Tetra Bio-Pharma (TBPMF) Enters into Agreement to Acquire Remaining 20% Interest in Phytopain Pharma Subsidiary

Under the terms of the Purchase Agreement, Tetra will acquire from the Vendors all of the remaining issued and outstanding common shares of Tetra’s subsidiary, Phytopain Pharma Inc. (“PPP“), currently held by the Vendors (representing 20% of the issued and outstanding shares of PPP) for an aggregate purchase price (the “Purchase Price“) of $12,425,089 (the “Transaction“). Upon completion of the Transaction, PPP will become a wholly-owned subsidiary of Tetra.

“Upon completion, this transaction will be a significant milestone for Tetra Bio-Pharma and all our stakeholders,” said Bernard Fortier, Tetra’s CEO.

“The two selling shareholders – our Chairman and our Chief Scientific Officer – are both committed to the long-term success of Tetra as evidenced by their agreement to accept shares in Tetra in lieu of an all- cash transaction. As well, a percentage of those shares are going to be released once certain key milestones for the company have been reached,” he said.

“This transaction will allow Tetra to gain 100% control of Phytopain Pharma, a key asset in the development of our pipeline of cannabinoid-based drugs and gives our company full flexibility to enter into other partnerships or agreements in the future.”

The Transaction is subject to customary closing conditions including, but not limited to, approval of the TSX Venture Exchange (“TSXV“) and any other approval that may be required by the TSXV.

The Transaction

Under the terms of the Purchase Agreement, the Purchase Price for the Transaction is comprised of the following:

• Cash: An aggregate cash payment of $248,000 (the “Cash Payment“). Under the terms of the Purchase Agreement, the Cash Payment is payable in escrow as of the signature of the Purchase Agreement and has been paid to the Vendors’ legal counsel in trust for the Vendors pending receipt of approval for the Transaction from the TSXV. In addition, Tetra has agreed to pay the Vendors, immediately upon signature of the Purchase Agreement, a non-refundable amount of $200,000, payable out of the funds available for the Cash Payment, to induce the Vendors to provide an exclusivity of negotiation to the Purchaser for the Transaction.
• Promissory Notes: Promissory notes issued by Tetra to the Vendors in an aggregate principal amount of $2,236,696 (the “Notes“), which Notes are payable in accordance with a specified milestone schedule as described in the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, the Notes have been delivered to the Vendors’ legal counsel in trust for the Vendors pending receipt of approval for the Transaction from the TSXV.
• Tetra Shares: Common shares of Tetra (“Common Shares“) will be issued to the Vendors as follows:
  • Upon completion of the Transaction, an aggregate of 2,485,218 Common Shares will be issued to the Vendors.
  • Upon completion of the Transaction, 7,455,653 Common Shares will be issued to
    Computershare Trust Company of Canada, as escrow agent (the “Escrow Agent“), to be held in escrow and released by the Escrow Agent under the terms and conditions set forth in the Purchase Agreement and the terms and conditions of an escrow agreement to be executed at closing by the Vendors, the Corporation and the Escrow Agent.

The Vendors under the Purchase Agreement are entities controlled by André Rancourt, Chairman of the Board of Directors of the Corporation, and Guy Chamberland, Chief Scientific Officer of the Corporation and are therefore considered “non-arm’s length parties” under the rules of the TSXV. Mr. Rancourt and Mr. Chamberland have properly disclosed their respective interest in the Transaction to the board of directors of the Corporation.

The Transaction constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). While MI 61-101 would generally subject the transaction to minority shareholder approval and formal valuation requirements, the Corporation will avail itself of the exemptions applicable under Section 5.5(a) of MI 61- 101.

Mr. Rancourt currently has ownership or direction and control over (i) an aggregate of 465,000 Common Shares, (ii) 1,600,000 options to acquire Common Shares and (iii) 4,000,000 Common Share purchase warrants, representing approximately 0.37% of the issued and outstanding Common Shares on a non- diluted basis and approximately 4.66% of the issued and outstanding Common Shares on a partially diluted basis. Further to the completion of the Transaction, and assuming that all of the Common Shares issued in escrow and allotted to Mr. Rancourt are released to Mr. Rancourt or an affiliate of Mr. Rancourt in accordance with the Purchase Agreement, Mr. Rancourt would then have ownership or direction and control over (i) 5,435,436 Common Shares, (ii) 1,600,000 options to acquire Common Shares and (iii) 4,000,000 Common Share purchase warrants, representing approximately 4.20% of the issued and outstanding Common Shares on a non-diluted basis and approximately 8.17% of the issued and outstanding Common Shares.

Mr. Chamberland currently has ownership or direction and control over (i) an aggregate of 1,250,000 Common Shares, (ii) 350,000 options to acquire Common Shares and (iii) 4,000,000 Common Share purchase warrants, representing approximately 1.00% of the issued and outstanding Common Shares on a non-diluted basis and approximately 4.32% of the issued and outstanding Common Shares on a partially diluted basis. Further to the completion of the Transaction, and assuming that all of the Common Shares issued in escrow and allotted to Mr. Chamberland are released to Mr. Chamberland or an affiliate of Mr. Chamberland in accordance with the Purchase Agreement, Mr. Chamberland would then have ownership or direction and control over (i) 6,220,436 Common Shares, (ii) 1,600,000 options to acquire Common Shares and (iii) 4,000,000 Common Share purchase warrants, representing approximately 4.78% of the issued and outstanding Common Shares on a non-diluted basis and approximately 8.70% of the issued and outstanding Common Shares.