner synergies and bonus reversals; Corporate expenses allocated between CMO, PDS and Banner based on revenue contribution. EBITDA margins expanding from 17% to 21%, with capex increasing to $63 million by FY2017E PROJECT CALCULUS 16
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Financial Forecast Versus Street Estimates Revenue (31-Oct Year End) Adjusted EBITDA (31-Oct Year End) (US$ millions) (US$ millions) Financial Forecast Street Consensus Financial Forecast Street Consensus $1,218 Financial Forecast Margin Street Margin $1,144 $230 $1,122 $204 $1,057 $1,014 $178 $173 US$149 mm $141 18.9% 17.8% EBITDA 16.8% Margin at 14.2% 15.4% US$149 mm 13.9% n.a. n.a. PF FY2014E FY2015E PF FY2014E FY2015E FY2013E FY2013E Source: Financial Forecast, select Street research Patheons Financial Forecast is relatively in line with street estimates at the revenue level, but more aggressive with respect to EBITDA growth and margin PROJECT CALCULUS 17
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Industry Perspectives Benchmarking Industry Growth Statistics Financial Forecast 2012A2017E Industry Growth Forecasts Third Party Research Forecasts Revenue CAGR By Segment Patheon Management Presentation Revenue EBITDA CMO 19.7% 16.9% 25.9% Patheon CMO Revenue CAGR (12A-17E): 6.5% PDS CRO Patheon Banner Revenue CAGR (12A-17E): 5.1% Patheon PDS Revenue CAGR (12A-17E): 6.8% 11.0% 9.0% 6.8% 7.0% 7.0% 6.6% 6.5% 6.0% 6.3% 6.1% 5.5% 6.3% 5.1% 3.4% CMO PDS Banner 2012A2017E 2012A2016E 2012A2014E 2010A2018E 2012A2017E 2011A2016E 2011A2016E 2012A2017E 2012A2016E 2013E2016E 2010A-2015E CMO PDS U.S. Soft-Gel GBI Research Frost & Sullivan PharmSource PharmSource Jefferies Parexel Sterne Agee Wells Fargo Industry Competitive Landscape Contract Manufacturing Outsourcing Pharmaceutical Development Services Soft-Gel Drug Delivery 32% 11% All 10% Others All Others 5% 73% 9% All 16% 79% Others 5% 41% 8% 11% $14B Market Size (2012A) $2B Market Size (2012A) $6B Market Size (U.S.) (2012A) Sources: Company filings; Company confidential information package; Company management presentation; Company market intelligence presentation; Global Pharmaceutical Contract Manufacturing Market, Frost & Sullivan, August 2013; GBI Research, April 2012; Jefferies equity research, March 2013; Wells Fargo equity research, September 2011; Sterne Agee equity research, June 2013; and PAREXEL International Investor Day Presentation, June 2013. PROJECT CALCULUS 18
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Business Mix Perspectives US$ millions PF 2010A PF 2013E 2017E FY2010A$909 FY2013E$1,057 FY2017E$1,376 26% 24% 25% CMO PDS 60% 62% 61% Revenue Banner 14% 14% 14% FY2010A$116 FY2013E$178 FY2017E$287 16% 17% EBITDA 21% CMO PDS 51% 20% Banner 21% 63% 63% Adjusted 28% Source: Company data, Financial Forecast Note: 2010A is shown PF Banner acquisition. Patheons business mix is forecasted to remain relatively stable during the Forecast Period PROJECT CALCULUS 19
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Consolidated Forecast CMO Forecast PDS Forecast Banner Forecast Other Considerations Financial Perspectives Summary Perspectives PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO CMO Financial Forecast Themes Favorable Global Diversification Strong Visibility / Long Contract Cycle 300+ PRODUCTS ACROSS 125 CUSTOMERS MINIMAL CONCENTRATION ~97% OF 2014 FORECAST UNDER CONTRACT Revenue by Product (YTD 2Q13) Revenue by Customer(1) (2014E) Revenue Under Contract 97% 80% 65% 2014E 2015E 2016E Source: Company data 1. 2014E customer details for revenue under contract Source: Data per management estimates provided on October 1, 2013 Customer base spanning large pharma to emerging biotech Good visibility to short-term revenue and gross margin forecast Comprehensive Manufacturing Capabilities Product Mix Provides Sustainable Gross Margins SPECIALIZED CAPABILITIES PROVIDE COMPETITIVE ADVANTAGE DOSAGE FORMS WEIGHTED TOWARDS HIGHLY PROFITABLE PRODUCTS PhIII ORAL Complex ORAL Patheon can make 50% Sterile Compounds Compounds Patheon cannot make 45% Lyo Vials(1) (261) (108)(1) Non-Sterile Cytotoxic 40% Other Sterile Vaccine (2) 35% Complex Sterile Liquid Vials 30% Pre-Filled Syringes Controlled Substance AVG. CMO GROSS MARGIN (41%) Margin 25% Capsules Non-Coated Tablets Coated Tablets Controlled Release 20% Other Non-Sterile Hormone Gross 15% Biologic Product #365 10% Powders / Granulations Simple Potential High Potency (59%) 5% Fixed Dose Combination Sterile Liquid Ampoules 0% Potential Low Solubility 050 100 150 200 Revenue ($M)(3) Orals Complex Source: Company data Source: Company data 1. Excludes Product #365 (lyo vial); 2. Gross margin based on 2013 budget and standard costs, excluding D&A and other / 1. Select compounds may be included in more than one category pro forma adjustments; 3. Excludes other / miscellaneous revenue Capability to produce 98% of PhIII oral compounds with known formulation Expanding mix to high-margin sterile products PROJECT CALCULUS 21
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO CMO Financial Summary Acutal (Pro Forma) Pro Forma Projected CAGR (US$ millions) FY2010A FY2011A FY2012A FY2013E FY2014E FY2015E FY2016E FY2017E 10A-13E 13E-17E Revenue $545 $573 $613 $655 $705 $747 $792 $840 6.3% 6.4% % Growth 5.0% 7.1% 6.8% 8.0% 6.0% 6.0% 6.0% Growth rate Cost of Goods Sold (excl. D&A) in-line with Raw Materials $123 $122 $135 $142 $153 $162 $172 $182 Inventory/API Provisions $6 $8 $9 $7 $8 $8 $9 $10 industry Direct Labor $76 $80 $91 $91 $98 $104 $110 $117 forecasts Factory Overhead $153 $164 $168 $159 $165 $170 $175 $181 Quality $50 $52 $57 $57 $61 $63 $66 $69 Technical Affairs / PDSS $4 $4 $3 $5 $5 $5 $5 $5 Total Cost of Goods Sold (excl. D&A) $412 $430 $463 $461 $489 $513 $537 $563 3.8% 5.1% COGS (% of revenue) 75.6% 75.2% 75.6% 70.5% 69.4% 68.6% 67.8% 67.1% Gross Margin (excl. D&A) $133 $142 $150 $193 $216 $235 $255 $277 13.3% 9.4% Gross Margin (%) 24.4% 24.8% 24.4% 29.5% 30.6% 31.4% 32.2% 32.9% SG&A (excl. D&A and stock comp) $59 $58 $54 $57 $59 $60 $62 $63 3.9% 3.7% CMO business is SG&A (% of revenue) 13.5% 12.8% 12.3% 12.6% 12.6% 12.2% 11.7% 11.4% the main driver of consolidated R&D EBITDA Other Expense (Income) $1 ($2) $1 ($0) expansion and Segment Adj. EBITDA $72 $86 $95 $136 $157 $174 $193 $213 23.5% 11.9% FCF generation % Margin 13.3% 15.1% 15.5% 20.8% 22.3% 23.3% 24.4% 25.4% Corporate G&A Allocation ($14) ($15) ($21) ($25) ($30) ($31) ($31) ($32) Segment Adj. EBITDA (Post-Allocation) $58 $71 $74 $111 $127 $144 $162 $181 24.1% 13.0% % Margin 10.7% 12.4% 12.0% 17.0% 18.0% 19.2% 20.4% 21.6% Total D&A $49 $46 $35 $32 $35 $37 $39 $42 Adj. EBIT $9 $25 $39 $79 $92 $107 $123 $140 % Margin 1.7% 4.3% 6.3% 12.0% 13.0% 14.3% 15.5% 16.6% Capital Expenditure Growth $9 $13 $17 $20 $22 $23 $24 $26 Maintenance $19 $10 $12 $15 $16 $17 $18 $19 Total $27 $23 $30 $35 $38 $40 $42 $45 8.5% 6.5% Capex (% of sales) 5.0% 4.0% 4.8% 5.3% 5.3% 5.3% 5.3% 5.3% Growth Capex (% of capex) 31.6% 57.4% 58.5% 57.6% 57.6% 57.6% 57.7% 57.8% Source: Financial Forecast Note: 2013E shown PF impact from OE savings, Caugas site closure and bonus reversals; Corporate expenses allocated between CMO, PDS and Banner based on revenue contribution. EBITDA margins expanding from 17% to 22%, with capex increasing to $45 million by FY2017E PROJECT CALCULUS 22
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO CMO Benchmarking the Financial Forecast Revenue Growth EBITDA(1) Growth Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR) Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR) 12.8% 31.2% 8.4% 7.2% 6.0% 13.8% 12.5% 9.7% Patheon CMO Median of (2) Patheon CMO Median of (2) Patheon CMO Median of (2) Patheon CMO Median of (2) Comparable CMOs Financial Forecast Comparable CMOs Comparable CMOs Financial Forecast Comparable CMOs EBITDA(1) Margin Capital Intensity(3) 2012A 2014E 2012A 3 Yr Avg 2014E 2014E 20.5% 18.9% 18.0% 8.0% 7.0% 12.0% 5.3% 4.8% Patheon CMO Median of Patheon CMO Median of Patheon CMO Median of Patheon CMO Median of (2) (2) (2) (2) Comparable CMOs Financial Forecast Comparable CMOs Comparable CMOs Financial Forecast Comparable CMOs Source: Company filings, Financial Forecast 1. Excludes synergies and repositioning expenses 2. Average of CMOs based on calendarized financial metrics. CMOs include Albany Molecular Research, Biocon, Cambrex, Cangene, Jubilant Life Sciences and Lonza Group 3. Capital intensity defined as capital expenditures divided by revenue Patheon EBITDA growth outpacing peers; growth driven by OE initiatives that expand EBITDA margins to be more in-line with peers PROJECT CALCULUS 23
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Consolidated Forecast CMO Forecast PDS Forecast Banner Forecast Other Considerations Financial Perspectives Summary Perspectives PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO PDS Financial Forecast Themes Significant Diversification Project-Based / CRO-Like Visibility 450+ PROJECTS ACROSS 260 CUSTOMERS MINIMAL CONCENTRATION LESS CERTAINTY OF REVENUE GIVEN PROJECTS SIZE / TERM Revenue by Product (YTD Q213) 2014E PDS Revenue Source: Company data Source: Company data Full Spectrum of Drug Development Services Strong Pipeline of New Business COMPREHENSIVE OFFERING CREATES A ONE-STOP SHOP +$100 mm BACKLOG SUPPORTS A CRITICAL SOURCE OF CMO BUSINESS ?Clinical trial material manufacturing and packaging PDS Backlog CMO Revenue by Source +$100 0+MM mm ?Pre-formulation ?Analytical development ?Formulation ?Stability ?Scale-up and validation ?Product registration PDS Backlog Source: Data per management estimates provided on October 1, 2013 28 NMEs worldwide since 2001 >1/3 of CMO business originates in PDS sticky business model PROJECT CALCULUS 25
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO PDS Financial Summary Acutal (Pro Forma) Pro Forma Projected CAGR (US$ millions) FY2010A FY2011A FY2012A FY2013E FY2014E FY2015E FY2016E FY2017E 10A-13E 13E-17E Revenue $126 $127 $138 $147 $162 $171 $182 $193 5.3% 7.0% % Growth 1.2% 8.7% 6.1% 10.0% 6.0% 6.0% 6.0% Cost of Goods Sold (excl. D&A) Growth rate Raw Materials $1 $1 $2 $2 $2 $2 $2 $2 in-line with Inventory/API Provisions $0 $0 $0 $0 $0 $0 $0 $0 industry Direct Labor $5 $6 $6 $7 $7 $8 $8 $9 forecasts Factory Overhead $20 $23 $23 $22 $24 $25 $27 $28 Quality $10 $12 $11 $10 $11 $12 $12 $13 Technical Affairs / PDSS $41 $46 $46 $44 $46 $48 $51 $54 Total Cost of Goods Sold (excl. D&A) $77 $88 $89 $85 $91 $96 $101 $107 3.1% 5.9% COGS (% of revenue) 61.5% 69.1% 64.2% 57.8% 56.0% 55.9% 55.7% 55.5% Gross Margin (excl. D&A) $48 $39 $49 $62 $71 $76 $81 $86 8.5% 8.4% Gross Margin (%) 38.5% 30.9% 35.8% 42.2% 44.0% 44.1% 44.3% 44.5% SG&A (excl. D&A and stock comp) $14 $17 $19 $20 $20 $21 $21 $22 13.0% 3.5% SG&A (% of revenue) 13.9% 15.7% 16.9% 17.2% 16.7% 16.1% 15.6% 15.0% R&D Other Expense (Income) ($2) ($1) $0 ($0) Segment Adj. EBITDA $36 $24 $31 $43 $51 $55 $59 $64 4.4% 11.1% % Margin 28.6% 18.9% 22.2% 29.1% 31.5% 32.1% 32.7% 33.3% Corporate G&A Allocation ($3) ($3) ($5) ($6) ($7) ($7) ($7) ($7) Segment Adj. EBITDA (Post-Allocation) $33 $21 $26 $37 $44 $48 $52 $57 4.4% 11.1% % Margin 26.0% 16.2% 18.8% 25.3% 27.3% 28.0% 28.8% 29.5% Total D&A $6 $6 $5 $4 $4 $5 $5 $5 PDS segment continues to be Adj. EBIT $27 $15 $21 $33 $40 $43 $47 $51 Patheons highest margin segment % Margin 21.3% 11.7% 15.3% 22.6% 24.5% 25.3% 26.0% 26.7% Capital Expenditure Growth $7 $5 $3 $3 $4 $4 $4 $5 Maintenance $2 $4 $2 $3 $3 $3 $3 $3 Total $9 $9 $5 $6 $7 $7 $7 $8 (11.5%) 7.0% Capex (% of sales) 6.9% 6.9% 3.4% 4.1% 4.1% 4.1% 4.1% 4.1% Growth Capex (% of capex) 78.3% 55.3% 68.3% 57.6% 57.6% 57.6% 57.7% 57.8% Source: Financial Forecast Note: 2013E shown PF impact from OE savings and bonus reversals; Corporate expenses allocated between CMO, PDS and Banner based on revenue contribution. EBITDA margins expanding from 25% to 30%, with capex increasing to $8 million by FY2017E PROJECT CALCULUS 26
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO PDS Benchmarking the Financial Forecast Revenue Growth EBITDA(1) Growth Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR) Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR) 11.2% 9.7% 8.1% 30.3% 4.8% 20.5% 11.1% Patheon PDS Median of Patheon PDS Median of Patheon PDS Median of Patheon PDS Median of (2) (2) (2) (2) Comparable CROs Financial Forecast Comparable CROs Comparable CROs Financial Forecast Comparable CROs (10.9%) EBITDA(1) Margin Capital Intensity(3) 2012A 2014E 2012A 3 Yr Avg 2014E 2014E 27.3% 18.8% 16.0% 12.6% 3.4% 4.1% 4.1% 4.5% Patheon PDS Median of (2) Patheon PDS Median of (2) Patheon PDS Median of Patheon PDS Median of (2) (2) Comparable CROs Financial Forecast Comparable CROs Comparable CROs Financial Forecast Comparable CROs Source: Company filings, Financial Forecast 1. Excludes synergies and repositioning expenses 2. Average of CROs based on calendarized financial metrics. CROs include Charles River Laboratories, Covance, Quintiles, Parexel, ICON and WuXi 3. Capital intensity defined as capital expenditures divided by revenue Patheons OE initiatives driving margin outperformance versus peers PROJECT CALCULUS 27
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Consolidated Forecast CMO Forecast PDS Forecast Banner Forecast Other Considerations Financial Perspectives Summary Perspectives PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Banner Financial Forecast Themes Significant Revenue from Existing Customers / Products Favorable Product Portfolio 80% OF 2014 REVENUE PROJECTED FROM EXISTING BUSINESS 70+ PRODUCTS IN PORTFOLIO ACROSS 60 CUSTOMERS (MANY OWNED) ?tail ?Largely private label OTC and nutritional products ?7 proprietary soft-gel technologies Source: Company data Stable, recurring stream of revenue diversified across geographic footprint High margin proprietary technology portfolio in soft-gels Product Concentration Strong Pipeline of New Products RISK OF PRODUCT CONCENTRATION RELATIVE TO OTHER SEGMENTS IMPROVED BUSINESS MIX TOWARDS HIGHER MARGIN RX PRODUCTS Revenue by Product (2014E) Product Filing Date Expected Approval Rx December 2010 November 2013 OTC June 2011 January 2014 Rx January 2011 January 2014 Rx November 2012 November 2015 Rx May 2010 January 2017 Source: Company data Source: Company data Pipeline of 27 Rx, OTC and nutritional products PROJECT CALCULUS 29
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Banner Financial Summary Acutal (Pro Forma) Pro Forma Projected CAGR (US$ millions) FY2010A FY2011A FY2012A FY2013E FY2014E FY2015E FY2016E FY2017E 10A-13E 13E-17E Revenue $237 $261 $269 $255 $277 $299 $322 $344 2.4% 7.8% % Growth 8.5% 9.9% 3.1% (5.2%) 8.7% 8.0% 7.5% 7.0% Cost of Goods Sold (excl. D&A) Strong growth through Raw Materials $96 $110 $115 $103 $114 $123 $132 $141 soft-gel product Inventory/API Provisions $2 $2 $2 $2 $2 $2 $3 $3 launches in large and Direct Labor $22 $25 $26 $20 $21 $23 $25 $27 growing markets Factory Overhead $35 $40 $42 $33 $35 $38 $41 $43 Quality $16 $18 $19 $15 $16 $17 $18 $19 Technical Affairs / PDSS Total Cost of Goods Sold (excl. D&A) $170 $195 $203 $173 $189 $203 $218 $232 0.5% 7.7% COGS (% of revenue) 71.8% 74.8% 75.6% 67.9% 68.1% 67.9% 67.7% 67.5% Gross Margin (excl. D&A) $67 $66 $65 $82 $88 $96 $104 $112 7.0% 8.1% Gross Margin (%) 28.2% 25.2% 24.4% 32.1% 31.9% 32.1% 32.3% 32.5% SG&A (excl. D&A and stock comp) $25 $28 $28 $28 $28 $30 $31 $32 6.0% 4.7% SG&A (% of revenue) 13.2% 13.5% 13.8% 14.7% 14.5% 14.0% 13.5% 13.1% R&D $12 $15 $14 $14 $15 $16 $17 $18 Other Expense (Income) ($1) ($1) ($1) $1 Segment Adj. EBITDA $30 $24 $25 $39 $45 $50 $56 $62 6.5% 13.9% % Margin 12.7% 9.3% 9.2% 15.2% 16.2% 16.9% 17.5% 18.0% Corporate G&A Allocation ($6) ($7) ($9) ($10) ($12) ($12) ($13) ($13) Segment Adj. EBITDA (Post-Allocation) $24 $17 $15 $29 $33 $38 $43 $49 6.5% 13.9% % Margin 10.1% 6.6% 5.7% 11.4% 11.9% 12.7% 13.5% 14.2% Total D&A $9 $10 $10 $12 $11 $12 $13 $14 Adj. EBIT $15 $7 $6 $17 $22 $26 $30 $35 Operational improvements driving EBITDA % Margin 6.3% 2.8% 2.2% 6.8% 7.9% 8.7% 9.4% 10.1% margin expansion in Banner segment Capital Expenditure Growth $5 $5 $5 $4 $4 $4 $5 $5 Maintenance $7 $7 $7 $3 $3 $3 $3 $4 Total $12 $12 $13 $6 $7 $7 $8 $9 (18.2%) 7.7% Capex (% of sales) 4.9% 4.6% 4.8% 2.5% 2.5% 2.5% 2.5% 2.5% Growth Capex (% of capex) 42.7% 42.5% 42.2% 57.6% 57.6% 57.6% 57.7% 57.8% Source: 2.1.4 Banner_Historical PL.xlsx, Financial Forecast Note: Historical COGS breakdown based on 2013E COGS split; 2013E shown PF impact from unrealized Banner synergies, OE savings, Olds site closure and bonus reversals; Corporate expenses allocated between CMO, PDS and Banner based on revenue contribution EBITDA margins expanding from 11% to 14%, with capex increasing to $9 million by FY2017E PROJECT CALCULUS 30
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Banner Benchmarking the Financial Forecast Revenue Growth EBITDA(1) Growth Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR) Historical (2010A 2012A CAGR) Estimates (2012A 2014E CAGR) 12.8% 46.3% 8.4% 6.4% 13.8% 9.7% 1.5% PatheonBanner Average of Patheon Banner Average of PatheonBanner Average of Patheon Banner Average of (2) (2) Comparable CMOs(2) Financial Forecast Comparable CMOs(2) Comparable CMOs Financial Forecast Comparable CMOs (19.9%) EBITDA(1) Margin Capital Intensity(3) 2012A 2014E 2012A 3 Yr Avg 2014E 2014E 20.5% 18.9% 8.0% 7.0% 11.9% 4.8% 5.7% 2.5% PatheonBanner Average of (2) Patheon Banner Average of (2) PatheonBanner Average of Patheon Banner Average of (2) (2) Comparable CMOs Financial Forecast Comparable CMOs Comparable CMOs Financial Forecast Comparable CMOs Source: Company filings, Financial Forecast 1. Excludes synergies and repositioning expenses 2. Average of CMOs based on calendarized financial metrics. CMOs include Albany Molecular Research, Biocon, Cambrex, Cangene, Jubilant Life Sciences and Lonza Group 3. Capital intensity defined as capital expenditures divided by revenue. Short term revenue CAGR artificially low due to subpar 2013 revenue CAGR at ~8% throughout Forecast Period; Capital Intensity lower than peers as Patheons focus is on applying OE initiatives to expand margins PROJECT CALCULUS 31
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Consolidated Forecast CMO Forecast PDS Forecast Banner Forecast Other Considerations Financial Perspectives Summary Perspectives PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Foreign Exchange Considerations Financial Forecast was built with a flat FX assumption, based on FY2013 YTD exchange rates as at June, 2013 Foreign Exchange Historical and Forecast Foreign Exchange Sensitivity 2014E USD / EUR (1) 2013 2017 US$ millions At Original Rates Impact of Mark-to-Market on Plan 1.5 Financial Forecast 1.3000x 1.3000x Spot 1.3687x 1.3687x Cost Revenue Net Pre-Tax 2014E Revenue2014E Costs1.3 US$1,143.8 mm US$939.8 mm Increase Increase Impact 3% Consolidated (18.4) 19.7 1.3 1.1 2% 0% 0% USD / CAD 1.1 2013 2017 USD EUR (13.3) 18.1 4.9 Financial Forecast 0.9600x 0.9600x 20% Spot 0.9722x 0.9722x GBP 3% GBP (4.1) 2.1 (2.0) 1.0 EUR 30% 43% MXN 62% 0.9 CAD (2.3) 0.4 (2.0) USD / GBP CAD 27% JPY JPY (0.0) (0.0) 1.8 2013 2017 3% Financial Forecast 1.5200x 1.5200x Spot 1.6167x 1.6167x 7% 1.6 Source: Company data MXN (0.9) 1.3 0.4 1.4 EBITDA Bridge Analysis MXN / USD US$ millions FY2014E FY2015E FY2016E FY2017E 16.0 2013 2017 Financial Forecast 12.30x 12.30x 14.0 Spot Financial Forecast 12.86x 12.86x Revenue $1,144 $1,218 $1,295 $1,376 12.0 Adjusted EBITDA $204 $230 $257 $287 10.0 Mark-to-Market (FX) (1) JPY / USD Revenue $20 $21 $22 $24 110.0 Adjusted EBITDA $1 $2 $2 $2 90.0 2013 2017 Financial ForecastFX Adjusted Financial Forecast 101.15x 101.15x Revenue $1,163 $1,239 $1,318 $1,400 70.0 Spot 97.77x 97.77x 2011 2012 2013 2014 2015 2016 2017 Adjusted EBITDA $205 $231 $259 $289 Source: Bloomberg, Financial Forecast 1. Revenue and Adjusted EBITDA adjusted to reflect spot FX pricing as at 18-Oct-13 Revenue and EBITDA are somewhat sensitive to exchange rates forecast adjustment; Mark-to-Market has a ~US$1 mm postive impact on FY2014E EBITDA PROJECT CALCULUS 33
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Other Considerations Working Capital Tax Financial Forecast assumes net working capital as a percentage of The Company is currently organized through 25 legal entities and files tax Revenue is consistent over Forecast Period returns in 11 jurisdictions Net working capital estimated at 14.0% of revenue, an increase to the Company is currently a tax payer in only four jurisdictions, including Italy, Companys historical run rate of approximately 7.5% Netherlands, Japan and Mexico ?Increase primarily related to significant working capital requirements at Tax planning strategies include the use of net operating loss carry forwards, the Banner segment due to inventory requirements to support retail R&D credits and double-dip tax shields, and are expected to keep cash distribution taxes at a minimum throughout the Forecast Period Net working capital of US$146 mm at July 31, 2013 equal to approximately ?Sufficient tax assets and other tax strategies implemented to maintain 14% of annualized Q2 and Q3 FY2013A revenue low marginal tax rates beyond Forecast Period ?Q2 and Q3 F2013A are the only two quarters with 100% revenue Management estimates 20% marginal cash tax rate in Forecast Period; contribution from Banner (i.e. no stub period) 22.5% marginal cash tax rate in Terminal Period FY2013E FY2015E estimated cash taxes are illustrated below (US$ millions) Historical Forecasted Implied Cash Tax Rate FY2010A FY2011A FY2012A Q3 FY2013A FY2014E FY2013E FY2014E FY2015E (1) Current Assets (US$ mm) (US$ mm) (US$ mm) Accounts Receivable $140 $158 $162 $182 Inventory $73 $82 $82 $144 Revenue $1,057 $1,144 $1,218 Income taxes receivable $6 $3 $0 $21 Prepaid Expenses $10 $11 $12 $22 Adjusted EBITDA 150 204 230 (2) D&A (52) (52) (55) Current Liabilities (1) (42) (42) (42) Accounts Payable ($157) ($182) ($186) ($206) Interest Expense Income taxes payable ($0) ($6) ($2) EBT $56 $111 $133 Deferred Revenues ($27) ($9) ($14) ($15) Cash Taxes 10.0(2) 20.0(2) 26.7 Net Working Capital $45 $63 $51 $146 $160 (3) (3) Actual Patheon Revenue $671 $700 $752 $1,039 $1,144 Implied Cash Tax Rate 17.7% 18.1% 20.0% NWC% Revenue 6.6% 9.0% 6.7% 14.0% 14.0% Source: Company filings, Financial Forecast Source: Company filings, Financial Forecast 1. Excl. Deferred tax assets-short term of $9.0mm, $8.1mm, $4.3mm & $6.6mm in FY2010-Q3 FY2013A, respectively 1. Q3 FY2013A interest expense annualized 2. Excl. Deferred tax liabilities-short term of $0.3mm in Q3 FY2013A 2. Based on Patheon Management estimate 3. Q2-Q3 FY2013A annualized revenue 3. Patheon Management estimate for FY2015E-FY2017E PROJECT CALCULUS 34
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives Summary Perspectives PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO BMO Capital Markets Approach to Financial Perspectives Financial Perspectives Discounted Cash Flow Precedent Transactions Comparable Trading Fundamentals Fundamentals Fundamentals Evaluates business as a going concern Analysis of precedent CMO, CRO and Analysis based on publicly-traded based on expected unlevered free cash other pharmaceutical service transactions comparable CMO / CRO market flows Advantages participants Synergies estimated and incorporated Reflects strategic investors perception of Advantages the business Advantages Reflects current trends in market prices Provides objective information and profitability / growth of similar Free cash flow projections capture Generally includes a control premium companies company specific long-term business Disadvantages outlook Availability of public and objective financial improvement opportunities, Different perceptions of risk and returns information Reflects allows for adjustments for non-recurrent events Limited information on comparable Disadvantages transactions Riskiness and duration of cash flows Limited number of direct comparables reflected in weighted average cost of Economic backdrop at time of comparable transaction can be different Comparable companies may have different capital business prospects and capital structures Disadvantages Could be affected by exogenous market Subjected to different perceptions of the events Companys future performance Does include a not control premium Requires an in-depth understanding of the company and underlying business drivers PROJECT CALCULUS 36
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Capital Structure Considerations Description Implications 140.9 mm basic RVS outstanding as at July 31, 2013 Restricted ?146.9 mm after adjusting for ITM options (Treasury stock method) n.a. Voting Shares Shareholders entitled to elect six of nine Directors of the Company 150,000 Preferred Shares outstanding (100% held by JLL) as at July 31, 2013 Series D Entitles JLL to designate three Directors of the Company No value ascribed based on Special Voting On liquidation, dissolution or winding-up of the Company, holders of each Preferred Share receive minimal liquidation value and Preferred Shares C$0.0001 non-transferability(1) Not transferable, except to an affiliate of JLL Senior Secured Term loanFloating LIBOR plus 6.00% with LIBOR floor of 1.25% due December 14, 2018 ?US$570.7 mm outstanding as at July 31, 2013 Senior Secured Revolving FacilityUS$85 mm maturing December 14, 2017, bearing interest Net Debt ranging from 5.8% to 7.75% Face value of Debt less book (Debt less Cash) ?US$42.3 mm outstanding as at July 31, 2013 value of Cash and equivalents Italian Bank Loans Two loans outstanding as at July 31, 2013 ?Loan 1: Subsidized loan of US$7.0 mm, interest rate of 0.5%, maturity date of June 30, 2020 ?Loan 2: US$1.0 mm with interest rate of Euribor 6-month +7.1%, maturity date of June 30, 2020 Cash and equivalentsUS$40.9 mm as at July 31, 2013 Defined benefit pension plan deficit (US$22.3 mm), Other post-employment benefit deficit (US$7.8 mm) and unfunded termination indemnities (US$5.7 mm) October 31, 2012 book value Pension Liability (tax affected) No significant changes in plan deficits since October 31, 2012 actuarial valuations Holds 18% interest in two Italian entities known as BSP Pharmaceuticals Investments ?2013 EBITDA estimated at ~€20 mm, with estimated net debt of €28.3 mm Book value Immaterial interests in certain U.S. retirement plans Financial Foreign exchange forward contracts and collars Net liability position of US$2.8 mm as at July 31, 2013 Book value Instruments No significant changes in related underlying exchange rates since July 31, 2013 Source: Company filings 1. MI 61-101 defines fair market value as the monetary consideration that, in an open and unrestricted market, a prudent and informed buyer would pay to a prudent and informed seller, each acting at arms length with the other and under no compulsion to act PROJECT CALCULUS 37
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives DCF Analysis Precedent Transaction Analysis Comparable Trading Analysis Summary Perspectives PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Discounted Cash Flow Analysis Assumptions Key Assumptions Terminal Growth Rate FY2014E based on Patheons Precedent Fairness Opinions OECD Economic Data Street Consensus ? FY2017E projections Operating Financial Forecast Real Nominal 3.90% 3.90% 4.00% Assumptions Assumed $25mm of unlevered free cash flow in Q4 3.50% FY2013E, as per Patheon Management 3.20% Discounted to October 20, 2013 Selected Terminal Growth Rate: 2.50% Discount 2.00% 2.50% 2.00% Mid-year discounting applied Period 2.20% 1.50% 2.10% 2.00% Four year Forecast Period, ending October 31, 2017 of 10.25%1.00% 1.00% 1.00% Discount Selected WACC range 11.25% adjustments Rate Based on comparable beta analysis and PPD / Kendle / inVentiv / OECDOECDOECDStreet CMO Street CRO for size premium (1) (1) (1) H&F, INC THL Canada United States Europe Industry Industry Carlyle Forecast Forecast Based on perpetual growth of normalized terminal year Source: Company filings, OECD Economic Outlook May 2013, select Street research unlevered free cash flow 1. Represent 2018-2030 Real GDP CAGR plus estimated Inflation rates Terminal Value Terminal growth rate of 2.5% assumed MI 61-101 Approach to Synergies Capex 4.5% annual capital intensity into perpetuity to an Assess any distinctive material benefit that might accrue interested party as a consequence of the transaction Flat cash tax rate of 20% in the Forecast Period Tax ?Required to be disclosed in our Valuation 22.5% cash tax rate in Terminal Period Assess what synergies should be included in the Valuation Net Working Net working capital requirements of 14% of revenue ?Guiding principal is the concept of Fair Market Value Capital The monetary consideration that, in an open and unrestricted 50% of pre-tax net identified synergies included market, a prudent and informed buyer would pay to a prudent and Synergies informed seller, each acting at arms length with the other and 50% of US$44.1 mm on a run-rate basis under no compulsion to act Repositioning expenses in FY2014E and FY2015E Repositioning associated with closure of Olds, Caugas and Swindon Expenses facilities FX Spot FX rates PROJECT CALCULUS 39
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Synergy Perspectives US$ millions Synergy Estimates Synergy Category FY2014E FY2015E FY2016E Description 1. Procurement $1$2 $6$8 $13$16Procurement savings through increased volumes and strategic sourcing 2. G&A 79 13 13Headcount and non-headcount cost savings in various cost centres 3. IT 23 68 711Savings resulting from tech outsourcing and system alignmentCost savings from redundant leadership Leadership, 4. 35 58 58Redundant office space currently occupied by DSM senior leadership Public Company Costs, FacilitiesPatheon public company costs Total Synergies $13$19 $30$37 $38$48 One-Time Costs to Realize Synergies Synergy Category FY2014E FY2015E FY2016E Description 1. Procurement $3$4 $0.5$1 $0 2. G&A 34 0 0One-time costs associated with realizing above synergies 3. IT 34 12 0 4. Leadership 24 0 0Severance associated with removal of DSM senior leadership Total One-Time Costs $11$16 $1.5$3 $0 Total Net Synergies $2$3 $28.5$34 $38$48 Source: JLL, Patheon Management and third party consultants Selected Precedent Transaction Analysis Minimum Synergies Strategic Buyer Ann. Target / EV Synergies / Description A strategic buyer could reasonably be expected to accrue ~US$10 mm of synergies Date Acquiror (US$) PF EBITDA from executive compensation and board fees following a transaction with the Company (exclusive of integration costs) $44.1 mm run-rate annual pre-tax synergies Synergy Description Amount Pending Patheon / JLL $1.8 bn 18.7% 2014E Adjusted EBITDA of (US$ mm) $12.5 mm $19.2 mm $234.3 mm (1) Executive compensation (inclusive of stock based rewards)(1) $7.5 19.2 (1) $12.5 mm / $ mm Director compensation (inclusive of stock based rewards) 1.5 Banner / Oct-12 $269 mm 9.8% 15.1% Headcount reduction (2) Patheon Other public company costs 1.4 Other operational synergies Total $10.4 Aptuit (Clinical Source: Company filings, Patheon Management estimates Aug-11 Trial Business) $407 mm n.a. / Catalent 4.0% 1. From Companys Management Information Circular dated 4-Mar-13 2. Other public company costs exclusive of board fees $20.0 mm Dow Pharma / Core R&D savings Dec-08 $308 mm Valeant 11.7% Non-core R&D, G&A and facility consolidation 1. 2014E Pro Forma for 2012A DSM DPP EBITDA (EUR 23 mm) as per Patheon Management presentation; converted from EUR to USD at a rate of 1.3687x PROJECT CALCULUS 40
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Weighted Average Cost of Capital Analysis Comparable Beta Analysis Illustrative Cost of Capital In US$ million unless otherwise noted Company Beta R2 Total Debt(1) Equity Value(2) Debt Ratio Tax Rate Beta (3) BARRA Beta Selected Beta ?U = 0.90 ?U = 1.05 ?U = 1.20 Levered Unlevered Unlevered Covance 1.25 0.36 $325 $5,169 6% 35% 1.20 0.85 Cost of Debt Lonza Group 0.83 0.13 2,516 3,598 41% 22% 0.54 0.66 Nominal Risk Free Rate (4) 2.58% 2.58% 2.58% Parexel Intnl 1.46 0.29 444 3,087 13% 35% 1.33 1.01 Borrowing Spread (5) 4.50% 4.50% 4.50% ICON 0.65 0.11 2,554 13% 0.65 0.83 (6) Country Risk Premium Charles River 1.19 0.35 636 2,378 21% 35% 1.02 0.77 Pre-tax Cost of Debt 7.08% 7.08% 7.08% WuXi Pharma 1.69 0.36 65 2,113 3% 25% 1.65 1.06 Tax Rate 23% 23% 23% Biocon 1.09 0.43 61 1,075 5% 30% 1.05 0.97 After-Tax Cost of Debt 5.5% 5.5% 5.5% Cambrex 1.41 0.21 144 518 22% 35% 1.20 0.73 Albany Molecular Research 1.49 0.26 17 431 4% 35% 1.45 1.27 Cost of Equity Jubilant Life Sciences 1.31 0.44 553 195 74% 30% 0.44 0.63 Nominal Risk Free Rate (4) 2.58% 2.58% 2.58% Cangene (0.27) 0.01 177 27% (0.27) 0.36 (7) 6.11% 6.11% 6.11% 2 Equity Risk Premium Mean (R > 0.2) 1.36 $281 $1,871 18% 1.17 0.91 (6) Country Risk Premium Selected BetaLow 0.90 Size Premium (8) 1.73% 1.73% 1.73% Selected BetaHigh 1.20 Selected Unlevered Beta 0.90 1.05 1.20 Patheon (B3 / B+) 1.32 0.11 $610 $872 41% 23% 0.86 0.52 Optimal Debt in Capital Structure 25% 25% 25% Levered Beta (3) 1.13 1.32 1.51 Cost of Equity (9) 11.2% 12.4% 13.5% Implied WACC (10) 9.8% 10.7% 11.5% Source: Company filings, Bloomberg, BMO CM estimates Note: Levered Betas are Bloomberg 5-year monthly raw Betas, unless otherwise noted; excludes Quintiles Transnational Holdings, due to limited historical trading data. 1. Total Debt (including preferred shares) at book value. 6. Assets and operations mainly located in the U.S. and Canada, not applicable. 2. Equity value as of 18-Oct-13. 7. BMO CM estimate based on data from Ibbotson Risk Premia Over Time report. 3. ?U = ?L / (1 + (1tax rate) x Debt/Equity). 8. BMO CM estimate based on data from Ibbotson Risk Premia Over Time report. 4. Yield on 10-year U.S. Treasury. 9. Cost of equity = risk free rate + ? x market risk premium + size premium + country risk premium. 5. BMO CM estimate of 10-year borrowing spread at the optimal capital structure. 10. WACC = debt/(debt + equity) x((1tax rate) x cost of debt) + equity/(debt + equity) x cost of equity. Implied WACC range of 10.25% to 11.25% PROJECT CALCULUS 41
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Discounted Cash Flow Analysis Financial Forecast Discounted Cash Flow Summary Selected Range Projected Fiscal Year Ending Oct-31 Sensitivity Q4 2013E 2014E 2015E 2016E 2017E Terminal Low High Adjusted EBITDA (US$ mm) $204 $230 $257 $287 $294 WACC (%) 11.25% 10.25% y-o-y growth 36.3% 12.7% 12.0% 11.4% 2.5% Terminal Growth Rate (%) 2.50% 2.50% margin 17.8% 18.9% 19.9% 20.8% 20.8% PV of Projected CF (US$ mm) $484 $493 Other Items: PV of Terminal Value (US$ mm) 1,459 1,701 Less: Unlevered Cash Taxes (US$ mm) (30) (35) (40) (45) (52) Enterprise Value (US$ mm) $1,944 $2,194 Add / (Less): Change in Working Capital (US$ mm) (12) (10) (11) (11) (12) (1) Less: After-Tax Repositioning Expenses (US$ mm) (10) (6) Less: Net Debt (US$ mm) (580) (580) Less: After-Tax Other Cash Payments (US$ mm) (7) Less: Preferred Shares (US$ mm) Add / (Less): Impact of After-Tax FX Forecast (US$ mm) 1 1 2 2 2 Less: Pension Solvency Deficit (US$ mm) (29) (29) (1) Add: Realized After-Tax Net Synergies (US$ mm) 1 13 18 18 18 Less: Fair Value of FX Liabilities (US$ mm) (3) (3) Less: Total After-Tax Pension Funding (US$ mm) Add: Proceeds from ITM Options (US$ mm) 30 30 (2) Less: Capex (US$ mm) (53) (56) (60) (63) (64) Add: Inv. in Unconsol. Affiliates (US$ mm) 9 9 Capital Intensity 4.6% 4.6% 4.6% 4.6% 4.5% (2) Impled Equity Value (US$ mm) $1,370 $1,621 Unlevered Free Cash Flow $25 $93 $136 $166 $187 $186 F.D. Shares Outstanding (mm) 152 152 Terminal Value $2,372 Implied Equity Value per Share (US$ / sh) $9.02 $10.67 Assumptions: Present Value of Projected Cash Flows $489 WACC 10.75% Present Value of Terminal Value $1,572 1. Based on Face Value of debt Terminal Growth Rate 2.50% Enterprise Value $2,061 2. Balance sheet figures as at 31-Jul-13 Sensitivity Analysis Enterprise Value Implied Share Price Implied Terminal Multiple Terminal Growth Rate Terminal Growth Rate Terminal Growth Rate WACC 2.0% 2.5% 3.0% WACC 2.0% 2.5% 3.0% WACC 2.0% 2.5% 3.0% 11.25% $1,856 $1,944 $2,042 11.25% $8.44 $9.02 $9.66 11.25% 6.6x 7.0x 7.5x 10.75% $1,962 $2,061 $2,173 10.75% $9.14 $9.79 $10.53 10.75% 7.0x 7.4x 7.9x 10.25% $2,081 $2,194 $2,323 10.25% $9.93 $10.67 $11.51 10.25% 7.4x 7.9x 8.5x Source: Financial Forecast, JLL, Patheon Management and third party consultants 1. Net synergies incorporated as per JLL and Patheon Management estimates; DCF incorporates 50% of after-tax net synergies 2. 4.5% capital intensity in Terminal Period provided by Patheon Management Selected DCF range of $9.02$10.67 per RVS PROJECT CALCULUS 42
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Discounted Cash Flow Analysis Key Sensitivities Sensitivity to Financial Forecast All figures in US$ $9.02 $9.79 $10.67 WACC: 11.25% to 10.25% TGR: 2.5% Implied Terminal Multiple: 7.0x to 7.9x Implied FY2013E EBITDA ($150.6 mm): 12.9x to 14.6x Implied FY2014E EBITDA ($206.3 mm): 9.4x to 10.6x Metric Benchmark Change Share Sensitivity Terminal Growth Rate 2.5%/ + 1.0% ($1.22) $1.56 WACC 10.75% + /0.5% ($0.77) $0.88 6.2%8.3% Revenue Growth + /1.0% ($0.85) $0.85 in Forecast Period 17.8%20.8% EBITDA Margin/ + 1.0% ($0.84) $0.84 in Forecast Period (1) FX Forecast Spot Rates + /10.0% ($0.61) $0.61 $58.1 mm Total Capex + /10.0% ($0.40) $0.40 (Forecast Period average) Terminal Period Tax Rate 22.5% + /2.5% ($0.35) $0.35 $44.1 mm (2) Synergies Realized (2)/ + $10.0 mm ($0.31) $0.31 (Pre-Tax Run Rate) 1. A 10% increase in FX forecast implies a 10% weakening of the USD against each of the EUR, CAD, GBP, MXN and JPY, respectively 2. Incorporating 50% of pre-tax net synergies in DCF DCF highly sensitive to Terminal Growth Rate and WACC assumptions PROJECT CALCULUS 43
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives DCF Analysis Precedent Transaction Analysis Comparable Trading Analysis Summary Perspectives PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Precedent Transactions Contract Manufacturing Organizations (7) 14.3x (4) 13.5x 10.9x (3) 11.9x (5) 11.3x 11.2x EV / 10.1x 9.6x 10.1x 9.4x LTM 7.5x 8.0x 6.2x 8.1x EBITDA Ann. 21-May-13 06-Mar-13 31-Dec-12 29-Oct-12 04-Oct-12 06-Aug-12 09-Jan-12 22-Aug-11 04-Apr-11 24-Feb-11 30-Apr-08 06-Feb-08 01-Aug-07 25-Jul-07 24-Apr-07 25-Jan-07 Median Date Xellia Lancaster Xellia Brookwood Lipa Hollister Stier Target Althea JHP Pharma Banner Metrics Aenova BioReliance Aptuit Capsugel BASF Catalent Pharma Labs Pharma Pharma Pharma Labs Warburg Mayne Sigma- CK Acquiror Novo Group Ajinomoto Patheon BC Partners Catalent KKR Eurofins Dr. Reddys 3i Group SurModics Jubiliant Blackstone Pincus Pharma Aldrich Life Sciences Enterprise $700 $175 $195 $269 $120 (1) $618(2) $353 $407 $2,375 $200 $40 $395 $40 $100 $123(6) $3,217 $233 Value EV / 3.2x 3.3x1.0x 2.3x 2.0x 2.8x 2.1x 3.2x 1.7x 0.9x 2.1x 2.6x 1.3x 2.2x 2.0x 2.2x LTM Revenue EV / 2.7x 2.4x NTM Revenue EV / 11.3x 10.3x NTM EBITDA LTM EBITDA Margin 9.2% 31.2% 21.2% 23.5% 20.4% 28.0% 21.7% 15.0% 26.1% 19.5% 13.4% 19.8% 13.9% 20.1% 1 Day Premium 18.0% 19.7% 1 Week Premium 21.0% 22.1% 30 Day Premium 20.3% 38.0% Sources: Company public filings, press releases, Street research, MergerMarket and Deal Pipeline 1. Enterprise value includes $15 million milestone payment. 2. Converted in US$ as per exchange rate at announcement date. 3. Based on estimate FY 2012 EBITDA. 4. LTM EBITDA implied based on NTM EBITDA margin. 5. Based on FY 2011 revenue and EBITDA. 6. Enterprise value excludes $16 million that Jubilant will pay for CapEx expansion reimbursement. 7. Based on FY 2006 EBITDA. Selected CMO range of 10.0x to 11.0x EV / LTM EBITDA PROJECT CALCULUS 45
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Precedent Transactions Contract Research Organizations (3) 17.4x 14.9x 13.0x 13.7x (5) 13.4x 11.8x 11.8x 12.6x 11.8x (2) 10.5x 11.4x 10.6x EV / 9.8x 10.0x 8.0x 8.5x LTM EBITDA Ann. 24-Jun-13 31-Oct-12 02-Oct-11 09-May-11 04-May-11 28-Feb-11 27-Dec-10 19-Aug-10 06-May-10 02-Sep-09 03-Feb-09 20-Mar-08 03-Jan-08 21-Dec-07 24-Jul-07 18-Jul-07 Median Date ReSearch MDS Pharma Diosynth / INC inVentiv Premier Apptec Lab Quintiles WIL Target PRA Intl Sygene Intl Medpace Kendle Intl Pharma Analytical Pharmanet PRA Intl Product Dev. MSD Research Health Research Services Transntl Research Services Tech. INC Warburg Avista / Thomas H. 3i Group / Genstar American Acquiror KKR GE Capital H&F / Carlyle CCMP FUJIFILM Danaher JLL Partners ECI Partners WuXi Research Pincus Teachers Lee Bain / TPG Capital Capital Enterprise (1) (1) (4) (1) $1,300 $301 $3,404 $741 $348 $329 $254 $600 $1,164 $650 $186 $177 $164 $2,860 $758 $500 $550 Value EV / 9.0x12.6x 8.0x 11.4x 9.5x 7.1x 15.0x9.5x NTM EBITDA LTM EBITDA Margin34.0% 20.3%5.9%6.2%13.4% 15.6% 4.8% 10.8% 13.4% 12.6% 14.8% 25.4% 13.4% 1 Day Premium 29.6%53.9% 52.4%NM 12.4% 13.1%29.6% 1 Week Premium 29.1%50.7% 58.0%NM 40.8% 10.9%40.8% 30 Day Premium 6.7%42.3% 80.0%NM 58.7% 24.4%42.3% Sources: Company public filings, press releases, Wall Street equity research, MergerMarket and Deal Pipeline 1. Converted in US$ as per exchange rate at announcement date. 2. LTM revenue and EBITDA implied based on management estimates of growth and margins. 3. EBITDA is inclusive of fee and costs associated with the European acquisitions and Paramax acquisition. 4. Cash inclusive of restricted cash related to security deposits for the London office in the inVentiv Communications segment 5. Based on FY 2006 revenue and EBITDA. Selected CRO range of 11.0x to 13.0x EV / LTM EBITDA PROJECT CALCULUS 46
DRAFT: For discussion purposes only - Not to be distributed to third parties without consent of BMO PROJECT CALCULUS Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives Summary Perspectives DCF Analysis Precedent Transaction Analysis Comparable Trading Analysis
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives DCF Analysis Precedent Transaction Analysis Comparable Trading Analysis Summary Perspectives PROJECT CALCULUS DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Comparable Trading Analysis CMO PEERS CRO PEERS EV / 12.3x 12.0x 2014E 11.4x 11.4x 11.4x 9.8x 9.1x 10.4x 10.4x EBITDA 8.5x 8.5x 8.5x 7.9x 7.2x 3.5x n.a. Albany Jubilant Quintiles Lonza CMO Parexel WuXi Charles CRO PatheonPatheonCompany Molecular Cambrex Biocon Life Cangene ICON Covance Transntl (1) Group Median Intnl Pharma River Median Street Model Research Sciences Holdings Country USA USA Switzerland India India Canada Ireland USA USA USA China USA USA Enterprise Value (US $ mm) $408 $628 $7,197 $927 $704 $120 $666 $2,372 $5,049 $3,257 $7,394 $1,860 $2,897 $3,077 Med $1,475 Equity Value (US $ mm) $431 $518 $4,425 $1,075 $195 $177 $474 $2,554 $5,169 $3,087 $5,959 $2,113 $2,378 $2,821 Med $872 % Buy Ratings (%) 100% 67% 15% 70% 70% 68% 67% 56% 69% 64% 67% 31% 65% Med 100.0% Target Price (%) 7% 15% (10%) 11% 158% (4%) 9% 11% 0% 7% 16% (2%) 4% 6% Med 23% Prem. / (Disc.) P / E 2014E (x) 21.2x 16.5x 13.4x 14.8x 2.7x n.a. 14.8x 21.3x 23.6x 23.8x 19.5x 16.5x 15.5x 20.4x n.a. 12A14E (%) 15.8% 9.6% 9.2% 10.4% 9.7% n.a. 9.7% 28.6% 29.2% 24.2% 14.4% 16.8% 2.1% 20.5% High 63.0% 33.0% EBITDA CAGR 2013E EBITDA (%) 16.9% 20.7% 18.1% 22.0% 18.3% n.a. 18.3% 12.6% 15.3% 13.1% 15.6% 28.5% 22.6% 15.4% Low 13.9% 16.8% Margin Total Debt / (x) 0.4x 2.1x 3.7x 0.5x 2.8x 1.3x 0.8x 1.6x 3.2x 0.4x 2.3x 1.2x High 3.6x 3.0x 2014E EBITDA 2014E Capex (2) (2) (2) (%) 4.3% 6.2% 7.8% 10.4% 4.9% 3.4% 5.6% 3.0% 5.9% 4.6% 2.5% 10.1% 4.3% 4.5% Low 5.8% 4.7% Intensity Source: FactSet and Company Filings Note: Estimates are based on CY2013 & CY2014 EBITDA and EPS Street Consensus estimates. 1. Based on FY2014E EBITDA 2. LTM Capex Intensity used as a proxy, as 2014E capex estimates are unavailable Selected CMO range of 7.75x 8.75x EV / 2014E EBITDA; Selected CRO range of 10.75x 11.75x EV / 2014E EBITDA PROJECT CALCULUS 48
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Company Overview and Capital Markets Profile Financial Forecast Review and Benchmarking Financial Perspectives Summary Perspectives PROJECT CALCULUS
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Summary Perspectives TRADING PERSPECTIVES EN BLOC PERSPECTIVES DCF ANALYSIS PRECEDENT CAPITAL MARKETS TRADING COMPARABLES TRANSACTIONS Shown in US$ per share, unless otherwise indicated $10.67 $9.43 JLL Current Offer: $8.25 $8.54 $7.78 $9.02 $7.20 $8.09 $6.54 $6.66 $6.81 20-Day VWAP: $5.93(1) $5.52 Based on FY2014E EBITDAStreet $2.99 DCF CMO: 7.75x8.75x (2) CMO: 10.0x11.0x 52 Week High / Low (1) Analyst Target Price Range CRO: 10.75x11.75x CRO: 11.0x13.0x (2) WACC: (C$7.00C$8.00) (1) (3) 10.25%11.25% FY2014E EBITDAModel LTM PF EBITDAModel TGR: 2.5% Implied Premium to (49%)10% 15%31% 21%44% 37%59% 52%80% 20-Day VWAP Implied EV / 2013E 6.9x10.5x 10.7x11.7x 11.1x12.5x 12.0x13.4x 13.0x14.7x EBITDAModel ($149.6 mm) Implied EV / PF 2013E 5.8x8.8x 9.0x9.9x 9.4x10.5x 10.1x11.3x 10.9x12.3x EBITDAModel ($177.8 mm) Implied EV / 2014E 5.0x7.7x 7.9x8.6x 8.2x9.2x 8.8x9.8x 9.5x10.8x EBITDAModel ($203.9 mm) Implied EV / 2014E 0.9x1.4x 1.4x1.5x 1.5x1.6x 1.6x1.8x 1.7x1.9x RevenueModel ($1.1 bn) Note: 20-Day VWAP of C$6.22/share, converted to US$ at the closing rate of the respective previous 20 trading days. 1. Converted to US$ at 1.0286x (as at 18-Oct-13 close) 2. Selected CMO and CRO multiples based on observed comparable peer trading and precedent transaction multiples. Applied Patheons 2014E CMO and CRO EBITDA weighting to the selected Trading Comparables multiple range and Patheons 2013E CMO and CRO EBITDA weighting to the selected Transaction Comparables multiple range. 3. FY2013E used as a proxy for LTM Selected range of US$8.75 US$10.25 per restricted voting share PROJECT CALCULUS 50
DRAFT: For discussion purposes onlyNot to be distributed to third parties without consent of BMO Disclaimer This Presentation has been provided to the Special Committee of the Board of Directors of Patheon Inc. (Patheon or the Company) (the Board) formed to consider a potential transaction involving JLL Partners, Inc., in their capacity as members of the Special Committee, by BMO Nesbitt Burns Inc. (BMO Capital Markets) pursuant to the engagement letter dated September 11, 2013 (the Engagement Letter) and, except as contemplated by the Engagement Letter, may not be used or relied upon for any purpose without the written consent of BMO Capital Markets. The information contained herein (the Information) is confidential. By accepting this Information, the Board agrees that, except as contemplated by the Engagement Letter, it and its agents and representatives shall use it for informational purposes only and, except as set forth in the Engagement Letter, will not divulge any such Information to any other party. This presentation has not been prepared with a view toward public disclosure under federal, provincial or territorial securities laws or otherwise. Except as contemplated by the Engagement Letter, reproduction, dissemination, quotation, summarization or reference to this Information, in whole or in part, is prohibited. Without the consent of BMO Capital Markets, these contents are proprietary and a product of BMO Capital Markets. The information contained in these materials is not intended to constitute a report, statement or opinion of an expert for purposes of the securities legislation of any province or territory of Canada. Moreover, the information contained in these materials summarizes certain background work completed by BMO Capital Markets in connection with the preparation of a potential formal valuation and although we have undertaken financial analysis that we believe is appropriate, we have not made or prepared any valuation (including, without limitation, a formal valuation of the Company, as such term is defined in the Canadian Securities Administrators Multilateral Instrument 61-101 (MI 61-101)) or appraisal of the securities, assets or liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) of the Company, nor have we been furnished with any such valuations or appraisals, and the information contained in these materials should not be construed as any such valuation or appraisal. Furthermore, the Company has informed us that there have not been any prior valuations, as such term is defined in MI 61-101, of the Company, its material assets or its securities in the past twenty-four month period. In preparing this presentation, BMO Capital Markets has made certain assumptions regarding the information contained herein, and certain limitations apply to such information. The information used in preparing these materials may have been obtained from or through the Company or the Companys representatives or from public sources as of the date hereof. BMO Capital Markets assumes no responsibility for independent investigation or verification of such information and has relied on such information being complete and accurate in all material respects. To the extent such information includes estimates and/or forecasts of future financial performance (including estimates of potential cost savings and synergies) prepared by or reviewed or discussed with the management of the Company and/or other potential transaction participants or obtained from public sources, we have assumed that such estimates and forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of such managements (or, with respect to estimates and forecasts obtained from public sources, represent reasonable estimates). BMO Capital Markets has no obligation (express or implied) to update` any or all of the Information or to advise you of any changes; nor do we make any express or implied warranties or representations as to the completeness or accuracy of the information or accept responsibility for errors. These materials were designed for use by specific persons familiar with the business and affairs of the Company and are being furnished and should be considered only in connection with other information, oral or written, being provided by BMO Capital Markets in connection herewith. These materials are not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. Prior to entering into any transaction the Company should determine, without reliance on BMO Capital Markets or its affiliates, the economic risks and merits as well as the legal, tax and accounting characterizations and consequences of any such transaction. BMO Capital Markets is not acting in any other capacity or as a fiduciary to the Company or the Board or the Special Committee. PROJECT CALCULUS 51
Exhibit (d)(6)
VOTING AND SUPPORT AGREEMENT
THIS AGREEMENT made the 18th day of November, 2013.
BETWEEN:
THE SHAREHOLDER LISTED ON SCHEDULE A HERETO | ||
(hereinafter called the Shareholder), | ||
- and - | ||
PATHEON INC. | ||
a corporation incorporated under the laws of Canada (the Company) | ||
- and - | ||
JLL/DELTA PATHEON HOLDINGS, L.P., | ||
an exempt limited partnership organized under the laws of the Cayman Islands | ||
(hereinafter called the Purchaser), (collectively, the Parties) | ||
WHEREAS the Shareholder is the beneficial owner of restricted voting shares of the Company, as more particularly described herein;
AND WHEREAS on the date hereof, the Purchaser is concurrently entering into an arrangement agreement (the Arrangement Agreement) with the Company which provides for, among other things, a business combination involving the Purchaser and the Company by way of a plan of arrangement under Section 192 of the Canada Business Corporations Act, pursuant to which the Purchaser will directly or indirectly acquire all of the restricted voting shares (the Shares) of the Company, other than Shares held by affiliates of the Purchaser, at a purchase price of US$9.32 in cash per Share (the Arrangement);
AND WHEREAS this Agreement sets out the terms and conditions of the agreement of the Shareholder to (i) vote, or cause to be voted, all Shares, now or hereafter, beneficially owned (including any shares issued upon the exercise of any stock options or other convertible securities), or over which control or direction is exercised, by the Shareholder (the Owned Shares) in favour of the Arrangement and any matter that is necessary or desirable for the consummation of the Arrangement and (ii) abide by the restrictions and covenants set forth herein;
AND WHEREAS the Purchaser and the Company are relying on the covenants, representations and warranties of the Shareholder set forth in this Agreement in connection with the Purchasers and the Companys respective execution and delivery of the Arrangement Agreement;
NOW THEREFORE this Agreement witnesses that, in consideration of the premises and the covenants and agreement herein contained, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 All capitalized terms used but not otherwise defined herein shall have the respective meaning ascribed to them in the Arrangement Agreement.
ARTICLE 2
CERTAIN COVENANTS OF THE SHAREHOLDER
2.1 Agreement to Vote in Favor. At any meeting of shareholders of the Company (including the Company Meeting) called to vote upon the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval (including by written consent in lieu of a meeting) with respect to the Arrangement or any of the other transactions contemplated by the Arrangement Agreement is sought, the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares (i) in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement, and (ii) in favour of any other matter necessary or desirable for the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. The Shareholder will not commit any act that could restrict or affect the Shareholders legal power, authority, and right to vote all of the Owned Shares or otherwise prevent or disable the Shareholder from performing any of his or her obligations under this Agreement. Without limiting the generality of the foregoing, except for this Agreement, the Shareholder shall not enter into any voting agreement with any person or entity with respect to any of the Owned Shares, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Owned Shares, deposit any Owned Shares in a voting trust, or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting the Shareholders legal power, authority, or right to vote the Owned Shares in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.1.
2.2 Agreement to Vote Against. At any meeting of shareholders of the Company (including the Company Meeting) or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval of all or some of the shareholders of the Company is sought (including by written consent in lieu of a meeting), the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares against (i) any merger agreement or merger, consolidation, combination, sale or transfer of a material amount of assets, amalgamation, plan of arrangement, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or any other Acquisition Proposal (other than the Arrangement or any of the other
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transactions contemplated by the Arrangement Agreement), (ii) any amendment of the Companys charter document or bylaws or other proposal or transaction involving the Company or any of its Subsidiaries, which amendment or other proposal or transaction would in any manner delay, impede, frustrate, prevent or nullify the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or change in any manner the voting rights of the holders of Shares, and (iii) any action, agreement, transaction or proposal that would result in a breach of any representation, warranty, covenant, agreement or other obligation of the Company in the Arrangement Agreement or of the Shareholder under this Agreement or otherwise impede, interfere with, delay, postpone, discourage, or adversely affect the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.2.
2.3 Waiver of Special Approval Rights. The Shareholder hereby waives any and all of its rights to approve the Arrangement or any of the other transactions contemplated by the Arrangement Agreement, including any such rights that it may have under the Investor Agreement dated April 27, 2007 between the Company and the Shareholder. The Shareholder further acknowledges that the Company or the Purchaser may take any and all steps necessary or desirable in connection with the completion of the Arrangement and any other transactions contemplated by the Arrangement Agreement without the approval of, or notice to, the Shareholder.
2.4 Restrictions on Transfer. The Shareholder agrees to not directly or indirectly, (i) Transfer (as defined below), or enter into any agreement, option or other arrangement (including any profit-sharing arrangement) with respect to the Transfer of any of the Owned Shares to any Person other than pursuant to the Arrangement Agreement, which, for greater certainty, shall include any Transfer made to an affiliate of the Shareholder as part of any pre-closing tax or other structuring relating to the Arrangement that has been discussed with the Company and the Purchaser prior to the date hereof or (ii) grant any proxies, deposit any of the Owned Shares into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to the Owned Shares, other than pursuant to this Agreement. For the purposes of this Agreement, Transfer means, with respect to any security, (a) any direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation, or the grant, creation, or suffrage of a Lien in or upon, or the gift, grant, or placement in trust or other disposition of such security (including transfers by testamentary or intestate succession, by domestic relations order or other court order, or otherwise by operation of law) or any right, title, or interest therein (including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise) (b) any short sale with respect to such security, entering into or acquiring a derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic benefits or risks of ownership of such security, and (c) each agreement, arrangement, or understanding, whether or not in writing, to effect any of the foregoing.
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2.5 Revocation of Prior Proxies
The Shareholder hereby revokes any proxies heretofore given by it in respect of the Owned Shares.
2.6 Other Covenants. The Shareholder agrees:
(a) | not take any other action of any kind, directly or indirectly, which could reasonably be regarded as likely to reduce the success of, or delay or interfere with the completion of, the Arrangement and the other transactions contemplated by the Arrangement Agreement and this Agreement. |
(b) | not do indirectly that which it may not do directly by the terms of Article 2. |
(c) | not to, directly or indirectly, exercise or cause to be exercised any rights of appraisal or dissent or otherwise oppose in any manner the treatment of any Owned Shares pursuant to the Arrangement. |
(d) | not to requisition or join in the requisition of any meeting of holders of Shares. |
(e) | to provide the Company or the Purchaser, upon request, with evidence that the Shareholder has complied with its, her or his obligations to vote in favour of the approval, consent, ratification and adoption of the Arrangement and the Arrangement Resolution (as applicable) and not to revoke any voting instructions or proxy executed and delivered in respect thereto. |
(f) | to the following disclosure matters: |
(i) | details of this Agreement being set out in the Company Circular and/or any press release of the Company or the Purchaser relating to the Company Meeting or the Arrangement; |
(ii) | this Agreement being publicly filed on SEDAR and/or EDGAR, and/or available for inspection to the extent required by Law; and |
(iii) | details of this Agreement being set out in an early warning report to be filed by the Purchaser. |
2.7 Alternative Transaction. If the Purchaser concludes after the date of this Agreement that it is necessary or desirable to proceed with a form of transaction other than the Arrangement whereby the Purchaser and/or its affiliates would effectively acquire all the Shares or all or substantially all of the business, properties and assets of the Company on economic and other terms and conditions (including, without limitation, tax treatment) having consequences to the Shareholder that are, in its, his or her reasonable objective opinion, equivalent to or better than those contemplated by this Agreement and the Arrangement Agreement (any such transaction is referred to as an Alternative Transaction), then the Shareholder agrees to support the completion of the Alternative Transaction, including, if necessary, by tendering or voting the Owned Shares to a take-over bid or in favour of a special resolution approving the Alternative Transaction.
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2.8 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Purchaser any direct or indirect economic benefit or ownership or incidence of ownership of, or relating to, any Owned Shares. All rights, ownership and economic benefits of and relating to the Owned Shares shall remain vested in and belong to the Shareholder, and the Purchaser shall have no authority to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct the Shareholder in the voting of any of the Owned Shares, except as otherwise provided herein, or in the performance of the Shareholders duties or responsibilities as a shareholder of the Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
3.1 Representations and Warranties. The Shareholder represents, warrants and, where applicable, covenants to the Purchaser and the Company as follows and acknowledges that the Purchaser and the Company are relying upon these representations, warranties and covenants in connection with the entering into of this Agreement and the Arrangement Agreement and the purchase by the Purchaser of the Owned Shares under the Arrangement:
(a) | if the Shareholder is not an individual: |
(i) | the Shareholder has been duly formed and is validly existing under the laws of the jurisdiction of its organization and has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and |
(ii) | the execution and delivery of this Agreement by the Shareholder and the performance by it of its obligations hereunder have been duly authorized and no other proceedings on its part are necessary to authorize this Agreement and the performance of its obligations hereunder. |
(b) | if the Shareholder is an individual, the Shareholder has the legal capacity to execute and deliver this Agreement and performance of his or her obligations hereunder; |
(c) | this Agreement has been duly executed and delivered by the Shareholder and, assuming the due authorization, execution and delivery by the Purchaser and the Company, constitutes a legal, valid and binding obligation, enforceable by the Purchaser and the Company against the Shareholder in accordance with its terms, subject, however, to limitations imposed by Law in connection with bankruptcy, insolvency or similar proceedings and to the extent that the award of equitable remedies such as specific performance and injunction is within the discretion of the court from which they are sought; |
5
(d) | the Shareholder is the sole, unconditional legal and beneficial owner of the number of Owned Shares and the stock options or other securities or rights exerciseable, directly or indirectly, to acquire Shares listed on Schedule A to this Agreement, and has no legal or beneficial interest in, or control or direction over, any other Shares or such options, securities or rights; |
(e) | the Shareholder has the right to cause the sale and vote of all the Owned Shares and all the Owned Shares shall, at the Effective Time, be beneficially owned solely by the Shareholder and its affiliates with good and marketable title thereto, free and clear of any Liens of any nature or kind whatsoever; |
(f) | no person, firm or corporation 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 Owned Shares or any interest therein or right thereto, except the Purchaser pursuant to this Agreement; |
(g) | none of the Owned Shares are subject to any power of attorney or attorney in fact, proxy, voting trust, vote pooling or other agreement, or any right or privilege capable of becoming an agreement, with respect to the right to vote, call meetings of shareholders or give consents or approvals of any kind, except for the Purchase Agreement dated March 1, 2007 between the Company and JLL Partners Fund V, L.P. and the Investor Agreement dated April 27, 2007 between the Company and the Shareholder; |
(h) | none of the execution and delivery by the Shareholder of this Agreement or the completion or performance of the transactions contemplated hereby or the compliance by the Shareholder with the Shareholders obligations hereunder will result in a breach of (i) the constating documents of the Shareholder, if the Shareholder is not an individual; (ii) any agreement or instrument to which the Shareholder is a party or by which the Shareholder or any of the Shareholders property or assets is bound; (iii) to the knowledge of the Shareholder, any judgment, decree, order or award of any Governmental Entity; or (iv) to the knowledge of the Shareholder, any Law, relevant in the context of the Arrangement or this Agreement; |
(i) | the Shareholder acknowledges that it has had the opportunity to obtain independent legal advice with respect to the Agreement and the Arrangement; |
(j) | the Shareholder has received, and is familiar with, the terms of the Arrangement Agreement; |
(k) | (i) the only securities of the Company owned, directly or indirectly, or over which control or direction is exercised, by the Shareholder are those listed on Schedule A to this Agreement and 150,000 Class I Preferred Shares, Series D and (ii) the Shareholder has no agreement or option, or right or privilege (whether by law, |
6
pre-emptive or contractual) capable of becoming an agreement or option, for the purchase or acquisition by the Shareholder or transfer to the Shareholder of additional Shares other than upon the exercise of stock options, if any set forth on Schedule A to this Agreement; |
(l) | there are no Proceedings in progress or pending or, to the knowledge of the Shareholder, threatened against the Shareholder or its affiliates that would adversely affect in any manner the ability of the Shareholder to enter into this Agreement and to perform its obligations hereunder or the title of the Shareholder to any of the Owned Shares; and |
(m) | to the extent that it or any of its affiliates intends to, directly or indirectly, make an investment in securities of Purchaser using proceeds received in connection with the transactions contemplated by the Arrangement Agreement and the Contribution Agreement, including the acquisition of Restricted Voting Shares, Company Options or DSUs, or the forfeiture of Company Options and grant of options pursuant to an Option Cancellation Agreement (collectively, the Purchaser Securities): (a) it has such knowledge in financial and business affairs of Purchaser, including the business, assets and liabilities to be contributed by DSM to and assumed by Purchaser pursuant to the Contribution Agreement, as to be capable of evaluating the merits and risks of its, his or her proposed investment in the Purchaser Securities; (b) it is aware of the characteristics of the Purchaser Securities and any underlying securities, if applicable, and the risks relating to an investment therein and agrees that it, he or she must bear the economic risk of its, his or her investment in the Purchaser Securities; (c) it can afford the complete loss of such investment and acknowledges that it, he or she may be required to bear the financial risk of such investment for an indefinite period of time; (d) it has not received, nor has requested, nor has any need to receive, any prospectus, sales or advertising literature, offering memorandum or any other document describing or purporting to describe the business and affairs of Purchaser which has been prepared for delivery to, and review by, prospective purchasers in order to assist them in making an investment decision in respect of the purchase of the Purchaser Securities; (e) it is an accredited investor as defined in Regulation D promulgated under the U.S. Securities Act and was not organized for the specific purpose of acquiring the Purchaser Securities, unless it, he or she qualifies as an accredited investor under subparagraph (a)(8) of Rule 501 and it, he or she understands that no federal or state agency has passed upon such investment or upon the Purchaser, nor has any such agency made any finding or determination as to such investment; and (f) it understands that the Purchaser Securities may not be sold, transferred or otherwise disposed of without registration under the U.S. Securities Act and all applicable United States state securities laws or an exemption from such laws, and that in the absence of an effective registration statement covering the Purchaser Securities or an available exemption from registration under the U.S. Securities Act and all other applicable securities Laws, the Purchaser Securities must be held indefinitely. |
3.2 Survival of Representations. The representations and warranties of the Shareholder set forth in Article 3 shall survive the completion of the purchase by the Purchaser of the Owned Shares under the Arrangement and, despite such completion, shall continue in full force and effect for the benefit of the Purchaser and the Company for a period of one year from the date of this Agreement, except for the representation and warranty in Section 3.1(e) above, which shall survive indefinitely.
ARTICLE 4
TERMINATION
4.1 Termination. This Agreement shall terminate upon the earliest of:
(a) | written agreement of the Parties to terminate the Agreement; |
(b) | the Arrangement Agreement has been terminated in accordance with its terms; or |
(c) | the Effective Time. |
ARTICLE 5
GENERAL
5.1 Further Assurances. The Parties shall, from time to time, promptly execute and deliver all such further documents and instruments and do all such acts and things as the other party may reasonably require to effectively carry out the intent of this Agreement.
5.2 Amendment. This Agreement may only be amended by mutual written agreement of the Parties hereto.
5.3 Assignability. This Agreement shall not be assignable by any party without the prior written consent of the other parties, other than by the Purchaser to one of its direct or indirect Subsidiaries. This Agreement shall be binding upon and shall enure to the benefit of and be enforceable by each of the Parties hereto and their respective successors and permitted assigns.
5.4 Time. Time shall be of the essence of this Agreement.
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5.5 Notices. Any notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail) and addressed:
(a) | to the Purchaser at: |
JLL/Delta Patheon Holdings, L.P.
c/o JLL Partners, Inc.
450 Lexington Avenue, 31st Floor
New York, NY 10017
Attention: | Daniel Agroskin |
Michel Lagarde |
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware, U.S.A.
19899-0636
Attention: | Robert B. Pincus |
Telephone: | (302) 651-3090 |
Facsimile: | (302) 434-3090 |
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza
40 King Street West, Suite 4400
Toronto, Canada M5H 3Y4
Attention: | Paul A.D. Mingay/Jason Saltzman |
Telephone: | (416) 367-6006/(416) 367-6196 |
Facsimile: | (416) 367-7098/(416) 361-2770 |
(b) | to the Company at: |
Patheon Inc.
4721 Emperor Boulevard
Durham, NC 27703
Attention: | Jason Conner |
Telephone: | (919) 226-3340 |
Facsimile: | (919) 474-2269 |
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with a copy to:
Dentons LLP
99 Bank Street, Suite 1420
Ottawa, Canada K1P 1H4
Attention: | Andrea C. Johnson |
Telephone: | (613) 783-9655 |
Facsimile: | (613) 614-0292 |
(c) | to the Shareholder at: |
JLL Patheon Holdings, LLC
c/o JLL Partners, Inc.
450 Lexington Avenue, 31st Floor
New York, NY 10017
Attention: | Daniel Agroskin |
Michel Lagarde |
Any notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or (iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile.
5.6 Governing Law.
(a) This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
(b) Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.
5.7 Remedies. The Shareholder agrees and acknowledges that: (i) money damages would not be a sufficient remedy for any breach of this Agreement by it; (ii) in addition to any other remedies at law or in equity that the Purchaser and the Company may have, the Purchaser and the Company shall be entitled to seek equitable relief, including injunction and specific performance, in addition to any other remedies available to the Purchaser and the Company, in the event of any breach of the provisions of this Agreement; and (iii) if it is a defendant or respondent, it shall waive any requirement for the securing or posting of any bond in connection with such remedy. The Shareholder hereby consents to any preliminary applications for such relief to any court of competent jurisdiction. The prevailing party shall be reimbursed for all costs and expenses, including reasonable legal fees, incurred in enforcing the other partys obligations hereunder. Such remedies shall not be deemed to be exclusive remedies for the breach of this Agreement but shall be in addition to all other remedies at law or in equity.
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5.8 Severability. If any provision of this Agreement is determined to be illegal, invalid or unenforceable by any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
5.9 Waiver. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Partys failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.
5.10 Rules of Construction. The Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the Party drafting such agreement or other document.
5.11 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof, being the voting of the Owned Shares, the supporting of the Arrangement and related matters, and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties with respect thereto. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter hereof, except as specifically set forth in this Agreement. The Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
5.12 Counterparties. This Agreement may be executed in any number of counterparts (including counterparts by facsimile) 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 and binding agreement between the Parties.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, | ||
JLL/DELTA PATHEON GP, LTD. | ||
By: |
/s/ Michel Lagarde | |
Name: Michel Lagarde | ||
Title: Director | ||
PATHEON INC. | ||
By: |
| |
Name: | ||
Title: | ||
JLL PATHEON HOLDINGS, LLC | ||
By: |
/s/ Daniel Agroskin | |
Name: Daniel Agroskin | ||
Title: Authorized Person |
[Counterpart to Voting and Support Agreement]
SCHEDULE A
OWNERSHIP OF SECURITIES OF THE COMPANY
Shares
Name |
Shares Beneficially owned |
Registered holder if different from beneficial owner |
Total number of Shares owned or controlled |
|||||||
JLL Patheon Holdings, LLC |
78,524,986 | JLL Patheon Holdings, Coöperatief U.A. | 78,524,986 | |||||||
Options or Other Convertible Securities | ||||||||||
Name |
Type of Security | Exercise or Conversion Price (CAD) |
Total number of Shares Issuable upon Exercise/Conversion |
|||||||
JLL Patheon Holdings, LLC |
Nil. | Nil. | Nil. |
Exhibit (d)(7)(i)
VOTING AND SUPPORT AGREEMENT
THIS AGREEMENT made the 18th day of November, 2013.
BETWEEN:
THE SHAREHOLDER LISTED ON SCHEDULE A HERETO
(hereinafter called the Shareholder),
- and -
PATHEON INC.
a corporation incorporated under the laws of Canada (the Company)
- and -
JLL/DELTA PATHEON HOLDINGS, L.P.,
an exempt limited partnership organized under the laws of the Cayman Islands
(hereinafter called the Purchaser), (collectively, the Parties)
WHEREAS the Shareholder is the legal and beneficial owner of restricted voting shares of the Company, as more particularly described herein;
AND WHEREAS on the date hereof, the Purchaser is concurrently entering into an arrangement agreement (the Arrangement Agreement) with the Company which provides for, among other things, a business combination involving the Purchaser and the Company by way of a plan of arrangement under Section 192 of the Canada Business Corporations Act, pursuant to which the Purchaser will directly or indirectly acquire all of the restricted voting shares (the Shares) of the Company, other than Shares held by affiliates of the Purchaser, at a purchase price of US$9.32 in cash per Share (the Arrangement);
AND WHEREAS this Agreement sets out the terms and conditions of the agreement of the Shareholder to (i) vote, or cause to be voted, all Shares, now or hereafter, beneficially owned (including any shares issued upon the exercise of any stock options or other convertible securities), or over which control or direction is exercised, by the Shareholder (the Owned Shares) in favour of the Arrangement and any matter that is necessary or desirable for the consummation of the Arrangement and (ii) abide by the restrictions and covenants set forth herein;
AND WHEREAS the Purchaser and the Company are relying on the covenants, representations and warranties of the Shareholder set forth in this Agreement in connection with the Purchasers and the Companys respective execution and delivery of the Arrangement Agreement;
NOW THEREFORE this Agreement witnesses that, in consideration of the premises and the covenants and agreement herein contained, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 All capitalized terms used but not otherwise defined herein shall have the respective meaning ascribed to them in the Arrangement Agreement.
ARTICLE 2
CERTAIN COVENANTS OF THE SHAREHOLDER
2.1 Non-Solicitation. The Shareholder hereby covenants and irrevocably agrees that it shall, from the date hereof until the earlier of (i) the termination of this Agreement pursuant to Article 4 and (ii) the Effective Time:
(a) | not, directly or indirectly, through any officer, director, employee, representative (including any financial or other advisor) or agent or otherwise, and shall not permit any such person to: |
(i) | solicit, assist, initiate, knowingly encourage or otherwise facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of the Company or any of its Subsidiaries or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes an Acquisition Proposal; |
(ii) | enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than any Purchaser Party or Purchaser Party Representative) regarding any inquiry, proposal or offer that constitutes or could reasonably be expected to constitute an Acquisition Proposal; |
(iii) | accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend any Acquisition Proposal, or take no position or remain neutral with respect to, any public Acquisition Proposal; or |
(iv) | accept, approve, endorse, recommend or execute or enter into or publicly propose to accept, approve, endorse, recommend or execute or enter into any agreement, letter of intent, understanding or arrangement relating to an Acquisition Proposal. |
(b) | immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiation, or other activities commenced prior to the date of this Agreement with any Person (other than any Purchaser Party or Purchaser Party Representative) with respect to any Acquisition Proposal; and |
(c) | immediately notify the Purchaser and the Company, at first orally, and then promptly and in any event within 24 hours in writing, of any Acquisition Proposal, and shall provide the Purchaser and the Company with copies of all |
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written documents, correspondence or other material received by the Shareholder, its affiliates or its, his, or her Representatives in respect of, from or on behalf of any such Person in connection therewith and if not in writing or electronic form, a description of the material terms of such correspondence sent or communicated to the Shareholder, its affiliates or its, his, or her Representatives. |
2.2 Agreement to Vote in Favor. At any meeting of shareholders of the Company (including the Company Meeting) called to vote upon the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval (including by written consent in lieu of a meeting) with respect to the Arrangement or any of the other transactions contemplated by the Arrangement Agreement is sought, the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares (i) in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement, and (ii) in favour of any other matter necessary or desirable for the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. The Shareholder will not commit any act that could restrict or affect the Shareholders legal power, authority, and right to vote all of the Owned Shares or otherwise prevent or disable the Shareholder from performing any of his or her obligations under this Agreement. Without limiting the generality of the foregoing, except for this Agreement, the Shareholder shall not enter into any voting agreement with any person or entity with respect to any of the Owned Shares, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Owned Shares, deposit any Owned Shares in a voting trust, or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting the Shareholders legal power, authority, or right to vote the Owned Shares in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.2.
2.3 Agreement to Vote Against. At any meeting of shareholders of the Company (including the Company Meeting) or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval of all or some of the shareholders of the Company is sought (including by written consent in lieu of a meeting), the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares against (i) any merger agreement or merger, consolidation, combination, sale or transfer of a material amount of assets, amalgamation, plan of arrangement, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or any other Acquisition Proposal (other than the Arrangement or any of the other transactions contemplated by the Arrangement Agreement), (ii) any amendment of the Companys charter document or bylaws or other proposal or transaction involving the Company or any of its Subsidiaries, which amendment or other proposal or transaction would in any manner delay, impede, frustrate, prevent or nullify the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or change in any manner the voting rights of the holders of Shares, and (iii) any action, agreement, transaction or proposal that would result in a breach of any representation, warranty, covenant, agreement or other obligation of the
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Company in the Arrangement Agreement or of the Shareholder under this Agreement or otherwise impede, interfere with, delay, postpone, discourage, or adversely affect the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.3.
2.4 Restrictions on Transfer. The Shareholder agrees to not directly or indirectly, (i) Transfer (as defined below), or enter into any agreement, option or other arrangement (including any profit-sharing arrangement) with respect to the Transfer of any of the Owned Shares to any Person other than pursuant to the Arrangement Agreement, which, for greater certainty, shall include any Transfer made to an affiliate of the Shareholder as part of any pre-closing tax or other structuring relating to the Arrangement that has been discussed with the Company and the Purchaser prior to the date hereof or (ii) grant any proxies, deposit any of the Owned Shares into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to the Owned Shares, other than pursuant to this Agreement. For the purposes of this Agreement, Transfer means, with respect to any security, (a) any direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation, or the grant, creation, or suffrage of a Lien in or upon, or the gift, grant, or placement in trust or other disposition of such security (including transfers by testamentary or intestate succession, by domestic relations order or other court order, or otherwise by operation of law) or any right, title, or interest therein (including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise) (b) any short sale with respect to such security, entering into or acquiring a derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic benefits or risks of ownership of such security, and (c) each agreement, arrangement, or understanding, whether or not in writing, to effect any of the foregoing.
2.5 Revocation of Prior Proxies
The Shareholder hereby revokes any proxies heretofore given by it in respect of the Owned Shares.
2.6 Other Covenants. The Shareholder agrees:
(a) | not take any other action of any kind, directly or indirectly, which could reasonably be regarded as likely to reduce the success of, or delay or interfere with the completion of, the Arrangement and the other transactions contemplated by the Arrangement Agreement and this Agreement. |
(b) | not do indirectly that which it may not do directly by the terms of Article 2. |
4
(c) | not to, directly or indirectly, exercise or cause to be exercised any rights of appraisal or dissent or otherwise oppose in any manner the treatment of any Owned Shares pursuant to the Arrangement. |
(d) | not to requisition or join in the requisition of any meeting of holders of Shares. |
(e) | to provide the Company or the Purchaser, upon request, with evidence that the Shareholder has complied with its, her or his obligations to vote in favour of the approval, consent, ratification and adoption of the Arrangement and the Arrangement Resolution (as applicable) and not to revoke any voting instructions or proxy executed and delivered in respect thereto. |
(f) | to the following disclosure matters: |
(i) | details of this Agreement being set out in the Company Circular and/or any press release of the Company or the Purchaser relating to the Company Meeting or the Arrangement; |
(ii) | this Agreement being publicly filed on SEDAR and/or EDGAR, and/or available for inspection to the extent required by Law; and |
(iii) | details of this Agreement being set out in an early warning report to be filed by the Purchaser. |
2.7 Alternative Transaction. If the Purchaser concludes after the date of this Agreement that it is necessary or desirable to proceed with a form of transaction other than the Arrangement whereby the Purchaser and/or its affiliates would effectively acquire all the Shares or all or substantially all of the business, properties and assets of the Company on economic and other terms and conditions (including, without limitation, tax treatment) having consequences to the Shareholder that are, in its, his or her reasonable objective opinion, equivalent to or better than those contemplated by this Agreement and the Arrangement Agreement (any such transaction is referred to as an Alternative Transaction), then the Shareholder agrees to support the completion of the Alternative Transaction, including, if necessary, by tendering or voting the Owned Shares to a take-over bid or in favour of a special resolution approving the Alternative Transaction.
2.8 No Fettering of Discretion. Notwithstanding any other provision of this Agreement, the Company and the Purchaser hereby agree and acknowledge that the Shareholder is bound hereunder solely in his or her capacity as a securityholder of the Company and that the provisions hereof shall not be deemed or interpreted to bind the Shareholder in his or her capacity as a director or officer of the Company.
2.9 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Purchaser any direct or indirect economic benefit or ownership or incidence of ownership of, or relating to, any Owned Shares. All rights, ownership and economic benefits of and relating to the Owned Shares shall remain vested in and belong to the Shareholder, and the Purchaser shall have no authority to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct the Shareholder in the voting of any of the Owned Shares, except as otherwise provided herein, or in the performance of the Shareholders duties or responsibilities as a shareholder of the Company.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
3.1 Representations and Warranties. The Shareholder represents, warrants and, where applicable, covenants to the Purchaser and the Company as follows and acknowledges that the Purchaser and the Company are relying upon these representations, warranties and covenants in connection with the entering into of this Agreement and the Arrangement Agreement and the purchase by the Purchaser of the Owned Shares under the Arrangement:
(a) | if the Shareholder is not an individual: |
(i) | the Shareholder has been duly formed and is validly existing under the laws of the jurisdiction of its incorporation and has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and |
(ii) | the execution and delivery of this Agreement by the Shareholder and the performance by it of its obligations hereunder have been duly authorized and no other proceedings on its part are necessary to authorize this Agreement and the performance of its obligations hereunder. |
(b) | if the Shareholder is an individual, the Shareholder has the legal capacity to execute and deliver this Agreement and performance of his or her obligations hereunder; |
(c) | this Agreement has been duly executed and delivered by the Shareholder and, assuming the due authorization, execution and delivery by the Purchaser and the Company, constitutes a legal, valid and binding obligation, enforceable by the Purchaser and the Company against the Shareholder in accordance with its terms, subject, however, to limitations imposed by Law in connection with bankruptcy, insolvency or similar proceedings and to the extent that the award of equitable remedies such as specific performance and injunction is within the discretion of the court from which they are sought; |
(d) | the Shareholder is the sole, unconditional legal and beneficial owner of the number of Owned Shares and the stock options or other securities or rights exerciseable, directly or indirectly, to acquire Shares listed on Schedule A to this Agreement, and has no legal or beneficial interest in, or control or direction over, any other Shares or such options, securities or rights; |
(e) | the Shareholder has the sole right to sell and vote all the Owned Shares and all the Owned Shares shall, at the Effective Time, be beneficially owned solely by the Shareholder with good and marketable title thereto, free and clear of any Liens of any nature or kind whatsoever; |
6
(f) | no person, firm or corporation 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 Owned Shares or any interest therein or right thereto, except the Purchaser pursuant to this Agreement; |
(g) | none of the Owned Shares are subject to any power of attorney or attorney in fact, proxy, voting trust, vote pooling or other agreement, or any right or privilege capable of becoming an agreement, with respect to the right to vote, call meetings of shareholders or give consents or approvals of any kind; |
(h) | none of the execution and delivery by the Shareholder of this Agreement or the completion or performance of the transactions contemplated hereby or the compliance by the Shareholder with the Shareholders obligations hereunder will result in a breach of (i) the constating documents of the Shareholder, if the Shareholder is not an individual; (ii) any agreement or instrument to which the Shareholder is a party or by which the Shareholder or any of the Shareholders property or assets is bound; (iii) to the knowledge of the Shareholder, any judgment, decree, order or award of any Governmental Entity; or (iv) to the knowledge of the Shareholder, any Law, relevant in the context of the Arrangement or this Agreement; |
(i) | the Shareholder acknowledges that it has had the opportunity to obtain independent legal advice with respect to the Agreement and the Arrangement; |
(j) | the Shareholder has received, and is familiar with, the terms of the Arrangement Agreement; |
(k) | (i) the only securities of the Company owned, directly or indirectly, or over which control or direction is exercised, by the Shareholder are those listed on Schedule A to this Agreement and (ii) the Shareholder has no agreement or option, or right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option, for the purchase or acquisition by the Shareholder or transfer to the Shareholder of additional Shares other than upon the exercise of stock options, if any set forth on Schedule A to this Agreement; and |
(l) | there are no Proceedings in progress or pending or, to the knowledge of the Shareholder, threatened against the Shareholder or its affiliates that would adversely affect in any manner the ability of the Shareholder to enter into this Agreement and to perform its obligations hereunder or the title of the Shareholder to any of the Owned Shares. |
3.2 Survival of Representations. The representations and warranties of the Shareholder set forth in Article 3 shall survive the completion of the purchase by the Purchaser of the Owned Shares under the Arrangement and, despite such completion, shall continue in full force and effect for the benefit of the Purchaser and the Company for a period of one year from the date of this Agreement, except for the representation and warranty in Section 3.1(e) above, which shall survive indefinitely.
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ARTICLE 4
TERMINATION
4.1 Termination. This Agreement shall terminate upon the earliest of:
(a) | written agreement of the Parties to terminate the Agreement; |
(b) | the Arrangement Agreement has been terminated in accordance with its terms; or |
(c) | the Effective Time. |
ARTICLE 5
GENERAL
5.1 Further Assurances. The Parties shall, from time to time, promptly execute and deliver all such further documents and instruments and do all such acts and things as the other party may reasonably require to effectively carry out the intent of this Agreement.
5.2 Amendment. This Agreement may only be amended by mutual written agreement of the Parties hereto.
5.3 Assignability. This Agreement shall not be assignable by any party without the prior written consent of the other party, other than by the Purchaser to one of its direct or indirect Subsidiaries. This Agreement shall be binding upon and shall enure to the benefit of and be enforceable by each of the Parties hereto and their respective successors and permitted assigns.
5.4 Time. Time shall be of the essence of this Agreement.
5.5 Notices. Any notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail) and addressed:
(a) | to the Purchaser at: |
JLL/Delta Patheon Holdings, L.P.
c/o JLL Partners, Inc.
450 Lexington Avenue, 31st Floor
New York, NY 10017
Attn: | Daniel Agroskin |
Michel Lagarde
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware, U.S.A.
19899-0636
8
Attention: | Robert B. Pincus |
Telephone: | (302) 651-3090 |
Facsimile: | (302) 434-3090 |
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza
40 King Street West, Suite 4400
Toronto, Canada M5H 3Y4
Attention: | Paul A.D. Mingay/Jason Saltzman |
Telephone: | (416) 367-6006/(416) 367-6196 |
Facsimile: | (416) 367-7098/(416) 361-2770 |
(b) | to the Company at: |
Patheon Inc.
4721 Emperor Boulevard
Durham, NC 27703
Attention: | Jason Conner |
Telephone: | (919) 226-3340 |
Facsimile: | (919) 474-2269 |
with a copy to:
Dentons LLP
99 Bank Street, Suite 1420
Ottawa, Canada KIP 1H4
Attention: | Andrea C. Johnson |
Telephone: | (613) 783-9655 |
Facsimile: | (613) 614-0292 |
(c) | to the Shareholder at: |
James C. Mullen
4721 Emperor Boulevard
Durham, NC 27703
Attention: | James C. Mullen |
Telephone: | (919) 226-3200 |
Facsimile: | (919) 474-2269 |
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Any notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or (iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile.
5.6 Governing Law.
(a) This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
(b) Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.
5.7 Remedies. The Shareholder agrees and acknowledges that: (i) money damages would not be a sufficient remedy for any breach of this Agreement by it; (ii) in addition to any other remedies at law or in equity that the Purchaser and the Company may have, the Purchaser and the Company shall be entitled to seek equitable relief, including injunction and specific performance, in addition to any other remedies available to the Purchaser and the Company, in the event of any breach of the provisions of this Agreement; and (iii) if it is a defendant or respondent, it shall waive any requirement for the securing or posting of any bond in connection with such remedy. The Shareholder hereby consents to any preliminary applications for such relief to any court of competent jurisdiction. The prevailing party shall be reimbursed for all costs and expenses, including reasonable legal fees, incurred in enforcing the other partys obligations hereunder. Such remedies shall not be deemed to be exclusive remedies for the breach of this Agreement but shall be in addition to all other remedies at law or in equity.
5.8 Severability. If any provision of this Agreement is determined to be illegal, invalid or unenforceable by any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
5.9 Waiver. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Partys failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.
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5.10 Rules of Construction. The Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the Party drafting such agreement or other document.
5.11 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement. The Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
5.12 Counterparties. This Agreement may be executed in any number of counterparts (including counterparts by facsimile) 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 and binding agreement between the Parties.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. | ||||||
By its general partner, | ||||||
JLL/DELTA PATHEON GP, LTD. | ||||||
By: | /s/ Michel Lagarde |
|||||
Name: Michel Lagarde | ||||||
Title: Director | ||||||
PATHEON INC. | ||||||
By: |
|
|||||
Name: | ||||||
Title: | ||||||
SIGNED AND DELIVERED in the | )) | |||||
presence of: | )) | |||||
)) | ||||||
|
)) | /s/ James C. Mullen |
||||
Witness | )) | James C. Mullen |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, | ||||||
JLL/DELTA PATHEON GP, LTD. | ||||||
By: |
|
|||||
Name: | ||||||
Title: | ||||||
PATHEON INC. | ||||||
By: | /s/ Derek J. Watchorn |
|||||
Name: Derek J. Watchorn | ||||||
Title: Director | ||||||
SIGNED AND DELIVERED in the | )) | |||||
presence of: | )) | |||||
)) | ||||||
|
)) | /s/ James C. Mullen |
||||
Witness | )) | James C. Mullen |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, | ||||||
JLL/DELTA PATHEON GP, LTD. | ||||||
By: |
|
|||||
Name: | ||||||
Title: | ||||||
PATHEON INC. | ||||||
By: |
|
|||||
Name: | ||||||
Title: | ||||||
SIGNED AND DELIVERED in the | )) | |||||
presence of: | )) | |||||
)) | ||||||
![]() |
)) | /s/ James C. Mullen | ||||
Witness |
)) |
James C. Mullen |
[Counterpart to Voting and Support Agreement]
SCHEDULE A
OWNERSHIP OF SECURITIES OF THE COMPANY
Shares
Name |
Shares Beneficially owned |
Registered holder if different from beneficial owner |
Total number of Shares owned or controlled |
|||||||||
James C. Mullen |
2,312,085 | | 2,312,085 |
Options or Other Convertible Securities
Name |
Type of Security |
Exercise or Conversion Price (CAD) |
Total number of Shares Issuable upon Exercise/Conversion |
|||||||
James C. Mullen |
Options (Restricted Voting Shares) |
$ | 2.62 | 4,000,000 | * |
* | Certain of these options will be voluntarily cancelled by the Shareholder immediately prior to the Effective Time. |
Exhibit (d)(7)(ii)
VOTING AND SUPPORT AGREEMENT
THIS AGREEMENT made the 18th day of November, 2013.
BETWEEN:
THE SHAREHOLDERS LISTED ON SCHEDULE A HERETO
(hereinafter called the Shareholders and each a Shareholder),
- and -
PATHEON INC.
a corporation incorporated under the laws of Canada (the Company)
- and -
JLL/DELTA PATHEON HOLDINGS, L.P.,
an exempt limited partnership organized under the laws of the Cayman Islands
(hereinafter called the Purchaser), (collectively, the Parties)
WHEREAS the Shareholders are the joint, legal and beneficial owners of restricted voting shares of the Company, as more particularly described herein;
AND WHEREAS on the date hereof, the Purchaser is concurrently entering into an arrangement agreement (the Arrangement Agreement) with the Company which provides for, among other things, a business combination involving the Purchaser and the Company by way of a plan of arrangement under Section 192 of the Canada Business Corporations Act, pursuant to which the Purchaser will directly or indirectly acquire all of the restricted voting shares (the Shares) of the Company, other than Shares held by affiliates of the Purchaser, at a purchase price of US$9.32 in cash per Share (the Arrangement);
AND WHEREAS this Agreement sets out the terms and conditions of the agreement of the Shareholders to (i) vote, or cause to be voted, all Shares, now or hereafter, beneficially owned (including any shares issued upon the exercise of any stock options or other convertible securities), or over which control or direction is exercised, by the Shareholders (the Owned Shares) in favour of the Arrangement and any matter that is necessary or desirable for the consummation of the Arrangement and (ii) abide by the restrictions and covenants set forth herein;
AND WHEREAS the Purchaser and the Company are relying on the covenants, representations and warranties of the Shareholders set forth in this Agreement in connection with the Purchasers and the Companys respective execution and delivery of the Arrangement Agreement;
NOW THEREFORE this Agreement witnesses that, in consideration of the premises and the covenants and agreement herein contained, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 All capitalized terms used but not otherwise defined herein shall have the respective meaning ascribed to them in the Arrangement Agreement.
ARTICLE 2
CERTAIN COVENANTS OF THE SHAREHOLDERS
2.1 Non-Solicitation. Each Shareholder hereby covenants and irrevocably agrees that it shall, from the date hereof until the earlier of (i) the termination of this Agreement pursuant to Article 4 and (ii) the Effective Time:
(a) | not, directly or indirectly, through any officer, director, employee, representative (including any financial or other advisor) or agent or otherwise, and shall not permit any such person to: |
(i) | solicit, assist, initiate, knowingly encourage or otherwise facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of the Company or any of its Subsidiaries or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes an Acquisition Proposal; |
(ii) | enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than any Purchaser Party or Purchaser Party Representative) regarding any inquiry, proposal or offer that constitutes or could reasonably be expected to constitute an Acquisition Proposal; |
(iii) | accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend any Acquisition Proposal, or take no position or remain neutral with respect to, any public Acquisition Proposal; or |
(iv) | accept, approve, endorse, recommend or execute or enter into or publicly propose to accept, approve, endorse, recommend or execute or enter into any agreement, letter of intent, understanding or arrangement relating to an Acquisition Proposal. |
(b) | immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiation, or other activities commenced prior to the date of this Agreement with any Person (other than any Purchaser Party or Purchaser Party Representative) with respect to any Acquisition Proposal; and |
(c) | immediately notify the Purchaser and the Company, at first orally, and then promptly and in any event within 24 hours in writing, of any Acquisition Proposal, and shall provide the Purchaser and the Company with copies of all |
2
written documents, correspondence or other material received by the Shareholder, its affiliates or its, his, or her Representatives in respect of, from or on behalf of any such Person in connection therewith and if not in writing or electronic form, a description of the material terms of such correspondence sent or communicated to the Shareholder, its affiliates or its, his, or her Representatives. |
2.2 Agreement to Vote in Favor. At any meeting of shareholders of the Company (including the Company Meeting) called to vote upon the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval (including by written consent in lieu of a meeting) with respect to the Arrangement or any of the other transactions contemplated by the Arrangement Agreement is sought, the Shareholders shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares (i) in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement, and (ii) in favour of any other matter necessary or desirable for the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. Each Shareholder will not commit any act that could restrict or affect the Shareholders legal power, authority, and right to vote all of the Owned Shares or otherwise prevent or disable the Shareholder from performing any of his or her obligations under this Agreement. Without limiting the generality of the foregoing, except for this Agreement, each Shareholder shall not enter into any voting agreement with any person or entity with respect to any of the Owned Shares, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Owned Shares, deposit any Owned Shares in a voting trust, or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting the Shareholders legal power, authority, or right to vote the Owned Shares in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement. If either Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, such Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.2.
2.3 Agreement to Vote Against. At any meeting of shareholders of the Company (including the Company Meeting) or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval of all or some of the shareholders of the Company is sought (including by written consent in lieu of a meeting), the Shareholders shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares against (i) any merger agreement or merger, consolidation, combination, sale or transfer of a material amount of assets, amalgamation, plan of arrangement, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or any other Acquisition Proposal (other than the Arrangement or any of the other transactions contemplated by the Arrangement Agreement), (ii) any amendment of the Companys charter document or bylaws or other proposal or transaction involving the Company or any of its Subsidiaries, which amendment or other proposal or transaction would in any manner delay, impede, frustrate, prevent or nullify the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or change in any manner the voting rights of the holders of Shares, and (iii) any action, agreement, transaction or proposal that would result in a breach of any representation, warranty, covenant, agreement or other obligation of the
3
Company in the Arrangement Agreement or of the Shareholders under this Agreement or otherwise impede, interfere with, delay, postpone, discourage, or adversely affect the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. If either Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.3.
2.4 Restrictions on Transfer. Each Shareholder agrees to not directly or indirectly, (i) Transfer (as defined below), or enter into any agreement, option or other arrangement (including any profit-sharing arrangement) with respect to the Transfer of any of the Owned Shares to any Person other than pursuant to the Arrangement Agreement, which, for greater certainty, shall include any Transfer made to an affiliate of the Shareholder as part of any pre-closing tax or other structuring relating to the Arrangement that has been discussed with the Company and the Purchaser prior to the date hereof or (ii) grant any proxies, deposit any of the Owned Shares into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to the Owned Shares, other than pursuant to this Agreement. For the purposes of this Agreement, Transfer means, with respect to any security, (a) any direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation, or the grant, creation, or suffrage of a Lien in or upon, or the gift, grant, or placement in trust or other disposition of such security (including transfers by testamentary or intestate succession, by domestic relations order or other court order, or otherwise by operation of law) or any right, title, or interest therein (including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise) (b) any short sale with respect to such security, entering into or acquiring a derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic benefits or risks of ownership of such security, and (c) each agreement, arrangement, or understanding, whether or not in writing, to effect any of the foregoing.
2.5 Revocation of Prior Proxies
Each Shareholder hereby revokes any proxies heretofore given by it in respect of the Owned Shares.
2.6 Other Covenants. Each Shareholder agrees:
(a) | not take any other action of any kind, directly or indirectly, which could reasonably be regarded as likely to reduce the success of, or delay or interfere with the completion of, the Arrangement and the other transactions contemplated by the Arrangement Agreement and this Agreement. |
(b) | not do indirectly that which it may not do directly by the terms of Article 2. |
4
(c) | not to, directly or indirectly, exercise or cause to be exercised any rights of appraisal or dissent or otherwise oppose in any manner the treatment of any Owned Shares pursuant to the Arrangement. |
(d) | not to requisition or join in the requisition of any meeting of holders of Shares. |
(e) | to provide the Company or the Purchaser, upon request, with evidence that the Shareholder has complied with its, her or his obligations to vote in favour of the approval, consent, ratification and adoption of the Arrangement and the Arrangement Resolution (as applicable) and not to revoke any voting instructions or proxy executed and delivered in respect thereto. |
(f) | to the following disclosure matters: |
(i) | details of this Agreement being set out in the Company Circular and/or any press release of the Company or the Purchaser relating to the Company Meeting or the Arrangement; |
(ii) | this Agreement being publicly filed on SEDAR and/or EDGAR, and/or available for inspection to the extent required by Law; and |
(iii) | details of this Agreement being set out in an early warning report to be filed by the Purchaser. |
2.7 Alternative Transaction. If the Purchaser concludes after the date of this Agreement that it is necessary or desirable to proceed with a form of transaction other than the Arrangement whereby the Purchaser and/or its affiliates would effectively acquire all the Shares or all or substantially all of the business, properties and assets of the Company on economic and other terms and conditions (including, without limitation, tax treatment) having consequences to the Shareholders that are, in its, his or her reasonable objective opinion, equivalent to or better than those contemplated by this Agreement and the Arrangement Agreement (any such transaction is referred to as an Alternative Transaction), then each Shareholder agrees to support the completion of the Alternative Transaction, including, if necessary, by tendering or voting the Owned Shares to a take-over bid or in favour of a special resolution approving the Alternative Transaction.
2.8 No Fettering of Discretion. Notwithstanding any other provision of this Agreement, the Company and the Purchaser hereby agree and acknowledge that the Shareholder is bound hereunder solely in his or her capacity as a securityholder of the Company and that the provisions hereof shall not be deemed or interpreted to bind the Shareholder in his or her capacity as a director or officer of the Company.
2.9 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Purchaser any direct or indirect economic benefit or ownership or incidence of ownership of, or relating to, any Owned Shares. All rights, ownership and economic benefits of and relating to the Owned Shares shall remain vested in and belong to the Shareholders, and the Purchaser shall have no authority to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct the Shareholders in the voting of any of the Owned Shares, except as otherwise provided herein, or in the performance of the Shareholders duties or responsibilities as shareholders of the Company.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
3.1 Representations and Warranties. Each Shareholder represents, warrants and, where applicable, covenants to the Purchaser and the Company as follows and acknowledges that the Purchaser and the Company are relying upon these representations, warranties and covenants in connection with the entering into of this Agreement and the Arrangement Agreement and the purchase by the Purchaser of the Owned Shares under the Arrangement:
(a) | if the Shareholder is not an individual: |
(i) | the Shareholder has been duly formed and is validly existing under the laws of the jurisdiction of its incorporation and has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and |
(ii) | the execution and delivery of this Agreement by the Shareholder and the performance by it of its obligations hereunder have been duly authorized and no other proceedings on its part are necessary to authorize this Agreement and the performance of its obligations hereunder; |
(b) | if the Shareholder is an individual, the Shareholder has the legal capacity to execute and deliver this Agreement and performance of his or her obligations hereunder; |
(c) | this Agreement has been duly executed and delivered by the Shareholder and, assuming the due authorization, execution and delivery by the Purchaser and the Company, constitutes a legal, valid and binding obligation, enforceable by the Purchaser and the Company against the Shareholder in accordance with its terms, subject, however, to limitations imposed by Law in connection with bankruptcy, insolvency or similar proceedings and to the extent that the award of equitable remedies such as specific performance and injunction is within the discretion of the court from which they are sought; |
(d) | the Shareholder, together with the other Shareholder named on Schedule A to this Agreement, are the sole joint, unconditional legal and beneficial owners of the number of Owned Shares and the stock options or other securities or rights exerciseable, directly or indirectly, to acquire Shares listed on Schedule A to this Agreement, and the Shareholder has no legal or beneficial interest in, or control or direction over, any other Shares or such options, securities or rights; |
(e) | the Shareholder, together with the other Shareholder named on Schedule A to this Agreement, have the sole joint right to sell and vote all the Owned Shares and all the Owned Shares shall, at the Effective Time, be beneficially owned solely by such Shareholders jointly with good and marketable title thereto, free and clear of any Liens of any nature or kind whatsoever; |
6
(f) | no person, firm or corporation 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 Owned Shares or any interest therein or right thereto, except the Purchaser pursuant to this Agreement; |
(g) | none of the Owned Shares are subject to any power of attorney or attorney in fact, proxy, voting trust, vote pooling or other agreement, or any right or privilege capable of becoming an agreement, with respect to the right to vote, call meetings of shareholders or give consents or approvals of any kind; |
(h) | none of the execution and delivery by the Shareholder of this Agreement or the completion or performance of the transactions contemplated hereby or the compliance by the Shareholder with the Shareholders obligations hereunder will result in a breach of (i) the constating documents of the Shareholder, if the Shareholder is not an individual; (ii) any agreement or instrument to which the Shareholder is a party or by which the Shareholder or any of the Shareholders property or assets is bound; (iii) to the knowledge of the Shareholder, any judgment, decree, order or award of any Governmental Entity; or (iv) to the knowledge of the Shareholder, any Law, relevant in the context of the Arrangement or this Agreement; |
(i) | the Shareholder acknowledges that it has had the opportunity to obtain independent legal advice with respect to the Agreement and the Arrangement; |
(j) | the Shareholder has received, and is familiar with, the terms of the Arrangement Agreement; |
(k) | (i) the only securities of the Company owned, directly or indirectly, or over which control or direction is exercised, by the Shareholder are those listed on Schedule A to this Agreement and (ii) the Shareholder has no agreement or option, or right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option, for the purchase or acquisition by the Shareholder or transfer to the Shareholder of additional Shares other than upon the exercise of stock options, if any set forth on Schedule A to this Agreement; and |
(l) | there are no Proceedings in progress or pending or, to the knowledge of the Shareholder, threatened against the Shareholder or its affiliates that would adversely affect in any manner the ability of the Shareholder to enter into this Agreement and to perform its obligations hereunder or the title of the Shareholder to any of the Owned Shares. |
3.2 Survival of Representations. The representations and warranties of the Shareholders set forth in Article 3 shall survive the completion of the purchase by the Purchaser of the Owned Shares under the Arrangement and, despite such completion, shall continue in full force and
7
effect for the benefit of the Purchaser and the Company for a period of one year from the date of this Agreement, except for the representation and warranty in Section 3.1(e) above, which shall survive indefinitely.
ARTICLE 4
TERMINATION
4.1 Termination. This Agreement shall terminate upon the earliest of:
(a) | written agreement of the Parties to terminate the Agreement; |
(b) | the Arrangement Agreement has been terminated in accordance with its terms; or |
(c) | the Effective Time. |
ARTICLE 5
GENERAL
5.1 Further Assurances. The Parties shall, from time to time, promptly execute and deliver all such further documents and instruments and do all such acts and things as the other party may reasonably require to effectively carry out the intent of this Agreement.
5.2 Amendment. This Agreement may only be amended by mutual written agreement of the Parties hereto.
5.3 Assignability. This Agreement shall not be assignable by any party without the prior written consent of the other party, other than by the Purchaser to one of its direct or indirect Subsidiaries. This Agreement shall be binding upon and shall enure to the benefit of and be enforceable by each of the Parties hereto and their respective successors and permitted assigns.
5.4 Time. Time shall be of the essence of this Agreement.
5.5 Notices. Any notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail) and addressed:
(a) | to the Purchaser at: |
JLL/Delta Patheon Holdings, L.P.
c/o JLL Partners, Inc.
450 Lexington Avenue, 31st Floor
New York, NY 10017
Attn: Daniel Agroskin
Michel Lagarde
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
8
One Rodney Square P.O. Box 636 Wilmington, Delaware, U.S.A. | ||||
19899-0636 | ||||
Attention: Telephone: Facsimile: |
Robert B. Pincus (302) 651-3090 (302) 434-3090 | |||
with a copy to: | ||||
Borden Ladner Gervais LLP Scotia Plaza 40 King Street West, Suite 4400 Toronto, Canada M5H 3Y4 | ||||
Attention: Telephone: Facsimile: |
Paul A.D. Mingay/Jason Saltzman (416) 367-6006/(416) 367-6196 (416) 367-7098/(416) 361-2770 | |||
(b) | to the Company at: | |||
Patheon Inc. 4721 Emperor Boulevard Durham, NC 27703 | ||||
Attention: Telephone: Facsimile: |
Jason Conner (919) 226-3340 (919) 474-2269 | |||
with a copy to: | ||||
Dentons LLP 99 Bank Street, Suite 1420 Ottawa, Canada K1P 1H4 | ||||
Attention: Telephone: Facsimile: |
Andrea C. Johnson (613) 783-9655 (613) 614-0292 | |||
(c) | to the Shareholders at: | |||
Michael E. Lytton/Meghan Lytton 4721 Emperor Boulevard Durham, NC 27703 | ||||
Attention: Telephone: |
Michael E. Lytton (919) 226-3200 | |||
Facsimile: | (919) 474-2269 |
9
Any notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or (iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile.
5.6 | Governing Law. |
(a) This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
(b) Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.
5.7 Remedies. Each Shareholder agrees and acknowledges that: (i) money damages would not be a sufficient remedy for any breach of this Agreement by it; (ii) in addition to any other remedies at law or in equity that the Purchaser and the Company may have, the Purchaser and the Company shall be entitled to seek equitable relief, including injunction and specific performance, in addition to any other remedies available to the Purchaser and the Company, in the event of any breach of the provisions of this Agreement; and (iii) if it is a defendant or respondent, it shall waive any requirement for the securing or posting of any bond in connection with such remedy. Each Shareholder hereby consents to any preliminary applications for such relief to any court of competent jurisdiction. The prevailing party shall be reimbursed for all costs and expenses, including reasonable legal fees, incurred in enforcing the other partys obligations hereunder. Such remedies shall not be deemed to be exclusive remedies for the breach of this Agreement but shall be in addition to all other remedies at law or in equity.
5.8 Severability. If any provision of this Agreement is determined to be illegal, invalid or unenforceable by any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
5.9 Waiver. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Partys failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.
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5.10 Rules of Construction. The Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the Party drafting such agreement or other document.
5.11 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement. The Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
5.12 Counterparties. This Agreement may be executed in any number of counterparts (including counterparts by facsimile) 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 and binding agreement between the Parties.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, JLL/DELTA PATHEON GP, LTD. |
||||||
By: | /s/ Michel Lagarde |
|||||
Name : Michel Lagarde | ||||||
Title: Director | ||||||
PATHEON INC. | ||||||
By: |
|
|||||
Name: | ||||||
Title: | ||||||
SIGNED AND DELIVERED in the presence of: |
)) )) )) )) |
/s/ Michael E. Lytton | ||||
Witness |
)) |
Michael E. Lytton |
||||
SIGNED AND DELIVERED in the presence of: |
)) )) )) )) |
/s/ Meghan Lytton | ||||
Witness |
)) |
Meghan Lytton |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. | ||||||||||
By its general partner, | ||||||||||
JLL/DELTA PATHEON GP, LTD. | ||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
PATHEON INC. | ||||||||||
By: | /s/ Derek J. Watchorn |
|||||||||
Name: | Derek J. Watchorn | |||||||||
Title: | Director | |||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of: | )) | |||||||||
)) | ||||||||||
)) | /s/ Michael E. Lytton | |||||||||
Witness |
)) |
Michael E. Lytton |
||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of | )) | |||||||||
)) | ||||||||||
)) | /s/ Meghan Lytton | |||||||||
Witness |
)) |
Meghan Lytton |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. | ||||||||||
By its general partner, | ||||||||||
JLL/DELTA PATHEON GP, LTD. | ||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
PATHEON INC. | ||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of: | )) | |||||||||
)) | ||||||||||
![]() |
)) | /s/ Michael E. Lytton | ||||||||
Witness |
)) |
Michael E. Lytton |
||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of | )) | |||||||||
)) | ||||||||||
![]() |
)) | /s/ Meghan Lytton | ||||||||
Witness |
)) |
Meghan Lytton |
[Counterpart to Voting and Support Agreement]
SCHEDULE A
OWNERSHIP OF SECURITIES OF THE COMPANY
Shares
Name |
Shares Beneficially owned |
Registered holder if different from beneficial owner |
Total number of Shares owned or controlled |
|||||||
Michael E. Lytton and Meghan Lytton, jointly | 379,030 | | 379,030 | |||||||
Options or Other Convertible Securities | ||||||||||
Name |
Type of Security |
Exercise or Conversion Price (CAD) |
Total number of Shares Issuable upon Exercise/Conversion |
|||||||
Michael E. Lytton |
Options (Restricted Voting Shares) | $ | 2.09 | 240,000 | ||||||
Michael E. Lytton |
Options (Restricted Voting Shares) | $ | 2.05 | 175,000 | ||||||
Total |
415,000 | * |
* | Certain of these options will be voluntarily cancelled by the Shareholder immediately prior to the Effective Time. |
Exhibit (d)(7)(iii)
VOTING AND SUPPORT AGREEMENT
THIS AGREEMENT made the 18th day of November, 2013.
BETWEEN:
THE SHAREHOLDER LISTED ON SCHEDULE A HERETO
(hereinafter called the Shareholder),
- and -
PATHEON INC.
a corporation incorporated under the laws of Canada (the Company)
- and -
JLL/DELTA PATHEON HOLDINGS, L.P.,
an exempt limited partnership organized under the laws of the Cayman Islands
(hereinafter called the Purchaser), (collectively, the Parties)
WHEREAS the Shareholder is the legal and beneficial owner of restricted voting shares of the Company, as more particularly described herein;
AND WHEREAS on the date hereof, the Purchaser is concurrently entering into an arrangement agreement (the Arrangement Agreement) with the Company which provides for, among other things, a business combination involving the Purchaser and the Company by way of a plan of arrangement under Section 192 of the Canada Business Corporations Act, pursuant to which the Purchaser will directly or indirectly acquire all of the restricted voting shares (the Shares) of the Company, other than Shares held by affiliates of the Purchaser, at a purchase price of US$9.32 in cash per Share (the Arrangement);
AND WHEREAS this Agreement sets out the terms and conditions of the agreement of the Shareholder to (i) vote, or cause to be voted, all Shares, now or hereafter, beneficially owned (including any shares issued upon the exercise of any stock options or other convertible securities), or over which control or direction is exercised, by the Shareholder (the Owned Shares) in favour of the Arrangement and any matter that is necessary or desirable for the consummation of the Arrangement and (ii) abide by the restrictions and covenants set forth herein;
AND WHEREAS the Purchaser and the Company are relying on the covenants, representations and warranties of the Shareholder set forth in this Agreement in connection with the Purchasers and the Companys respective execution and delivery of the Arrangement Agreement;
NOW THEREFORE this Agreement witnesses that, in consideration of the premises and the covenants and agreement herein contained, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 All capitalized terms used but not otherwise defined herein shall have the respective meaning ascribed to them in the Arrangement Agreement.
ARTICLE 2
CERTAIN COVENANTS OF THE SHAREHOLDER
2.1 Non-Solicitation. The Shareholder hereby covenants and irrevocably agrees that it shall, from the date hereof until the earlier of (i) the termination of this Agreement pursuant to Article 4 and (ii) the Effective Time:
(a) | not, directly or indirectly, through any officer, director, employee, representative (including any financial or other advisor) or agent or otherwise, and shall not permit any such person to: |
(i) | solicit, assist, initiate, knowingly encourage or otherwise facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of the Company or any of its Subsidiaries or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes an Acquisition Proposal; |
(ii) | enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than any Purchaser Party or Purchaser Party Representative) regarding any inquiry, proposal or offer that constitutes or could reasonably be expected to constitute an Acquisition Proposal; |
(iii) | accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend any Acquisition Proposal, or take no position or remain neutral with respect to, any public Acquisition Proposal; or |
(iv) | accept, approve, endorse, recommend or execute or enter into or publicly propose to accept, approve, endorse, recommend or execute or enter into any agreement, letter of intent, understanding or arrangement relating to an Acquisition Proposal. |
(b) | immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiation, or other activities commenced prior to the date of this Agreement with any Person (other than any Purchaser Party or Purchaser Party Representative) with respect to any Acquisition Proposal; and |
(c) | immediately notify the Purchaser and the Company, at first orally, and then promptly and in any event within 24 hours in writing, of any Acquisition Proposal, and shall provide the Purchaser and the Company with copies of all |
2
written documents, correspondence or other material received by the Shareholder, its affiliates or its, his, or her Representatives in respect of, from or on behalf of any such Person in connection therewith and if not in writing or electronic form, a description of the material terms of such correspondence sent or communicated to the Shareholder, its affiliates or its, his, or her Representatives. |
2.2 Agreement to Vote in Favor. At any meeting of shareholders of the Company (including the Company Meeting) called to vote upon the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval (including by written consent in lieu of a meeting) with respect to the Arrangement or any of the other transactions contemplated by the Arrangement Agreement is sought, the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares (i) in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement, and (ii) in favour of any other matter necessary or desirable for the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. The Shareholder will not commit any act that could restrict or affect the Shareholders legal power, authority, and right to vote all of the Owned Shares or otherwise prevent or disable the Shareholder from performing any of his or her obligations under this Agreement. Without limiting the generality of the foregoing, except for this Agreement, the Shareholder shall not enter into any voting agreement with any person or entity with respect to any of the Owned Shares, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Owned Shares, deposit any Owned Shares in a voting trust, or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting the Shareholders legal power, authority, or right to vote the Owned Shares in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.2.
2.3 Agreement to Vote Against. At any meeting of shareholders of the Company (including the Company Meeting) or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval of all or some of the shareholders of the Company is sought (including by written consent in lieu of a meeting), the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares against (i) any merger agreement or merger, consolidation, combination, sale or transfer of a material amount of assets, amalgamation, plan of arrangement, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or any other Acquisition Proposal (other than the Arrangement or any of the other transactions contemplated by the Arrangement Agreement), (ii) any amendment of the Companys charter document or bylaws or other proposal or transaction involving the Company or any of its Subsidiaries, which amendment or other proposal or transaction would in any manner delay, impede, frustrate, prevent or nullify the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or change in any manner the voting rights of the holders of Shares, and (iii) any action, agreement, transaction or proposal that would result in a breach of any representation, warranty, covenant, agreement or other obligation of the
3
Company in the Arrangement Agreement or of the Shareholder under this Agreement or otherwise impede, interfere with, delay, postpone, discourage, or adversely affect the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.3.
2.4 Restrictions on Transfer. The Shareholder agrees to not directly or indirectly, (i) Transfer (as defined below), or enter into any agreement, option or other arrangement (including any profit-sharing arrangement) with respect to the Transfer of any of the Owned Shares to any Person other than pursuant to the Arrangement Agreement, which, for greater certainty, shall include any Transfer made to an affiliate of the Shareholder as part of any pre-closing tax or other structuring relating to the Arrangement that has been discussed with the Company and the Purchaser prior to the date hereof or (ii) grant any proxies, deposit any of the Owned Shares into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to the Owned Shares, other than pursuant to this Agreement. For the purposes of this Agreement, Transfer means, with respect to any security, (a) any direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation, or the grant, creation, or suffrage of a Lien in or upon, or the gift, grant, or placement in trust or other disposition of such security (including transfers by testamentary or intestate succession, by domestic relations order or other court order, or otherwise by operation of law) or any right, title, or interest therein (including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise) (b) any short sale with respect to such security, entering into or acquiring a derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic benefits or risks of ownership of such security, and (c) each agreement, arrangement, or understanding, whether or not in writing, to effect any of the foregoing.
2.5 Revocation of Prior Proxies
The Shareholder hereby revokes any proxies heretofore given by it in respect of the Owned Shares.
2.6 Other Covenants. The Shareholder agrees:
(a) | not take any other action of any kind, directly or indirectly, which could reasonably be regarded as likely to reduce the success of, or delay or interfere with the completion of, the Arrangement and the other transactions contemplated by the Arrangement Agreement and this Agreement. |
(b) | not do indirectly that which it may not do directly by the terms of Article 2. |
4
(c) | not to, directly or indirectly, exercise or cause to be exercised any rights of appraisal or dissent or otherwise oppose in any manner the treatment of any Owned Shares pursuant to the Arrangement. |
(d) | not to requisition or join in the requisition of any meeting of holders of Shares. |
(e) | to provide the Company or the Purchaser, upon request, with evidence that the Shareholder has complied with its, her or his obligations to vote in favour of the approval, consent, ratification and adoption of the Arrangement and the Arrangement Resolution (as applicable) and not to revoke any voting instructions or proxy executed and delivered in respect thereto. |
(f) | to the following disclosure matters: |
(i) | details of this Agreement being set out in the Company Circular and/or any press release of the Company or the Purchaser relating to the Company Meeting or the Arrangement; |
(ii) | this Agreement being publicly filed on SEDAR and/or EDGAR, and/or available for inspection to the extent required by Law; and |
(iii) | details of this Agreement being set out in an early warning report to be filed by the Purchaser. |
2.7 Alternative Transaction. If the Purchaser concludes after the date of this Agreement that it is necessary or desirable to proceed with a form of transaction other than the Arrangement whereby the Purchaser and/or its affiliates would effectively acquire all the Shares or all or substantially all of the business, properties and assets of the Company on economic and other terms and conditions (including, without limitation, tax treatment) having consequences to the Shareholder that are, in its, his or her reasonable objective opinion, equivalent to or better than those contemplated by this Agreement and the Arrangement Agreement (any such transaction is referred to as an Alternative Transaction), then the Shareholder agrees to support the completion of the Alternative Transaction, including, if necessary, by tendering or voting the Owned Shares to a take-over bid or in favour of a special resolution approving the Alternative Transaction.
2.8 No Fettering of Discretion. Notwithstanding any other provision of this Agreement, the Company and the Purchaser hereby agree and acknowledge that the Shareholder is bound hereunder solely in his or her capacity as a securityholder of the Company and that the provisions hereof shall not be deemed or interpreted to bind the Shareholder in his or her capacity as a director or officer of the Company.
2.9 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Purchaser any direct or indirect economic benefit or ownership or incidence of ownership of, or relating to, any Owned Shares. All rights, ownership and economic benefits of and relating to the Owned Shares shall remain vested in and belong to the Shareholder, and the Purchaser shall have no authority to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct the Shareholder in the voting of any of the Owned Shares, except as otherwise provided herein, or in the performance of the Shareholders duties or responsibilities as a shareholder of the Company.
5
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
3.1 Representations and Warranties. The Shareholder represents, warrants and, where applicable, covenants to the Purchaser and the Company as follows and acknowledges that the Purchaser and the Company are relying upon these representations, warranties and covenants in connection with the entering into of this Agreement and the Arrangement Agreement and the purchase by the Purchaser of the Owned Shares under the Arrangement:
(a) | if the Shareholder is not an individual: |
(i) | the Shareholder has been duly formed and is validly existing under the laws of the jurisdiction of its incorporation and has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and |
(ii) | the execution and delivery of this Agreement by the Shareholder and the performance by it of its obligations hereunder have been duly authorized and no other proceedings on its part are necessary to authorize this Agreement and the performance of its obligations hereunder. |
(b) | if the Shareholder is an individual, the Shareholder has the legal capacity to execute and deliver this Agreement and performance of his or her obligations hereunder; |
(c) | this Agreement has been duly executed and delivered by the Shareholder and, assuming the due authorization, execution and delivery by the Purchaser and the Company, constitutes a legal, valid and binding obligation, enforceable by the Purchaser and the Company against the Shareholder in accordance with its terms, subject, however, to limitations imposed by Law in connection with bankruptcy, insolvency or similar proceedings and to the extent that the award of equitable remedies such as specific performance and injunction is within the discretion of the court from which they are sought; |
(d) | the Shareholder is the sole, unconditional legal and beneficial owner of the number of Owned Shares and the stock options or other securities or rights exerciseable, directly or indirectly, to acquire Shares listed on Schedule A to this Agreement, and has no legal or beneficial interest in, or control or direction over, any other Shares or such options, securities or rights; |
(e) | the Shareholder has the sole right to sell and vote all the Owned Shares and all the Owned Shares shall, at the Effective Time, be beneficially owned solely by the Shareholder with good and marketable title thereto, free and clear of any Liens of any nature or kind whatsoever; |
6
(f) | no person, firm or corporation 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 Owned Shares or any interest therein or right thereto, except the Purchaser pursuant to this Agreement; |
(g) | none of the Owned Shares are subject to any power of attorney or attorney in fact, proxy, voting trust, vote pooling or other agreement, or any right or privilege capable of becoming an agreement, with respect to the right to vote, call meetings of shareholders or give consents or approvals of any kind; |
(h) | none of the execution and delivery by the Shareholder of this Agreement or the completion or performance of the transactions contemplated hereby or the compliance by the Shareholder with the Shareholders obligations hereunder will result in a breach of (i) the constating documents of the Shareholder, if the Shareholder is not an individual; (ii) any agreement or instrument to which the Shareholder is a party or by which the Shareholder or any of the Shareholders property or assets is bound; (iii) to the knowledge of the Shareholder, any judgment, decree, order or award of any Governmental Entity; or (iv) to the knowledge of the Shareholder, any Law, relevant in the context of the Arrangement or this Agreement; |
(i) | the Shareholder acknowledges that it has had the opportunity to obtain independent legal advice with respect to the Agreement and the Arrangement; |
(j) | the Shareholder has received, and is familiar with, the terms of the Arrangement Agreement; |
(k) | (i) the only securities of the Company owned, directly or indirectly, or over which control or direction is exercised, by the Shareholder are those listed on Schedule A to this Agreement and (ii) the Shareholder has no agreement or option, or right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option, for the purchase or acquisition by the Shareholder or transfer to the Shareholder of additional Shares other than upon the exercise of stock options, if any set forth on Schedule A to this Agreement; and |
(l) | there are no Proceedings in progress or pending or, to the knowledge of the Shareholder, threatened against the Shareholder or its affiliates that would adversely affect in any manner the ability of the Shareholder to enter into this Agreement and to perform its obligations hereunder or the title of the Shareholder to any of the Owned Shares. |
3.2 Survival of Representations. The representations and warranties of the Shareholder set forth in Article 3 shall survive the completion of the purchase by the Purchaser of the Owned Shares under the Arrangement and, despite such completion, shall continue in full force and effect for the benefit of the Purchaser and the Company for a period of one year from the date of this Agreement, except for the representation and warranty in Section 3.1(e) above, which shall survive indefinitely.
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ARTICLE 4
TERMINATION
4.1 Termination. This Agreement shall terminate upon the earliest of:
(a) | written agreement of the Parties to terminate the Agreement; |
(b) | the Arrangement Agreement has been terminated in accordance with its terms; or |
(c) | the Effective Time. |
ARTICLE 5
GENERAL
5.1 Further Assurances. The Parties shall, from time to time, promptly execute and deliver all such further documents and instruments and do all such acts and things as the other party may reasonably require to effectively carry out the intent of this Agreement.
5.2 Amendment. This Agreement may only be amended by mutual written agreement of the Parties hereto.
5.3 Assignability. This Agreement shall not be assignable by any party without the prior written consent of the other party, other than by the Purchaser to one of its direct or indirect Subsidiaries. This Agreement shall be binding upon and shall enure to the benefit of and be enforceable by each of the Parties hereto and their respective successors and permitted assigns.
5.4 Time. Time shall be of the essence of this Agreement.
5.5 Notices. Any notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail) and addressed:
(a) | to the Purchaser at: |
JLL/Delta Patheon Holdings, L.P.
c/o JLL Partners, Inc.
450 Lexington Avenue, 31st Floor
New York, NY 10017
Attn: | Daniel Agroskin |
Michel Lagarde |
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
8
P.O. Box 636
Wilmington, Delaware, U.S.A.
19899-0636
Attention: | Robert B. Pincus |
Telephone: | (302) 651-3090 |
Facsimile: | (302) 434-3090 |
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza
40 King Street West, Suite 4400
Toronto, Canada M5H 3Y4
Attention: | Paul A.D. Mingay/Jason Saltzman |
Telephone: | (416) 367-6006/(416) 367-6196 |
Facsimile: | (416) 367-7098/(416) 361-2770 |
(b) | to the Company at: |
Patheon Inc.
4721 Emperor Boulevard
Durham, NC 27703
Attention: | Jason Conner |
Telephone: | (919) 226-3340 |
Facsimile: | (919) 474-2269 |
with a copy to:
Dentons LLP
99 Bank Street, Suite 1420
Ottawa, Canada KIP 1H4
Attention: | Andrea C. Johnson |
Telephone: | (613) 783-9655 |
Facsimile: | (613) 614-0292 |
(c) | to the Shareholder at: |
Brian G. Shaw
Attention: | Brian G. Shaw |
Telephone:
Facsimile:
9
Any notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or (iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile.
5.6 Governing Law.
(a) This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
(b) Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.
5.7 Remedies. The Shareholder agrees and acknowledges that: (i) money damages would not be a sufficient remedy for any breach of this Agreement by it; (ii) in addition to any other remedies at law or in equity that the Purchaser and the Company may have, the Purchaser and the Company shall be entitled to seek equitable relief, including injunction and specific performance, in addition to any other remedies available to the Purchaser and the Company, in the event of any breach of the provisions of this Agreement; and (iii) if it is a defendant or respondent, it shall waive any requirement for the securing or posting of any bond in connection with such remedy. The Shareholder hereby consents to any preliminary applications for such relief to any court of competent jurisdiction. The prevailing party shall be reimbursed for all costs and expenses, including reasonable legal fees, incurred in enforcing the other partys obligations hereunder. Such remedies shall not be deemed to be exclusive remedies for the breach of this Agreement but shall be in addition to all other remedies at law or in equity.
5.8 Severability. If any provision of this Agreement is determined to be illegal, invalid or unenforceable by any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
5.9 Waiver. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Partys failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.
10
5.10 Rule of Construction. The Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the Party drafting such agreement or other document.
5.11 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement. The Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
5.12 Counterparties. This Agreement may be executed in any number of counterparts (including counterparts by facsimile) 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 and binding agreement between the Parties.
[Remainder of this page intentionally left blank.]
11
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, JLL/DELTA PATHEON GP, LTD. | ||||||||||
By: | /s/ Michel Lagarde |
|||||||||
Name: | Michel Lagarde | |||||||||
Title: | Director | |||||||||
PATHEON INC. | ||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of: | )) | |||||||||
)) | ||||||||||
|
)) | /s/ Brian G. Shaw |
||||||||
Witness | )) | Brian G. Shaw |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, JLL/DELTA PATHEON GP, LTD. | ||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
PATHEON INC. | ||||||||||
By: | /s/ Derek. J. Watchorn |
|||||||||
Name: | Derek. J. Watchorn | |||||||||
Title: | Director | |||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of: | )) | |||||||||
)) | ||||||||||
|
)) | /s/ Brian G. Shaw |
||||||||
Witness | )) | Brian G. Shaw |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, JLL/DELTA PATHEON GP, LTD. |
||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
PATHEON INC. | ||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of: | )) | |||||||||
|
)) )) |
|||||||||
/s/ Brian G. Shaw |
||||||||||
Witness | )) | Brian G. Shaw |
[Counterpart to Voting and Support Agreement]
SCHEDULE A
OWNERSHIP OF SECURITIES OF THE COMPANY
Shares
Name |
Shares Beneficially owned |
Registered holder if different from beneficial owner |
Total number of Shares owned or controlled |
|||||||||
Brian G. Shaw |
110,939 | | 110,939 |
Options or Other Convertible Securities
Name |
Type of Security | Exercise or Conversion Price (CAD) |
Total number of Shares Issuable upon Exercise/Conversion | |||
Brian G. Shaw |
Nil. | Nil. | Nil. |
Exhibit (d)(7)(iv)
VOTING AND SUPPORT AGREEMENT
THIS AGREEMENT made the 18th day of November, 2013.
BETWEEN:
THE SHAREHOLDER LISTED ON SCHEDULE A HERETO
(hereinafter called the Shareholder),
- and -
PATHEON INC.
a corporation incorporated under the laws of Canada (the Company)
- and -
JLL/DELTA PATHEON HOLDINGS, L.P.,
an exempt limited partnership organized under the laws of the Cayman Islands
(hereinafter called the Purchaser), (collectively, the Parties)
WHEREAS the Shareholder is the legal and beneficial owner of restricted voting shares of the Company, as more particularly described herein;
AND WHEREAS on the date hereof, the Purchaser is concurrently entering into an arrangement agreement (the Arrangement Agreement) with the Company which provides for, among other things, a business combination involving the Purchaser and the Company by way of a plan of arrangement under Section 192 of the Canada Business Corporations Act, pursuant to which the Purchaser will directly or indirectly acquire all of the restricted voting shares (the Shares) of the Company, other than Shares held by affiliates of the Purchaser, at a purchase price of US$9.32 in cash per Share (the Arrangement);
AND WHEREAS this Agreement sets out the terms and conditions of the agreement of the Shareholder to (i) vote, or cause to be voted, all Shares, now or hereafter, beneficially owned (including any shares issued upon the exercise of any stock options or other convertible securities), or over which control or direction is exercised, by the Shareholder (the Owned Shares) in favour of the Arrangement and any matter that is necessary or desirable for the consummation of the Arrangement and (ii) abide by the restrictions and covenants set forth herein;
AND WHEREAS the Purchaser and the Company are relying on the covenants, representations and warranties of the Shareholder set forth in this Agreement in connection with the Purchasers and the Companys respective execution and delivery of the Arrangement Agreement;
NOW THEREFORE this Agreement witnesses that, in consideration of the premises and the covenants and agreement herein contained, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 All capitalized terms used but not otherwise defined herein shall have the respective meaning ascribed to them in the Arrangement Agreement.
ARTICLE 2
CERTAIN COVENANTS OF THE SHAREHOLDER
2.1 Non-Solicitation. The Shareholder hereby covenants and irrevocably agrees that it shall, from the date hereof until the earlier of (i) the termination of this Agreement pursuant to Article 4 and (ii) the Effective Time:
(a) | not, directly or indirectly, through any officer, director, employee, representative (including any financial or other advisor) or agent or otherwise, and shall not permit any such person to: |
(i) | solicit, assist, initiate, knowingly encourage or otherwise facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of the Company or any of its Subsidiaries or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes an Acquisition Proposal; |
(ii) | enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than any Purchaser Party or Purchaser Party Representative) regarding any inquiry, proposal or offer that constitutes or could reasonably be expected to constitute an Acquisition Proposal; |
(iii) | accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend any Acquisition Proposal, or take no position or remain neutral with respect to, any public Acquisition Proposal; or |
(iv) | accept, approve, endorse, recommend or execute or enter into or publicly propose to accept, approve, endorse, recommend or execute or enter into any agreement, letter of intent, understanding or arrangement relating to an Acquisition Proposal. |
(b) | immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiation, or other activities commenced prior to the date of this Agreement with any Person (other than any Purchaser Party or Purchaser Party Representative) with respect to any Acquisition Proposal; and |
(c) | immediately notify the Purchaser and the Company, at first orally, and then promptly and in any event within 24 hours in writing, of any Acquisition Proposal, and shall provide the Purchaser and the Company with copies of all |
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written documents, correspondence or other material received by the Shareholder, its affiliates or its, his, or her Representatives in respect of, from or on behalf of any such Person in connection therewith and if not in writing or electronic form, a description of the material terms of such correspondence sent or communicated to the Shareholder, its affiliates or its, his, or her Representatives. |
2.2 Agreement to Vote in Favor. At any meeting of shareholders of the Company (including the Company Meeting) called to vote upon the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval (including by written consent in lieu of a meeting) with respect to the Arrangement or any of the other transactions contemplated by the Arrangement Agreement is sought, the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares (i) in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement, and (ii) in favour of any other matter necessary or desirable for the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. The Shareholder will not commit any act that could restrict or affect the Shareholders legal power, authority, and right to vote all of the Owned Shares or otherwise prevent or disable the Shareholder from performing any of his or her obligations under this Agreement. Without limiting the generality of the foregoing, except for this Agreement, the Shareholder shall not enter into any voting agreement with any person or entity with respect to any of the Owned Shares, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Owned Shares, deposit any Owned Shares in a voting trust, or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting the Shareholders legal power, authority, or right to vote the Owned Shares in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.2.
2.3 Agreement to Vote Against. At any meeting of shareholders of the Company (including the Company Meeting) or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval of all or some of the shareholders of the Company is sought (including by written consent in lieu of a meeting), the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares against (i) any merger agreement or merger, consolidation, combination, sale or transfer of a material amount of assets, amalgamation, plan of arrangement, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or any other Acquisition Proposal (other than the Arrangement or any of the other transactions contemplated by the Arrangement Agreement), (ii) any amendment of the Companys charter document or bylaws or other proposal or transaction involving the Company or any of its Subsidiaries, which amendment or other proposal or transaction would in any manner delay, impede, frustrate, prevent or nullify the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or change in any manner the voting rights of the holders of Shares, and (iii) any action, agreement, transaction or proposal that would result in a breach of any representation, warranty, covenant, agreement or other obligation of the
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Company in the Arrangement Agreement or of the Shareholder under this Agreement or otherwise impede, interfere with, delay, postpone, discourage, or adversely affect the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.3.
2.4 Restrictions on Transfer. The Shareholder agrees to not directly or indirectly, (i) Transfer (as defined below), or enter into any agreement, option or other arrangement (including any profit-sharing arrangement) with respect to the Transfer of any of the Owned Shares to any Person other than pursuant to the Arrangement Agreement, which, for greater certainty, shall include any Transfer made to an affiliate of the Shareholder as part of any pre-closing tax or other structuring relating to the Arrangement that has been discussed with the Company and the Purchaser prior to the date hereof or (ii) grant any proxies, deposit any of the Owned Shares into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to the Owned Shares, other than pursuant to this Agreement. For the purposes of this Agreement, Transfer means, with respect to any security, (a) any direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation, or the grant, creation, or suffrage of a Lien in or upon, or the gift, grant, or placement in trust or other disposition of such security (including transfers by testamentary or intestate succession, by domestic relations order or other court order, or otherwise by operation of law) or any right, title, or interest therein (including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise) (b) any short sale with respect to such security, entering into or acquiring a derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic benefits or risks of ownership of such security, and (c) each agreement, arrangement, or understanding, whether or not in writing, to effect any of the foregoing.
2.5 Revocation of Prior Proxies
The Shareholder hereby revokes any proxies heretofore given by it in respect of the Owned Shares.
2.6 Other Covenants. The Shareholder agrees:
(a) | not take any other action of any kind, directly or indirectly, which could reasonably be regarded as likely to reduce the success of, or delay or interfere with the completion of, the Arrangement and the other transactions contemplated by the Arrangement Agreement and this Agreement. |
(b) | not do indirectly that which it may not do directly by the terms of Article 2. |
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(c) | not to, directly or indirectly, exercise or cause to be exercised any rights of appraisal or dissent or otherwise oppose in any manner the treatment of any Owned Shares pursuant to the Arrangement. |
(d) | not to requisition or join in the requisition of any meeting of holders of Shares. |
(e) | to provide the Company or the Purchaser, upon request, with evidence that the Shareholder has complied with its, her or his obligations to vote in favour of the approval, consent, ratification and adoption of the Arrangement and the Arrangement Resolution (as applicable) and not to revoke any voting instructions or proxy executed and delivered in respect thereto. |
(f) | to the following disclosure matters: |
(i) | details of this Agreement being set out in the Company Circular and/or any press release of the Company or the Purchaser relating to the Company Meeting or the Arrangement; |
(ii) | this Agreement being publicly filed on SEDAR and/or EDGAR, and/or available for inspection to the extent required by Law; and |
(iii) | details of this Agreement being set out in an early warning report to be filed by the Purchaser. |
2.7 Alternative Transaction. If the Purchaser concludes after the date of this Agreement that it is necessary or desirable to proceed with a form of transaction other than the Arrangement whereby the Purchaser and/or its affiliates would effectively acquire all the Shares or all or substantially all of the business, properties and assets of the Company on economic and other terms and conditions (including, without limitation, tax treatment) having consequences to the Shareholder that are, in its, his or her reasonable objective opinion, equivalent to or better than those contemplated by this Agreement and the Arrangement Agreement (any such transaction is referred to as an Alternative Transaction), then the Shareholder agrees to support the completion of the Alternative Transaction, including, if necessary, by tendering or voting the Owned Shares to a take-over bid or in favour of a special resolution approving the Alternative Transaction.
2.8 No Fettering of Discretion. Notwithstanding any other provision of this Agreement, the Company and the Purchaser hereby agree and acknowledge that the Shareholder is bound hereunder solely in his or her capacity as a securityholder of the Company and that the provisions hereof shall not be deemed or interpreted to bind the Shareholder in his or her capacity as a director or officer of the Company.
2.9 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Purchaser any direct or indirect economic benefit or ownership or incidence of ownership of, or relating to, any Owned Shares. All rights, ownership and economic benefits of and relating to the Owned Shares shall remain vested in and belong to the Shareholder, and the Purchaser shall have no authority to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct the Shareholder in the voting of any of the Owned Shares, except as otherwise provided herein, or in the performance of the Shareholders duties or responsibilities as a shareholder of the Company.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
3.1 Representations and Warranties. The Shareholder represents, warrants and, where applicable, covenants to the Purchaser and the Company as follows and acknowledges that the Purchaser and the Company are relying upon these representations, warranties and covenants in connection with the entering into of this Agreement and the Arrangement Agreement and the purchase by the Purchaser of the Owned Shares under the Arrangement:
(a) | if the Shareholder is not an individual: |
(i) | the Shareholder has been duly formed and is validly existing under the laws of the jurisdiction of its incorporation and has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and |
(ii) | the execution and delivery of this Agreement by the Shareholder and the performance by it of its obligations hereunder have been duly authorized and no other proceedings on its part are necessary to authorize this Agreement and the performance of its obligations hereunder. |
(b) | if the Shareholder is an individual, the Shareholder has the legal capacity to execute and deliver this Agreement and performance of his or her obligations hereunder; |
(c) | this Agreement has been duly executed and delivered by the Shareholder and, assuming the due authorization, execution and delivery by the Purchaser and the Company, constitutes a legal, valid and binding obligation, enforceable by the Purchaser and the Company against the Shareholder in accordance with its terms, subject, however, to limitations imposed by Law in connection with bankruptcy, insolvency or similar proceedings and to the extent that the award of equitable remedies such as specific performance and injunction is within the discretion of the court from which they are sought; |
(d) | the Shareholder is the sole, unconditional legal and beneficial owner of the number of Owned Shares and the stock options or other securities or rights exerciseable, directly or indirectly, to acquire Shares listed on Schedule A to this Agreement, and has no legal or beneficial interest in, or control or direction over, any other Shares or such options, securities or rights; |
(e) | the Shareholder has the sole right to sell and vote all the Owned Shares and all the Owned Shares shall, at the Effective Time, be beneficially owned solely by the Shareholder with good and marketable title thereto, free and clear of any Liens of any nature or kind whatsoever; |
6
(f) | no person, firm or corporation 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 Owned Shares or any interest therein or right thereto, except the Purchaser pursuant to this Agreement; |
(g) | none of the Owned Shares are subject to any power of attorney or attorney in fact, proxy, voting trust, vote pooling or other agreement, or any right or privilege capable of becoming an agreement, with respect to the right to vote, call meetings of shareholders or give consents or approvals of any kind; |
(h) | none of the execution and delivery by the Shareholder of this Agreement or the completion or performance of the transactions contemplated hereby or the compliance by the Shareholder with the Shareholders obligations hereunder will result in a breach of (i) the constating documents of the Shareholder, if the Shareholder is not an individual; (ii) any agreement or instrument to which the Shareholder is a party or by which the Shareholder or any of the Shareholders property or assets is bound; (iii) to the knowledge of the Shareholder, any judgment, decree, order or award of any Governmental Entity; or (iv) to the knowledge of the Shareholder, any Law, relevant in the context of the Arrangement or this Agreement; |
(i) | the Shareholder acknowledges that it has had the opportunity to obtain independent legal advice with respect to the Agreement and the Arrangement; |
(j) | the Shareholder has received, and is familiar with, the terms of the Arrangement Agreement; |
(k) | (i) the only securities of the Company owned, directly or indirectly, or over which control or direction is exercised, by the Shareholder are those listed on Schedule A to this Agreement and (ii) the Shareholder has no agreement or option, or right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option, for the purchase or acquisition by the Shareholder or transfer to the Shareholder of additional Shares other than upon the exercise of stock options, if any set forth on Schedule A to this Agreement; and |
(I) | there are no Proceedings in progress or pending or, to the knowledge of the Shareholder, threatened against the Shareholder or its affiliates that would adversely affect in any manner the ability of the Shareholder to enter into this Agreement and to perform its obligations hereunder or the title of the Shareholder to any of the Owned Shares. |
3.2 Survival of Representations. The representations and warranties of the Shareholder set forth in Article 3 shall survive the completion of the purchase by the Purchaser of the Owned Shares under the Arrangement and, despite such completion, shall continue in full force and effect for the benefit of the Purchaser and the Company for a period of one year from the date of this Agreement, except for the representation and warranty in Section 3.1(e) above, which shall survive indefinitely.
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ARTICLE 4
TERMINATION
4.1 Termination. This Agreement shall terminate upon the earliest of:
(a) | written agreement of the Parties to terminate the Agreement; |
(b) | the Arrangement Agreement has been terminated in accordance with its terms; or |
(c) | the Effective Time. |
ARTICLE 5
GENERAL
5.1 Further Assurances. The Parties shall, from time to time, promptly execute and deliver all such further documents and instruments and do all such acts and things as the other party may reasonably require to effectively carry out the intent of this Agreement.
5.2 Amendment. This Agreement may only be amended by mutual written agreement of the Parties hereto.
5.3 Assignability. This Agreement shall not be assignable by any party without the prior written consent of the other party, other than by the Purchaser to one of its direct or indirect Subsidiaries. This Agreement shall be binding upon and shall enure to the benefit of and be enforceable by each of the Parties hereto and their respective successors and permitted assigns.
5.4 Time. Time shall be of the essence of this Agreement.
5.5 Notices. Any notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail) and addressed:
(a) | to the Purchaser at: |
JLL/Delta Patheon Holdings, L.P.
c/o JLL Partners, Inc.
450 Lexington Avenue, 31st Floor
New York, NY 10017
Attn: | Daniel Agroskin |
Michel Lagarde
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
8
P.O. Box 636
Wilmington, Delaware, U.S.A.
19899-0636
Attention: | Robert B. Pincus |
Telephone: | (302) 651-3090 |
Facsimile: | (302) 434-3090 |
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza
40 King Street West, Suite 4400
Toronto, Canada M5H 3Y4
Attention: | Paul A.D. Mingay/Jason Saltzman |
Telephone: | (416) 367-6006/(416) 367-6196 |
Facsimile: | (416) 367-7098/(416) 361-2770 |
(b) | to the Company at: |
Patheon Inc.
4721 Emperor Boulevard
Durham, NC 27703
Attention: | Jason Conner |
Telephone: | (919) 226-3340 |
Facsimile: | (919) 474-2269 |
with | a copy to: |
Dentons LLP
99 Bank Street, Suite 1420
Ottawa, Canada KIP 1H4
Attention: | Andrea C. Johnson |
Telephone: | (613) 783-9655 |
Facsimile: | (613) 614-0292 |
(c) | to the Shareholder at: |
David E. Sutin
Attention: | David E. Sutin |
Telephone: |
Facsimile: |
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Any notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or (iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile.
5.6 Governing Law.
(a) This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
(b) Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.
5.7 Remedies. The Shareholder agrees and acknowledges that: (i) money damages would not be a sufficient remedy for any breach of this Agreement by it; (ii) in addition to any other remedies at law or in equity that the Purchaser and the Company may have, the Purchaser and the Company shall be entitled to seek equitable relief, including injunction and specific performance, in addition to any other remedies available to the Purchaser and the Company, in the event of any breach of the provisions of this Agreement; and (iii) if it is a defendant or respondent, it shall waive any requirement for the securing or posting of any bond in connection with such remedy. The Shareholder hereby consents to any preliminary applications for such relief to any court of competent jurisdiction. The prevailing party shall be reimbursed for all costs and expenses, including reasonable legal fees, incurred in enforcing the other partys obligations hereunder. Such remedies shall not be deemed to be exclusive remedies for the breach of this Agreement but shall be in addition to all other remedies at law or in equity.
5.8 Severability. If any provision of this Agreement is determined to be illegal, invalid or unenforceable by any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
5.9 Waiver. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Partys failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.
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5.10 Rules of Construction. The Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the Party drafting such agreement or other document.
5.11 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement. The Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
5.12 Counterparties. This Agreement may be executed in any number of counterparts (including counterparts by facsimile) 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 and binding agreement between the Parties.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, JLL/DELTA PATHEON GP, LTD. | ||||||||
By: | /s/ Michel Lagarde |
|||||||
Name : Michel Lagarde | ||||||||
Title: Director | ||||||||
PATHEON INC. | ||||||||
By: |
|
|||||||
Name: | ||||||||
Title: | ||||||||
SIGNED AND DELIVERED in the presence of: |
)) )) )) )) |
/s/ David E. Sutin |
||||||
Witness |
)) |
David E. Sutin |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, JLL/DELTA PATHEON GP, LTD. | ||||||||
By: |
|
|||||||
Name: | ||||||||
Title: | ||||||||
PATHEON INC. | ||||||||
By: | /s/ Derek J. Watchorn |
|||||||
Name: Derek J. Watchorn | ||||||||
Title: Director | ||||||||
SIGNED AND DELIVERED in the presence of: |
)) )) )) )) |
/s/ David E. Sutin |
||||||
Witness |
)) |
David E. Sutin |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, JLL/DELTA PATHEON GP, LTD. | ||||||||
By: |
|
|||||||
Name: | ||||||||
Title: | ||||||||
PATHEON INC. | ||||||||
By: |
|
|||||||
Name: | ||||||||
Title: | ||||||||
SIGNED AND DELIVERED in the presence of:
|
)) )) )) )) |
/s/ David E. Sutin | ||||||
Witness |
)) |
David E. Sutin |
[Counterpart to Voting and Support Agreement]
SCHEDULE A
OWNERSHIP OF SECURITIES OF THE COMPANY
Shares
Name |
Shares Beneficially owned |
Registered holder if different from beneficial owner |
Total number of Shares owned or controlled |
|||||||||
David E. Sutin |
56,454 | | 56,454 | |||||||||
Options or Other Convertible Securities
|
| |||||||||||
Name |
Type of Security | Exercise or Conversion Price (CAD) |
Total number of Shares Issuable upon Exercise/Conversion |
|||||||||
David E. Sutin |
Nil. | Nil. | Nil. |
Exhibit (d)(7)(v)
VOTING AND SUPPORT AGREEMENT
THIS AGREEMENT made the 18th day of November, 2013.
BETWEEN:
THE SHAREHOLDERS LISTED ON SCHEDULE A HERETO
(hereinafter called the Shareholders and each a Shareholder),
- and -
PATHEON INC.
a corporation incorporated under the laws of Canada (the Company)
- and -
JLL/DELTA PATHEON HOLDINGS, L.P.,
an exempt limited partnership organized under the laws of the Cayman Islands
(hereinafter called the Purchaser), (collectively, the Parties)
WHEREAS the Shareholders are the joint, legal and beneficial owners of restricted voting shares of the Company, as more particularly described herein;
AND WHEREAS on the date hereof, the Purchaser is concurrently entering into an arrangement agreement (the Arrangement Agreement) with the Company which provides for, among other things, a business combination involving the Purchaser and the Company by way of a plan of arrangement under Section 192 of the Canada Business Corporations Act, pursuant to which the Purchaser will directly or indirectly acquire all of the restricted voting shares (the Shares) of the Company, other than Shares held by affiliates of the Purchaser, at a purchase price of US$9.32 in cash per Share (the Arrangement);
AND WHEREAS this Agreement sets out the terms and conditions of the agreement of the Shareholders to (i) vote, or cause to be voted, all Shares, now or hereafter, beneficially owned (including any shares issued upon the exercise of any stock options or other convertible securities), or over which control or direction is exercised, by the Shareholders (the Owned Shares) in favour of the Arrangement and any matter that is necessary or desirable for the consummation of the Arrangement and (ii) abide by the restrictions and covenants set forth herein;
AND WHEREAS the Purchaser and the Company are relying on the covenants, representations and warranties of the Shareholders set forth in this Agreement in connection with the Purchasers and the Companys respective execution and delivery of the Arrangement Agreement;
NOW THEREFORE this Agreement witnesses that, in consideration of the premises and the covenants and agreement herein contained, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 All capitalized terms used but not otherwise defined herein shall have the respective meaning ascribed to them in the Arrangement Agreement.
ARTICLE 2
CERTAIN COVENANTS OF THE SHAREHOLDERS
2.1 Non-Solicitation. Each Shareholder hereby covenants and irrevocably agrees that it shall, from the date hereof until the earlier of (i) the termination of this Agreement pursuant to Article 4 and (ii) the Effective Time:
(a) | not, directly or indirectly, through any officer, director, employee, representative (including any financial or other advisor) or agent or otherwise, and shall not permit any such person to: |
(i) | solicit, assist, initiate, knowingly encourage or otherwise facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of the Company or any of its Subsidiaries or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes an Acquisition Proposal; |
(ii) | enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than any Purchaser Party or Purchaser Party Representative) regarding any inquiry, proposal or offer that constitutes or could reasonably be expected to constitute an Acquisition Proposal; |
(iii) | accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend any Acquisition Proposal, or take no position or remain neutral with respect to, any public Acquisition Proposal; or |
(iv) | accept, approve, endorse, recommend or execute or enter into or publicly propose to accept, approve, endorse, recommend or execute or enter into any agreement, letter of intent, understanding or arrangement relating to an Acquisition Proposal. |
(b) | immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiation, or other activities commenced prior to the date of this Agreement with any Person (other than any Purchaser Party or Purchaser Party Representative) with respect to any Acquisition Proposal; and |
(c) | immediately notify the Purchaser and the Company, at first orally, and then promptly and in any event within 24 hours in writing, of any Acquisition Proposal, and shall provide the Purchaser and the Company with copies of all |
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written documents, correspondence or other material received by the Shareholder, its affiliates or its, his, or her Representatives in respect of, from or on behalf of any such Person in connection therewith and if not in writing or electronic form, a description of the material terms of such correspondence sent or communicated to the Shareholder, its affiliates or its, his, or her Representatives. |
2.2 Agreement to Vote in Favor. At any meeting of shareholders of the Company (including the Company Meeting) called to vote upon the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval (including by written consent in lieu of a meeting) with respect to the Arrangement or any of the other transactions contemplated by the Arrangement Agreement is sought, the Shareholders shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares (i) in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement, and (ii) in favour of any other matter necessary or desirable for the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. Each Shareholder will not commit any act that could restrict or affect the Shareholders legal power, authority, and right to vote all of the Owned Shares or otherwise prevent or disable the Shareholder from performing any of his or her obligations under this Agreement. Without limiting the generality of the foregoing, except for this Agreement, each Shareholder shall not enter into any voting agreement with any person or entity with respect to any of the Owned Shares, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Owned Shares, deposit any Owned Shares in a voting trust, or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting the Shareholders legal power, authority, or right to vote the Owned Shares in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement. If either Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, such Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.2.
2.3 Agreement to Vote Against. At any meeting of shareholders of the Company (including the Company Meeting) or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval of all or some of the shareholders of the Company is sought (including by written consent in lieu of a meeting), the Shareholders shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares against (i) any merger agreement or merger, consolidation, combination, sale or transfer of a material amount of assets, amalgamation, plan of arrangement, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or any other Acquisition Proposal (other than the Arrangement or any of the other transactions contemplated by the Arrangement Agreement), (ii) any amendment of the Companys charter document or bylaws or other proposal or transaction involving the Company or any of its Subsidiaries, which amendment or other proposal or transaction would in any manner delay, impede, frustrate, prevent or nullify the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or change in any manner the voting rights of the holders of Shares, and (iii) any action, agreement, transaction or proposal that would result in a breach of any representation, warranty, covenant, agreement or other obligation of the
3
Company in the Arrangement Agreement or of the Shareholders under this Agreement or otherwise impede, interfere with, delay, postpone, discourage, or adversely affect the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. If either Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.3.
2.4 Restrictions on Transfer. Each Shareholder agrees to not directly or indirectly, (i) Transfer (as defined below), or enter into any agreement, option or other arrangement (including any profit-sharing arrangement) with respect to the Transfer of any of the Owned Shares to any Person other than pursuant to the Arrangement Agreement, which, for greater certainty, shall include any Transfer made to an affiliate of the Shareholder as part of any pre-closing tax or other structuring relating to the Arrangement that has been discussed with the Company and the Purchaser prior to the date hereof or (ii) grant any proxies, deposit any of the Owned Shares into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to the Owned Shares, other than pursuant to this Agreement. For the purposes of this Agreement, Transfer means, with respect to any security, (a) any direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation, or the grant, creation, or suffrage of a Lien in or upon, or the gift, grant, or placement in trust or other disposition of such security (including transfers by testamentary or intestate succession, by domestic relations order or other court order, or otherwise by operation of law) or any right, title, or interest therein (including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise) (b) any short sale with respect to such security, entering into or acquiring a derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic benefits or risks of ownership of such security, and (c) each agreement, arrangement, or understanding, whether or not in writing, to effect any of the foregoing.
2.5 Revocation of Prior Proxies
Each Shareholder hereby revokes any proxies heretofore given by it in respect of the Owned Shares.
2.6 Other Covenants. Each Shareholder agrees:
(a) | not take any other action of any kind, directly or indirectly, which could reasonably be regarded as likely to reduce the success of, or delay or interfere with the completion of, the Arrangement and the other transactions contemplated by the Arrangement Agreement and this Agreement. |
(b) | not do indirectly that which it may not do directly by the terms of Article 2. |
4
(c) | not to, directly or indirectly, exercise or cause to be exercised any rights of appraisal or dissent or otherwise oppose in any manner the treatment of any Owned Shares pursuant to the Arrangement. |
(d) | not to requisition or join in the requisition of any meeting of holders of Shares. |
(e) | to provide the Company or the Purchaser, upon request, with evidence that the Shareholder has complied with its, her or his obligations to vote in favour of the approval, consent, ratification and adoption of the Arrangement and the Arrangement Resolution (as applicable) and not to revoke any voting instructions or proxy executed and delivered in respect thereto. |
(f) | to the following disclosure matters: |
(i) | details of this Agreement being set out in the Company Circular and/or any press release of the Company or the Purchaser relating to the Company Meeting or the Arrangement; |
(ii) | this Agreement being publicly filed on SEDAR and/or EDGAR, and/or available for inspection to the extent required by Law; and |
(iii) | details of this Agreement being set out in an early warning report to be filed by the Purchaser. |
2.7 Alternative Transaction. If the Purchaser concludes after the date of this Agreement that it is necessary or desirable to proceed with a form of transaction other than the Arrangement whereby the Purchaser and/or its affiliates would effectively acquire all the Shares or all or substantially all of the business, properties and assets of the Company on economic and other terms and conditions (including, without limitation, tax treatment) having consequences to the Shareholders that are, in its, his or her reasonable objective opinion, equivalent to or better than those contemplated by this Agreement and the Arrangement Agreement (any such transaction is referred to as an Alternative Transaction), then each Shareholder agrees to support the completion of the Alternative Transaction, including, if necessary, by tendering or voting the Owned Shares to a take-over bid or in favour of a special resolution approving the Alternative Transaction.
2.8 No Fettering of Discretion. Notwithstanding any other provision of this Agreement, the Company and the Purchaser hereby agree and acknowledge that the Shareholder is bound hereunder solely in his or her capacity as a securityholder of the Company and that the provisions hereof shall not be deemed or interpreted to bind the Shareholder in his or her capacity as a director or officer of the Company.
2.9 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Purchaser any direct or indirect economic benefit or ownership or incidence of ownership of, or relating to, any Owned Shares. All rights, ownership and economic benefits of and relating to the Owned Shares shall remain vested in and belong to the Shareholders, and the Purchaser shall have no authority to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct the
5
Shareholders in the voting of any of the Owned Shares, except as otherwise provided herein, or in the performance of the Shareholders duties or responsibilities as shareholders of the Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
3.1 Representations and Warranties. Each Shareholder represents, warrants and, where applicable, covenants to the Purchaser and the Company as follows and acknowledges that the Purchaser and the Company are relying upon these representations, warranties and covenants in connection with the entering into of this Agreement and the Arrangement Agreement and the purchase by the Purchaser of the Owned Shares under the Arrangement:
(a) | if the Shareholder is not an individual: |
(i) | the Shareholder has been duly formed and is validly existing under the laws of the jurisdiction of its incorporation and has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and |
(ii) | the execution and delivery of this Agreement by the Shareholder and the performance by it of its obligations hereunder have been duly authorized and no other proceedings on its part are necessary to authorize this Agreement and the performance of its obligations hereunder; |
(b) | if the Shareholder is an individual, the Shareholder has the legal capacity to execute and deliver this Agreement and performance of his or her obligations hereunder; |
(c) | this Agreement has been duly executed and delivered by the Shareholder and, assuming the due authorization, execution and delivery by the Purchaser and the Company, constitutes a legal, valid and binding obligation, enforceable by the Purchaser and the Company against the Shareholder in accordance with its terms, subject, however, to limitations imposed by Law in connection with bankruptcy, insolvency or similar proceedings and to the extent that the award of equitable remedies such as specific performance and injunction is within the discretion of the court from which they are sought; |
(d) | the Shareholder, together with the other Shareholder named on Schedule A to this Agreement, are the sole joint, unconditional legal and beneficial owners of the number of Owned Shares and the stock options or other securities or rights exerciseable, directly or indirectly, to acquire Shares listed on Schedule A to this Agreement, and the Shareholder has no legal or beneficial interest in, or control or direction over, any other Shares or such options, securities or rights; |
(e) | the Shareholder, together with the other Shareholder named on Schedule A to this Agreement, have the sole joint right to sell and vote all the Owned Shares and all the Owned Shares shall, at the Effective Time, be beneficially owned solely by such Shareholders jointly with good and marketable title thereto, free and clear of any Liens of any nature or kind whatsoever; |
6
(f) | no person, firm or corporation 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 Owned Shares or any interest therein or right thereto, except the Purchaser pursuant to this Agreement; |
(g) | none of the Owned Shares are subject to any power of attorney or attorney in fact, proxy, voting trust, vote pooling or other agreement, or any right or privilege capable of becoming an agreement, with respect to the right to vote, call meetings of shareholders or give consents or approvals of any kind; |
(h) | none of the execution and delivery by the Shareholder of this Agreement or the completion or performance of the transactions contemplated hereby or the compliance by the Shareholder with the Shareholders obligations hereunder will result in a breach of (i) the constating documents of the Shareholder, if the Shareholder is not an individual; (ii) any agreement or instrument to which the Shareholder is a party or by which the Shareholder or any of the Shareholders property or assets is bound; (iii) to the knowledge of the Shareholder, any judgment, decree, order or award of any Governmental Entity; or (iv) to the knowledge of the Shareholder, any Law, relevant in the context of the Arrangement or this Agreement; |
(i) | the Shareholder acknowledges that it has had the opportunity to obtain independent legal advice with respect to the Agreement and the Arrangement; |
(j) | the Shareholder has received, and is familiar with, the terms of the Arrangement Agreement; |
(k) | (i) the only securities of the Company owned, directly or indirectly, or over which control or direction is exercised, by the Shareholder are those listed on Schedule A to this Agreement and (ii) the Shareholder has no agreement or option, or right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option, for the purchase or acquisition by the Shareholder or transfer to the Shareholder of additional Shares other than upon the exercise of stock options, if any set forth on Schedule A to this Agreement; and |
(1) | there are no Proceedings in progress or pending or, to the knowledge of the Shareholder, threatened against the Shareholder or its affiliates that would adversely affect in any manner the ability of the Shareholder to enter into this Agreement and to perform its obligations hereunder or the title of the Shareholder to any of the Owned Shares. |
3.2 Survival of Representations. The representations and warranties of the Shareholders set forth in Article 3 shall survive the completion of the purchase by the Purchaser of the Owned Shares under the Arrangement and, despite such completion, shall continue in full force and
7
effect for the benefit of the Purchaser and the Company for a period of one year from the date of this Agreement, except for the representation and warranty in Section 3.1(e) above, which shall survive indefinitely.
ARTICLE 4
TERMINATION
4.1 Termination. This Agreement shall terminate upon the earliest of:
(a) | written agreement of the Parties to terminate the Agreement; |
(b) | the Arrangement Agreement has been terminated in accordance with its terms; or |
(c) | the Effective Time. |
ARTICLE 5
GENERAL
5.1 Further Assurances. The Parties shall, from time to time, promptly execute and deliver all such further documents and instruments and do all such acts and things as the other party may reasonably require to effectively carry out the intent of this Agreement.
5.2 Amendment. This Agreement may only be amended by mutual written agreement of the Parties hereto.
5.3 Assignability. This Agreement shall not be assignable by any party without the prior written consent of the other party, other than by the Purchaser to one of its direct or indirect Subsidiaries. This Agreement shall be binding upon and shall enure to the benefit of and be enforceable by each of the Parties hereto and their respective successors and permitted assigns.
5.4 Time. Time shall be of the essence of this Agreement.
5.5 Notices. Any notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail) and addressed:
(a) | to the Purchaser at: |
JLL/Delta Patheon Holdings, L.P.
c/o JLL Partners, Inc.
450 Lexington Avenue, 31 st Floor
New York, NY 10017
Attn: | Daniel Agroskin |
Michel Lagarde |
8
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware, U.S.A.
19899-0636
Attention: | Robert B. Pincus |
Telephone: | (302) 651-3090 |
Facsimile: | (302) 434-3090 |
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza
40 King Street West, Suite 4400
Toronto, Canada M5H 3Y4
Attention: | Paul A.D. Mingay/Jason Saltzman |
Telephone: | (416) 367-6006/(416) 367-6196 |
Facsimile: | (416) 367-7098/(416) 361-2770 |
(b) | to the Company at: |
Patheon Inc.
4721 Emperor Boulevard
Durham, NC 27703
Attention: | Jason Conner |
Telephone: | (919) 226-3340 |
Facsimile: | (919) 474-2269 |
with a copy to:
Dentons LLP
99 Bank Street, Suite 1420
Ottawa, Canada KIP 1H4
Attention: | Andrea C. Johnson |
Telephone: | (613) 783-9655 |
Facsimile: | (613) 614-0292 |
(c) | to the Shareholders at: |
Joaquin B. Viso/Olga Lizardi
Attention:
Telephone:
Facsimile:
9
Any notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or (iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile.
5.6 Governing Law.
(a) This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
(b) Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.
5.7 Remedies. Each Shareholder agrees and acknowledges that: (i) money damages would not be a sufficient remedy for any breach of this Agreement by it; (ii) in addition to any other remedies at law or in equity that the Purchaser and the Company may have, the Purchaser and the Company shall be entitled to seek equitable relief, including injunction and specific performance, in addition to any other remedies available to the Purchaser and the Company, in the event of any breach of the provisions of this Agreement; and (iii) if it is a defendant or respondent, it shall waive any requirement for the securing or posting of any bond in connection with such remedy. Each Shareholder hereby consents to any preliminary applications for such relief to any court of competent jurisdiction. The prevailing party shall be reimbursed for all costs and expenses, including reasonable legal fees, incurred in enforcing the other partys obligations hereunder. Such remedies shall not be deemed to be exclusive remedies for the breach of this Agreement but shall be in addition to all other remedies at law or in equity.
5.8 Severability. If any provision of this Agreement is determined to be illegal, invalid or unenforceable by any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
5.9 Waiver. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Partys failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.
10
5.10 Rules of Construction. The Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the Party drafting such agreement or other document.
5.11 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement. The Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
5.12 Counterparties. This Agreement may be executed in any number of counterparts (including counterparts by facsimile) 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 and binding agreement between the Parties.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. | ||||||||||
By its general partner, | ||||||||||
JLL/DELTA PATHEON GP, LTD. | ||||||||||
By: | /s/ Michel Lagarde |
|||||||||
Name: | Michel Lagarde | |||||||||
Title: | Director | |||||||||
PATHEON INC. | ||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of: | )) | |||||||||
)) | ||||||||||
)) | /s/ Joaquin B. Viso | |||||||||
Witness |
)) |
Joaquin B. Viso |
||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of: | )) | |||||||||
)) | ||||||||||
)) | /s/ Olga Lizardi | |||||||||
Witness |
)) |
Olga Lizardi |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. | ||||||||||
By its general partner, | ||||||||||
JLL/DELTA PATHEON GP, LTD. | ||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
PATHEON INC. | ||||||||||
By: | /s/ Derek J. Watchorn |
|||||||||
Name: | Derek J. Watchorn | |||||||||
Title: | Director | |||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of: | )) | |||||||||
)) | ||||||||||
)) | /s/ Joaquin B. Viso | |||||||||
Witness |
)) |
Joaquin B. Viso |
||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of: | )) | |||||||||
)) | ||||||||||
)) | /s/ Olga Lizardi | |||||||||
Witness |
)) |
Olga Lizardi |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. | ||||||||||
By its general partner, | ||||||||||
JLL/DELTA PATHEON GP, LTD. | ||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
PATHEON INC. | ||||||||||
By: |
|
|||||||||
Name: | ||||||||||
Title: | ||||||||||
SIGNED AND DELIVERED in the | )) | |||||||||
presence of: | )) | |||||||||
)) | ||||||||||
|
)) | /s/ Joaquin B. Viso |
||||||||
Witness | )) | Joaquin B. Viso | ||||||||
/s/ Olga Lizardi |
||||||||||
Olga Lizardi |
[Counterpart to Voting and Support Agreement]
SCHEDULE A
OWNERSHIP OF SECURITIES OF THE COMPANY
Shares
Name |
Shares Beneficially owned |
Registered holder if different from beneficial owner |
Total number of Shares owned or controlled |
|||||||||
Joaquin B. Viso and Olga Lizardi, jointly |
11,689,698 | | 11,689,698 |
Options or Other Convertible Securities
Name |
Type of Security | Exercise or Conversion Price (CAD) |
Total number of Shares Issuable upon Exercise/Conversion |
|||||||||
Joaquin B. Viso |
Nil. | Nil. | Nil. |
Exhibit (d)(7)(vi)
VOTING AND SUPPORT AGREEMENT
THIS AGREEMENT made the 18th day of November, 2013.
BETWEEN:
THE SHAREHOLDER LISTED ON SCHEDULE A HERETO
(hereinafter called the Shareholder),
- and -
PATHEON INC.
a corporation incorporated under the laws of Canada (the Company)
- and -
JLL/DELTA PATHEON HOLDINGS, L.P.,
an exempt limited partnership organized under the laws of the Cayman Islands
(hereinafter called the Purchaser), (collectively, the Parties)
WHEREAS the Shareholder is the legal and beneficial owner of restricted voting shares of the Company, as more particularly described herein;
AND WHEREAS on the date hereof, the Purchaser is concurrently entering into an arrangement agreement (the Arrangement Agreement) with the Company which provides for, among other things, a business combination involving the Purchaser and the Company by way of a plan of arrangement under Section 192 of the Canada Business Corporations Act, pursuant to which the Purchaser will directly or indirectly acquire all of the restricted voting shares (the Shares) of the Company, other than Shares held by affiliates of the Purchaser, at a purchase price of US$9.32 in cash per Share (the Arrangement);
AND WHEREAS this Agreement sets out the terms and conditions of the agreement of the Shareholder to (i) vote, or cause to be voted, all Shares, now or hereafter, beneficially owned (including any shares issued upon the exercise of any stock options or other convertible securities), or over which control or direction is exercised, by the Shareholder (the Owned Shares) in favour of the Arrangement and any matter that is necessary or desirable for the consummation of the Arrangement and (ii) abide by the restrictions and covenants set forth herein;
AND WHEREAS the Purchaser and the Company are relying on the covenants, representations and warranties of the Shareholder set forth in this Agreement in connection with the Purchasers and the Companys respective execution and delivery of the Arrangement Agreement;
NOW THEREFORE this Agreement witnesses that, in consideration of the premises and the covenants and agreement herein contained, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 All capitalized terms used but not otherwise defined herein shall have the respective meaning ascribed to them in the Arrangement Agreement.
ARTICLE 2
CERTAIN COVENANTS OF THE SHAREHOLDER
2.1 Non-Solicitation. The Shareholder hereby covenants and irrevocably agrees that it shall, from the date hereof until the earlier of (i) the termination of this Agreement pursuant to Article 4 and (ii) the Effective Time:
(a) | not, directly or indirectly, through any officer, director, employee, representative (including any financial or other advisor) or agent or otherwise, and shall not permit any such person to: |
(i) | solicit, assist, initiate, knowingly encourage or otherwise facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of the Company or any of its Subsidiaries or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes an Acquisition Proposal; |
(ii) | enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than any Purchaser Party or Purchaser Party Representative) regarding any inquiry, proposal or offer that constitutes or could reasonably be expected to constitute an Acquisition Proposal; |
(iii) | accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend any Acquisition Proposal, or take no position or remain neutral with respect to, any public Acquisition Proposal; or |
(iv) | accept, approve, endorse, recommend or execute or enter into or publicly propose to accept, approve, endorse, recommend or execute or enter into any agreement, letter of intent, understanding or arrangement relating to an Acquisition Proposal. |
(b) | immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiation, or other activities commenced prior to the date of this Agreement with any Person (other than any Purchaser Party or Purchaser Party Representative) with respect to any Acquisition Proposal; and |
(c) | immediately notify the Purchaser and the Company, at first orally, and then promptly and in any event within 24 hours in writing, of any Acquisition Proposal, and shall provide the Purchaser and the Company with copies of all |
2
written documents, correspondence or other material received by the Shareholder, its affiliates or its, his, or her Representatives in respect of, from or on behalf of any such Person in connection therewith and if not in writing or electronic form, a description of the material terms of such correspondence sent or communicated to the Shareholder, its affiliates or its, his, or her Representatives. |
2.2 Agreement to Vote in Favor. At any meeting of shareholders of the Company (including the Company Meeting) called to vote upon the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval (including by written consent in lieu of a meeting) with respect to the Arrangement or any of the other transactions contemplated by the Arrangement Agreement is sought, the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares (i) in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement, and (ii) in favour of any other matter necessary or desirable for the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. The Shareholder will not commit any act that could restrict or affect the Shareholders legal power, authority, and right to vote all of the Owned Shares or otherwise prevent or disable the Shareholder from performing any of his or her obligations under this Agreement. Without limiting the generality of the foregoing, except for this Agreement, the Shareholder shall not enter into any voting agreement with any person or entity with respect to any of the Owned Shares, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Owned Shares, deposit any Owned Shares in a voting trust, or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting the Shareholders legal power, authority, or right to vote the Owned Shares in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.2.
2.3 Agreement to Vote Against. At any meeting of shareholders of the Company (including the Company Meeting) or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval of all or some of the shareholders of the Company is sought (including by written consent in lieu of a meeting), the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares against (i) any merger agreement or merger, consolidation, combination, sale or transfer of a material amount of assets, amalgamation, plan of arrangement, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or any other Acquisition Proposal (other than the Arrangement or any of the other transactions contemplated by the Arrangement Agreement), (ii) any amendment of the Companys charter document or bylaws or other proposal or transaction involving the Company or any of its Subsidiaries, which amendment or other proposal or transaction would in any manner delay, impede, frustrate, prevent or nullify the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or change in any manner the voting rights of the holders of Shares, and (iii) any action, agreement, transaction or proposal that would result in a breach of any representation, warranty, covenant, agreement or other obligation of the
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Company in the Arrangement Agreement or of the Shareholder under this Agreement or otherwise impede, interfere with, delay, postpone, discourage, or adversely affect the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.3.
2.4 Restrictions on Transfer. The Shareholder agrees to not directly or indirectly, (i) Transfer (as defined below), or enter into any agreement, option or other arrangement (including any profit-sharing arrangement) with respect to the Transfer of any of the Owned Shares to any Person other than pursuant to the Arrangement Agreement, which, for greater certainty, shall include any Transfer made to an affiliate of the Shareholder as part of any pre-closing tax or other structuring relating to the Arrangement that has been discussed with the Company and the Purchaser prior to the date hereof or (ii) grant any proxies, deposit any of the Owned Shares into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to the Owned Shares, other than pursuant to this Agreement. For the purposes of this Agreement, Transfer means, with respect to any security, (a) any direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation, or the grant, creation, or suffrage of a Lien in or upon, or the gift, grant, or placement in trust or other disposition of such security (including transfers by testamentary or intestate succession, by domestic relations order or other court order, or otherwise by operation of law) or any right, title, or interest therein (including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise) (b) any short sale with respect to such security, entering into or acquiring a derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic benefits or risks of ownership of such security, and (c) each agreement, arrangement, or understanding, whether or not in writing, to effect any of the foregoing.
2.5 Revocation of Prior Proxies
The Shareholder hereby revokes any proxies heretofore given by it in respect of the Owned Shares.
2.6 Other Covenants. The Shareholder agrees:
(a) | not take any other action of any kind, directly or indirectly, which could reasonably be regarded as likely to reduce the success of, or delay or interfere with the completion of, the Arrangement and the other transactions contemplated by the Arrangement Agreement and this Agreement. |
(b) | not do indirectly that which it may not do directly by the terms of Article 2. |
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(c) | not to, directly or indirectly, exercise or cause to be exercised any rights of appraisal or dissent or otherwise oppose in any manner the treatment of any Owned Shares pursuant to the Arrangement. |
(d) | not to requisition or join in the requisition of any meeting of holders of Shares. |
(e) | to provide the Company or the Purchaser, upon request, with evidence that the Shareholder has complied with its, her or his obligations to vote in favour of the approval, consent, ratification and adoption of the Arrangement and the Arrangement Resolution (as applicable) and not to revoke any voting instructions or proxy executed and delivered in respect thereto. |
(f) | to the following disclosure matters: |
(i) | details of this Agreement being set out in the Company Circular and/or any press release of the Company or the Purchaser relating to the Company Meeting or the Arrangement; |
(ii) | this Agreement being publicly filed on SEDAR and/or EDGAR, and/or available for inspection to the extent required by Law; and |
(iii) | details of this Agreement being set out in an early warning report to be filed by the Purchaser. |
2.7 Alternative Transaction. If the Purchaser concludes after the date of this Agreement that it is necessary or desirable to proceed with a form of transaction other than the Arrangement whereby the Purchaser and/or its affiliates would effectively acquire all the Shares or all or substantially all of the business, properties and assets of the Company on economic and other terms and conditions (including, without limitation, tax treatment) having consequences to the Shareholder that are, in its, his or her reasonable objective opinion, equivalent to or better than those contemplated by this Agreement and the Arrangement Agreement (any such transaction is referred to as an Alternative Transaction), then the Shareholder agrees to support the completion of the Alternative Transaction, including, if necessary, by tendering or voting the Owned Shares to a take-over bid or in favour of a special resolution approving the Alternative Transaction.
2.8 No Fettering of Discretion. Notwithstanding any other provision of this Agreement, the Company and the Purchaser hereby agree and acknowledge that the Shareholder is bound hereunder solely in his or her capacity as a securityholder of the Company and that the provisions hereof shall not be deemed or interpreted to bind the Shareholder in his or her capacity as a director or officer of the Company.
2.9 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Purchaser any direct or indirect economic benefit or ownership or incidence of ownership of, or relating to, any Owned Shares. All rights, ownership and economic benefits of and relating to the Owned Shares shall remain vested in and belong to the Shareholder, and the Purchaser shall have no authority to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct the Shareholder in the voting of any of the Owned Shares, except as otherwise provided herein, or in the performance of the Shareholders duties or responsibilities as a shareholder of the Company.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
3.1 Representations and Warranties. The Shareholder represents, warrants and, where applicable, covenants to the Purchaser and the Company as follows and acknowledges that the Purchaser and the Company are relying upon these representations, warranties and covenants in connection with the entering into of this Agreement and the Arrangement Agreement and the purchase by the Purchaser of the Owned Shares under the Arrangement:
(a) | if the Shareholder is not an individual: |
(i) | the Shareholder has been duly formed and is validly existing under the laws of the jurisdiction of its incorporation and has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and |
(ii) | the execution and delivery of this Agreement by the Shareholder and the performance by it of its obligations hereunder have been duly authorized and no other proceedings on its part are necessary to authorize this Agreement and the performance of its obligations hereunder. |
(b) | if the Shareholder is an individual, the Shareholder has the legal capacity to execute and deliver this Agreement and performance of his or her obligations hereunder; |
(c) | this Agreement has been duly executed and delivered by the Shareholder and, assuming the due authorization, execution and delivery by the Purchaser and the Company, constitutes a legal, valid and binding obligation, enforceable by the Purchaser and the Company against the Shareholder in accordance with its terms, subject, however, to limitations imposed by Law in connection with bankruptcy, insolvency or similar proceedings and to the extent that the award of equitable remedies such as specific performance and injunction is within the discretion of the court from which they are sought; |
(d) | the Shareholder is the sole, unconditional legal and beneficial owner of the number of Owned Shares and the stock options or other securities or rights exerciseable, directly or indirectly, to acquire Shares listed on Schedule A to this Agreement, and has no legal or beneficial interest in, or control or direction over, any other Shares or such options, securities or rights; |
(e) | the Shareholder has the sole right to sell and vote all the Owned Shares and all the Owned Shares shall, at the Effective Time, be beneficially owned solely by the Shareholder with good and marketable title thereto, free and clear of any Liens of any nature or kind whatsoever; |
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(f) | no person, firm or corporation 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 Owned Shares or any interest therein or right thereto, except the Purchaser pursuant to this Agreement; |
(g) | none of the Owned Shares are subject to any power of attorney or attorney in fact, proxy, voting trust, vote pooling or other agreement, or any right or privilege capable of becoming an agreement, with respect to the right to vote, call meetings of shareholders or give consents or approvals of any kind; |
(h) | none of the execution and delivery by the Shareholder of this Agreement or the completion or performance of the transactions contemplated hereby or the compliance by the Shareholder with the Shareholders obligations hereunder will result in a breach of (i) the constating documents of the Shareholder, if the Shareholder is not an individual; (ii) any agreement or instrument to which the Shareholder is a party or by which the Shareholder or any of the Shareholders property or assets is bound; (iii) to the knowledge of the Shareholder, any judgment, decree, order or award of any Governmental Entity; or (iv) to the knowledge of the Shareholder, any Law, relevant in the context of the Arrangement or this Agreement; |
(i) | the Shareholder acknowledges that it has had the opportunity to obtain independent legal advice with respect to the Agreement and the Arrangement; |
(j) | the Shareholder has received, and is familiar with, the terms of the Arrangement Agreement; |
(k) | (i) the only securities of the Company owned, directly or indirectly, or over which control or direction is exercised, by the Shareholder are those listed on Schedule A to this Agreement and (ii) the Shareholder has no agreement or option, or right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option, for the purchase or acquisition by the Shareholder or transfer to the Shareholder of additional Shares other than upon the exercise of stock options, if any set forth on Schedule A to this Agreement; and |
(l) | there are no Proceedings in progress or pending or, to the knowledge of the Shareholder, threatened against the Shareholder or its affiliates that would adversely affect in any manner the ability of the Shareholder to enter into this Agreement and to perform its obligations hereunder or the title of the Shareholder to any of the Owned Shares. |
3.2 Survival of Representations. The representations and warranties of the Shareholder set forth in Article 3 shall survive the completion of the purchase by the Purchaser of the Owned Shares under the Arrangement and, despite such completion, shall continue in full force and effect for the benefit of the Purchaser and the Company for a period of one year from the date of this Agreement, except for the representation and warranty in Section 3.1(e) above, which shall survive indefinitely.
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ARTICLE 4
TERMINATION
4.1 Termination. This Agreement shall terminate upon the earliest of:
(a) | written agreement of the Parties to terminate the Agreement; |
(b) | the Arrangement Agreement has been terminated in accordance with its terms; or |
(c) | the Effective Time. |
ARTICLE 5
GENERAL
5.1 Further Assurances. The Parties shall, from time to time, promptly execute and deliver all such further documents and instruments and do all such acts and things as the other party may reasonably require to effectively carry out the intent of this Agreement.
5.2 Amendment. This Agreement may only be amended by mutual written agreement of the Parties hereto.
5.3 Assignability. This Agreement shall not be assignable by any party without the prior written consent of the other party, other than by the Purchaser to one of its direct or indirect Subsidiaries. This Agreement shall be binding upon and shall enure to the benefit of and be enforceable by each of the Parties hereto and their respective successors and permitted assigns.
5.4 Time. Time shall be of the essence of this Agreement.
5.5 Notices. Any notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail) and addressed:
(a) | to the Purchaser at: |
JLL/Delta Patheon Holdings, L.P.
c/o JLL Partners, Inc.
450 Lexington Avenue, 31st Floor
New York, NY 10017
Attn: | Daniel Agroskin |
Michel Lagarde |
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
8
P.O. Box 636
Wilmington, Delaware, U.S.A.
19899-0636
Attention: | Robert B. Pincus |
Telephone: | (302) 651-3090 |
Facsimile: | (302) 434-3090 |
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza
40 King Street West, Suite 4400
Toronto, Canada M5H 3Y4
Attention: | Paul A.D. Mingay/Jason Saltzman |
Telephone: | (416) 367-6006/(416) 367-6196 |
Facsimile: | (416) 367-7098/(416) 361-2770 |
(b) | to the Company at: |
Patheon Inc.
4721 Emperor Boulevard
Durham, NC 27703
Attention: | Jason Conner |
Telephone: | (919) 226-3340 |
Facsimile: | (919) 474-2269 |
with a copy to:
Dentons LLP
99 Bank Street, Suite 1420
Ottawa, Canada K1P 1H4
Attention: | Andrea C. Johnson |
Telephone: | (613) 783-9655 |
Facsimile: | (613) 614-0292 |
(c) | to the Shareholder at: |
DJW Investment Holdings Limited
Attention: | Derek J. Watchorn |
Telephone: |
Facsimile: |
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Any notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or (iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile.
5.6 | Governing Law. |
(a) This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
(b) Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.
5.7 Remedies. The Shareholder agrees and acknowledges that: (i) money damages would not be a sufficient remedy for any breach of this Agreement by it; (ii) in addition to any other remedies at law or in equity that the Purchaser and the Company may have, the Purchaser and the Company shall be entitled to seek equitable relief, including injunction and specific performance, in addition to any other remedies available to the Purchaser and the Company, in the event of any breach of the provisions of this Agreement; and (iii) if it is a defendant or respondent, it shall waive any requirement for the securing or posting of any bond in connection with such remedy. The Shareholder hereby consents to any preliminary applications for such relief to any court of competent jurisdiction. The prevailing party shall be reimbursed for all costs and expenses, including reasonable legal fees, incurred in enforcing the other partys obligations hereunder. Such remedies shall not be deemed to be exclusive remedies for the breach of this Agreement but shall be in addition to all other remedies at law or in equity.
5.8 Severability. If any provision of this Agreement is determined to be illegal, invalid or unenforceable by any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
5.9 Waiver. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Partys failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.
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5.10 Rules of Construction. The Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the Party drafting such agreement or other document.
5.11 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement. The Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
5.12 Counterparties. This Agreement may be executed in any number of counterparts (including counterparts by facsimile) 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 and binding agreement between the Parties.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. | ||
By its general partner, | ||
JLL/DELTA PATHEON GP LTD. | ||
By: | /s/ Michel Lagarde | |
Name: Michel Lagarde | ||
Title: Director | ||
PATHEON INC. | ||
By: |
| |
Name: | ||
Title: | ||
DJW INVESTMENT HOLDINGS LIMITED | ||
By: |
| |
Name: | ||
Title: |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, | ||
JLL/DELTA PATHEON GP, LTD. | ||
By: |
| |
Name: | ||
Title: | ||
PATHEON INC. | ||
By: | /s/ Derek J. Watchorn | |
Name: Derek J. Watchorn | ||
Title: Director | ||
DJW INVESTMENT HOLDINGS LIMITED | ||
By: | /s/ Derek J. Watchorn | |
Name: Derek J. Watchorn | ||
Title: President |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. By its general partner, | ||
JLL/DELTA PATHEON GP, LTD. | ||
By: |
| |
Name: | ||
Title: | ||
PATHEON INC. | ||
By: |
| |
Name: | ||
Title: | ||
DJW INVESTMENT HOLDINGS LIMITED | ||
By: | /s/ Derek J. Watchorn | |
Name: Derek J. Watchorn | ||
Title: President |
[Counterpart to Voting and Support Agreement]
SCHEDULE A
OWNERSHIP OF SECURITIES OF THE COMPANY
Shares
Name |
Shares Beneficially owned |
Registered holder if different from beneficial owner |
Total number of Shares owned or controlled |
|||||||||
DJW Investment Holdings Limited |
21,054 | | 21,054 | |||||||||
Options or Other Convertible Securities | ||||||||||||
Name |
Type of Security | Exercise or Conversion Price (CAD) |
Total number of Shares Issuable upon Exercise/Conversion |
|||||||||
DJW Investment Holdings Limited |
Nil. | Nil. | Nil. |
Exhibit (d)(7)(vii)
VOTING AND SUPPORT AGREEMENT
THIS AGREEMENT made the 18th day of November, 2013.
BETWEEN:
THE SHAREHOLDER LISTED ON SCHEDULE A HERETO
(hereinafter called the Shareholder),
- and -
PATHEON INC.
a corporation incorporated under the laws of Canada (the Company)
- and -
JLL/DELTA PATHEON HOLDINGS, L.P.,
an exempt limited partnership organized under the laws of the Cayman Islands
(hereinafter called the Purchaser), (collectively, the Parties)
WHEREAS the Shareholder is the legal and beneficial owner of restricted voting shares of the Company, as more particularly described herein;
AND WHEREAS on the date hereof, the Purchaser is concurrently entering into an arrangement agreement (the Arrangement Agreement) with the Company which provides for, among other things, a business combination involving the Purchaser and the Company by way of a plan of arrangement under Section 192 of the Canada Business Corporations Act, pursuant to which the Purchaser will directly or indirectly acquire all of the restricted voting shares (the Shares) of the Company, other than Shares held by affiliates of the Purchaser, at a purchase price of US$9.32 in cash per Share (the Arrangement);
AND WHEREAS this Agreement sets out the terms and conditions of the agreement of the Shareholder to (i) vote, or cause to be voted, all Shares, now or hereafter, beneficially owned (including any shares issued upon the exercise of any stock options or other convertible securities), or over which control or direction is exercised, by the Shareholder (the Owned Shares) in favour of the Arrangement and any matter that is necessary or desirable for the consummation of the Arrangement and (ii) abide by the restrictions and covenants set forth herein;
AND WHEREAS the Purchaser and the Company are relying on the covenants, representations and warranties of the Shareholder set forth in this Agreement in connection with the Purchasers and the Companys respective execution and delivery of the Arrangement Agreement;
NOW THEREFORE this Agreement witnesses that, in consideration of the premises and the covenants and agreement herein contained, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 All capitalized terms used but not otherwise defined herein shall have the respective meaning ascribed to them in the Arrangement Agreement.
ARTICLE 2
CERTAIN COVENANTS OF THE SHAREHOLDER
2.1 Non-Solicitation. The Shareholder hereby covenants and irrevocably agrees that it shall, from the date hereof until the earlier of (i) the termination of this Agreement pursuant to Article 4 and (ii) the Effective Time:
(a) | not, directly or indirectly, through any officer, director, employee, representative (including any financial or other advisor) or agent or otherwise, and shall not permit any such person to: |
(i) | solicit, assist, initiate, knowingly encourage or otherwise facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of the Company or any of its Subsidiaries or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes an Acquisition Proposal; |
(ii) | enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than any Purchaser Party or Purchaser Party Representative) regarding any inquiry, proposal or offer that constitutes or could reasonably be expected to constitute an Acquisition Proposal; |
(iii) | accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend any Acquisition Proposal, or take no position or remain neutral with respect to, any public Acquisition Proposal; or |
(iv) | accept, approve, endorse, recommend or execute or enter into or publicly propose to accept, approve, endorse, recommend or execute or enter into any agreement, letter of intent, understanding or arrangement relating to an Acquisition Proposal. |
(b) | immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiation, or other activities commenced prior to the date of this Agreement with any Person (other than any Purchaser Party or Purchaser Party Representative) with respect to any Acquisition Proposal; and |
(c) | immediately notify the Purchaser and the Company, at first orally, and then promptly and in any event within 24 hours in writing, of any Acquisition Proposal, and shall provide the Purchaser and the Company with copies of all |
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written documents, correspondence or other material received by the Shareholder, its affiliates or its, his, or her Representatives in respect of, from or on behalf of any such Person in connection therewith and if not in writing or electronic form, a description of the material terms of such correspondence sent or communicated to the Shareholder, its affiliates or its, his, or her Representatives. |
2.2 Agreement to Vote in Favor. At any meeting of shareholders of the Company (including the Company Meeting) called to vote upon the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval (including by written consent in lieu of a meeting) with respect to the Arrangement or any of the other transactions contemplated by the Arrangement Agreement is sought, the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares (i) in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement, and (ii) in favour of any other matter necessary or desirable for the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. The Shareholder will not commit any act that could restrict or affect the Shareholders legal power, authority, and right to vote all of the Owned Shares or otherwise prevent or disable the Shareholder from performing any of his or her obligations under this Agreement. Without limiting the generality of the foregoing, except for this Agreement, the Shareholder shall not enter into any voting agreement with any person or entity with respect to any of the Owned Shares, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Owned Shares, deposit any Owned Shares in a voting trust, or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting the Shareholders legal power, authority, or right to vote the Owned Shares in favour of the approval of the Arrangement and each of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.2.
2.3 Agreement to Vote Against. At any meeting of shareholders of the Company (including the Company Meeting) or at any adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval of all or some of the shareholders of the Company is sought (including by written consent in lieu of a meeting), the Shareholder shall cause the Owned Shares to be counted as present for purposes of establishing quorum and shall vote (or cause to be voted) the Owned Shares against (i) any merger agreement or merger, consolidation, combination, sale or transfer of a material amount of assets, amalgamation, plan of arrangement, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or any other Acquisition Proposal (other than the Arrangement or any of the other transactions contemplated by the Arrangement Agreement), (ii) any amendment of the Companys charter document or bylaws or other proposal or transaction involving the Company or any of its Subsidiaries, which amendment or other proposal or transaction would in any manner delay, impede, frustrate, prevent or nullify the Arrangement or any of the other transactions contemplated by the Arrangement Agreement or change in any manner the voting rights of the holders of Shares, and (iii) any action, agreement, transaction or proposal that would result in a breach of any representation, warranty, covenant, agreement or other obligation of the
3
Company in the Arrangement Agreement or of the Shareholder under this Agreement or otherwise impede, interfere with, delay, postpone, discourage, or adversely affect the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement. If the Shareholder is the beneficial owner, but not the registered holder, of any of the Owned Shares, the Shareholder agrees to take all actions necessary to cause the registered holder and any nominees to vote all of the Owned Shares in accordance with this Section 2.3.
2.4 Restrictions on Transfer. The Shareholder agrees to not directly or indirectly, (i) Transfer (as defined below), or enter into any agreement, option or other arrangement (including any profit-sharing arrangement) with respect to the Transfer of any of the Owned Shares to any Person other than pursuant to the Arrangement Agreement, which, for greater certainty, shall include any Transfer made to an affiliate of the Shareholder as part of any pre-closing tax or other structuring relating to the Arrangement that has been discussed with the Company and the Purchaser prior to the date hereof or (ii) grant any proxies, deposit any of the Owned Shares into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to the Owned Shares, other than pursuant to this Agreement. For the purposes of this Agreement, Transfer means, with respect to any security, (a) any direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation, or the grant, creation, or suffrage of a Lien in or upon, or the gift, grant, or placement in trust or other disposition of such security (including transfers by testamentary or intestate succession, by domestic relations order or other court order, or otherwise by operation of law) or any right, title, or interest therein (including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise) (b) any short sale with respect to such security, entering into or acquiring a derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic benefits or risks of ownership of such security, and (c) each agreement, arrangement, or understanding, whether or not in writing, to effect any of the foregoing.
2.5 Revocation of Prior Proxies
The Shareholder hereby revokes any proxies heretofore given by it in respect of the Owned Shares.
2.6 Other Covenants. The Shareholder agrees:
(a) | not take any other action of any kind, directly or indirectly, which could reasonably be regarded as likely to reduce the success of, or delay or interfere with the completion of, the Arrangement and the other transactions contemplated by the Arrangement Agreement and this Agreement. |
(b) | not do indirectly that which it may not do directly by the terms of Article 2. |
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(c) | not to, directly or indirectly, exercise or cause to be exercised any rights of appraisal or dissent or otherwise oppose in any manner the treatment of any Owned Shares pursuant to the Arrangement. |
(d) | not to requisition or join in the requisition of any meeting of holders of Shares. |
(e) | to provide the Company or the Purchaser, upon request, with evidence that the Shareholder has complied with its, her or his obligations to vote in favour of the approval, consent, ratification and adoption of the Arrangement and the Arrangement Resolution (as applicable) and not to revoke any voting instructions or proxy executed and delivered in respect thereto. |
(f) | to the following disclosure matters: |
(i) | details of this Agreement being set out in the Company Circular and/or any press release of the Company or the Purchaser relating to the Company Meeting or the Arrangement; |
(ii) | this Agreement being publicly filed on SEDAR and/or EDGAR, and/or available for inspection to the extent required by Law; and |
(iii) | details of this Agreement being set out in an early warning report to be filed by the Purchaser. |
2.7 Alternative Transaction. If the Purchaser concludes after the date of this Agreement that it is necessary or desirable to proceed with a form of transaction other than the Arrangement whereby the Purchaser and/or its affiliates would effectively acquire all the Shares or all or substantially all of the business, properties and assets of the Company on economic and other terms and conditions (including, without limitation, tax treatment) having consequences to the Shareholder that are, in its, his or her reasonable objective opinion, equivalent to or better than those contemplated by this Agreement and the Arrangement Agreement (any such transaction is referred to as an Alternative Transaction), then the Shareholder agrees to support the completion of the Alternative Transaction, including, if necessary, by tendering or voting the Owned Shares to a take-over bid or in favour of a special resolution approving the Alternative Transaction.
2.8 No Fettering of Discretion. Notwithstanding any other provision of this Agreement, the Company and the Purchaser hereby agree and acknowledge that the Shareholder is bound hereunder solely in his or her capacity as a securityholder of the Company and that the provisions hereof shall not be deemed or interpreted to bind the Shareholder in his or her capacity as a director or officer of the Company.
2.9 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Purchaser any direct or indirect economic benefit or ownership or incidence of ownership of, or relating to, any Owned Shares. All rights, ownership and economic benefits of and relating to the Owned Shares shall remain vested in and belong to the Shareholder, and the Purchaser shall have no authority to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct the Shareholder in the voting of any of the Owned Shares, except as otherwise provided herein, or in the performance of the Shareholders duties or responsibilities as a shareholder of the Company.
5
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
3.1 Representations and Warranties. The Shareholder represents, warrants and, where applicable, covenants to the Purchaser and the Company as follows and acknowledges that the Purchaser and the Company are relying upon these representations, warranties and covenants in connection with the entering into of this Agreement and the Arrangement Agreement and the purchase by the Purchaser of the Owned Shares under the Arrangement:
(a) | if the Shareholder is not an individual: |
(i) | the Shareholder has been duly formed and is validly existing under the laws of the jurisdiction of its incorporation and has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and |
(ii) | the execution and delivery of this Agreement by the Shareholder and the performance by it of its obligations hereunder have been duly authorized and no other proceedings on its part are necessary to authorize this Agreement and the performance of its obligations hereunder. |
(b) | if the Shareholder is an individual, the Shareholder has the legal capacity to execute and deliver this Agreement and performance of his or her obligations hereunder; |
(c) | this Agreement has been duly executed and delivered by the Shareholder and, assuming the due authorization, execution and delivery by the Purchaser and the Company, constitutes a legal, valid and binding obligation, enforceable by the Purchaser and the Company against the Shareholder in accordance with its terms, subject, however, to limitations imposed by Law in connection with bankruptcy, insolvency or similar proceedings and to the extent that the award of equitable remedies such as specific performance and injunction is within the discretion of the court from which they are sought; |
(d) | the Shareholder is the sole, unconditional legal and beneficial owner of the number of Owned Shares and the stock options or other securities or rights exerciseable, directly or indirectly, to acquire Shares listed on Schedule A to this Agreement, and has no legal or beneficial interest in, or control or direction over, any other Shares or such options, securities or rights; |
(e) | the Shareholder has the sole right to sell and vote all the Owned Shares and all the Owned Shares shall, at the Effective Time, be beneficially owned solely by the Shareholder with good and marketable title thereto, free and clear of any Liens of any nature or kind whatsoever; |
6
(f) | no person, firm or corporation 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 Owned Shares or any interest therein or right thereto, except the Purchaser pursuant to this Agreement; |
(g) | none of the Owned Shares are subject to any power of attorney or attorney in fact, proxy, voting trust, vote pooling or other agreement, or any right or privilege capable of becoming an agreement, with respect to the right to vote, call meetings of shareholders or give consents or approvals of any kind; |
(h) | none of the execution and delivery by the Shareholder of this Agreement or the completion or performance of the transactions contemplated hereby or the compliance by the Shareholder with the Shareholders obligations hereunder will result in a breach of (i) the constating documents of the Shareholder, if the Shareholder is not an individual; (ii) any agreement or instrument to which the Shareholder is a party or by which the Shareholder or any of the Shareholders property or assets is bound; (iii) to the knowledge of the Shareholder, any judgment, decree, order or award of any Governmental Entity; or (iv) to the knowledge of the Shareholder, any Law, relevant in the context of the Arrangement or this Agreement; |
(i) | the Shareholder acknowledges that it has had the opportunity to obtain independent legal advice with respect to the Agreement and the Arrangement; |
(j) | the Shareholder has received, and is familiar with, the terms of the Arrangement Agreement; |
(k) | (i) the only securities of the Company owned, directly or indirectly, or over which control or direction is exercised, by the Shareholder are those listed on Schedule A to this Agreement and (ii) the Shareholder has no agreement or option, or right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option, for the purchase or acquisition by the Shareholder or transfer to the Shareholder of additional Shares other than upon the exercise of stock options, if any set forth on Schedule A to this Agreement; and |
(l) | there are no Proceedings in progress or pending or, to the knowledge of the Shareholder, threatened against the Shareholder or its affiliates that would adversely affect in any manner the ability of the Shareholder to enter into this Agreement and to perform its obligations hereunder or the title of the Shareholder to any of the Owned Shares. |
3.2 Survival of Representations. The representations and warranties of the Shareholder set forth in Article 3 shall survive the completion of the purchase by the Purchaser of the Owned Shares under the Arrangement and, despite such completion, shall continue in full force and effect for the benefit of the Purchaser and the Company for a period of one year from the date of this Agreement, except for the representation and warranty in Section 3.1(e) above, which shall survive indefinitely.
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ARTICLE 4
TERMINATION
4.1 Termination. This Agreement shall terminate upon the earliest of:
(a) | written agreement of the Parties to terminate the Agreement; |
(b) | the Arrangement Agreement has been terminated in accordance with its terms; or |
(c) | the Effective Time. |
ARTICLE 5
GENERAL
5.1 Further Assurances. The Parties shall, from time to time, promptly execute and deliver all such further documents and instruments and do all such acts and things as the other party may reasonably require to effectively carry out the intent of this Agreement.
5.2 Amendment. This Agreement may only be amended by mutual written agreement of the Parties hereto.
5.3 Assignability. This Agreement shall not be assignable by any party without the prior written consent of the other party, other than by the Purchaser to one of its direct or indirect Subsidiaries. This Agreement shall be binding upon and shall enure to the benefit of and be enforceable by each of the Parties hereto and their respective successors and permitted assigns.
5.4 Time. Time shall be of the essence of this Agreement.
5.5 Notices. Any notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail) and addressed:
(a) | to the Purchaser at: |
JLL/Delta Patheon Holdings, L.P.
c/o JLL Partners, Inc.
450 Lexington Avenue, 31st Floor
New York, NY 10017
Attn: | Daniel Agroskin |
Michel Lagarde |
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
8
P.O. Box 636
Wilmington, Delaware, U.S.A.
19899-0636
Attention: | Robert B. Pincus |
Telephone: | (302) 651-3090 |
Facsimile: | (302) 434-3090 |
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza
40 King Street West, Suite 4400
Toronto, Canada M5H 3Y4
Attention: | Paul A.D. Mingay/Jason Saltzman |
Telephone: | (416) 367-6006/(416) 367-6196 |
Facsimile: | (416) 367-7098/(416) 361-2770 |
(b) | to the Company at: |
Patheon Inc.
4721 Emperor Boulevard
Durham, NC 27703
Attention: | Jason Conner |
Telephone: | (919) 226-3340 |
Facsimile: | (919) 474-2269 |
with a copy to:
Dentons LLP
99 Bank Street, Suite 1420
Ottawa, Canada KIP 1H4
Attention: | Andrea C. Johnson |
Telephone: | (613) 783-9655 |
Facsimile: | (613) 614-0292 |
(c) | to the Shareholder at: |
Derek J. Watchorn
Attention: | Derek J. Watchorn |
Telephone:
Facsimile:
9
Any notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or (iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile.
5.6 Governing Law.
(a) This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
(b) Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.
5.7 Remedies. The Shareholder agrees and acknowledges that: (i) money damages would not be a sufficient remedy for any breach of this Agreement by it; (ii) in addition to any other remedies at law or in equity that the Purchaser and the Company may have, the Purchaser and the Company shall be entitled to seek equitable relief, including injunction and specific performance, in addition to any other remedies available to the Purchaser and the Company, in the event of any breach of the provisions of this Agreement; and (iii) if it is a defendant or respondent, it shall waive any requirement for the securing or posting of any bond in connection with such remedy. The Shareholder hereby consents to any preliminary applications for such relief to any court of competent jurisdiction. The prevailing party shall be reimbursed for all costs and expenses, including reasonable legal fees, incurred in enforcing the other partys obligations hereunder. Such remedies shall not be deemed to be exclusive remedies for the breach of this Agreement but shall be in addition to all other remedies at law or in equity.
5.8 Severability. If any provision of this Agreement is determined to be illegal, invalid or unenforceable by any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
5.9 Waiver. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Partys failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.
10
5.10 Rules of Construction. The Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the Party drafting such agreement or other document.
5.11 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement. The Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
5.12 Counterparties. This Agreement may be executed in any number of counterparts (including counterparts by facsimile) 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 and binding agreement between the Parties.
[Remainder of this page intentionally left blank.]
11
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. | ||||||
By its general partner, | ||||||
JLL/DELTA PATHEON GP, LTD. | ||||||
By: | /s/ Michel Lagarde |
|||||
Name: Michel Lagarde | ||||||
Title: Director | ||||||
PATHEON INC. | ||||||
By: |
|
|||||
Name: | ||||||
Title: | ||||||
SIGNED AND DELIVERED in the | )) | |||||
presence of: | )) | |||||
)) | ||||||
|
)) | /s/ Derek J. Watchorn |
||||
Witness | )) | Derek J. Watchorn |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. | ||||||
By its general partner, | ||||||
JLL/DELTA PATHEON GP, LTD. | ||||||
By: |
|
|||||
Name: | ||||||
Title: | ||||||
PATHEON INC. | ||||||
By: | /s/ Derek J. Watchorn |
|||||
Name: Derek J. Watchorn | ||||||
Title: Director | ||||||
SIGNED AND DELIVERED in the | )) | |||||
presence of: | )) | |||||
)) | ||||||
|
)) | /s/ Derek J. Watchorn |
||||
Witness | )) | Derek J. Watchorn |
[Counterpart to Voting and Support Agreement]
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
JLL/DELTA PATHEON HOLDINGS, L.P. | ||||||
By its general partner, | ||||||
JLL/DELTA PATHEON GP, LTD. | ||||||
By: |
|
|||||
Name: | ||||||
Title: | ||||||
PATHEON INC. | ||||||
By: |
|
|||||
Name: | ||||||
Title: | ||||||
SIGNED AND DELIVERED in the | )) | |||||
presence of: | )) | |||||
![]() |
)) | |||||
)) | /s/ Derek J. Watchorn |
|||||
Witness |
)) | Derek J. Watchorn |
[Counterpart to Voting and Support Agreement]
SCHEDULE A
OWNERSHIP OF SECURITIES OF THE COMPANY
Shares
Name |
Shares Beneficially owned |
Registered holder if different from beneficial owner |
Total number of Shares owned or controlled |
|||||||||
Derek J. Watchorn |
30,384 | | 30,384 |
Options or Other Convertible Securities
Name |
Type of Security | Exercise or Conversion Price (CAD) |
Total number of Shares Issuable upon Exercise/Conversion |
|||||||
Derek J. Watchorn |
Options (Restricted Voting Shares) |
$ | 11.04 | 5,000 | ||||||
Derek J. Watchorn |
Options (Restricted Voting Shares) |
$ | 9.43 | 5,000 | ||||||
Total |
10,000 |
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