AMENDMENT NO. 2 TO ARRANGEMENT AGREEMENT AND AMENDMENT TO PLAN OF ARRANGEMENT
Exhibit
99.2
AMENDMENT
NO. 2
TO
AND
AMENDMENT
TO PLAN OF ARRANGEMENT
This
AMENDMENT NO. 2 TO ARRANGEMENT AGREEMENT and AMENDMENT TO PLAN OF ARRANGEMENT
is
made as of July 4, 2007 (“Amending Agreement”) by and between
Lorus Therapeutics Inc. (“Old Lorus”), XxXxxx Pharmaceuticals
Inc. (“XxXxxx”), GeneSense Technologies Inc.
(“GeneSense”), 6650309 Canada Inc. (“New
Lorus”), Pinnacle International Lands, Inc.
(“Pinnacle”), and 6707157 Canada Inc.
(“Investor”).
RECITALS:
WHEREAS,
Old Lorus, NuChem, GeneSense, New Lorus, Pinnacle and Investor are parties
to an
Arrangement Agreement (the “Arrangement Agreement”), dated May
1, 2007 to which is appended the Plan of Arrangement;
AND
WHEREAS the Arrangement Agreement was amended pursuant to an Amendment No.
1 to
the Arrangement Agreement dated as of May 14, 2007;
AND
WHEREAS, the parties hereto have agreed to amend the Arrangement Agreement,
as
set forth in this Amending Agreement;
AND
WHEREAS the parties have agreed to amend the Plan of Arrangement, as set
forth
in the Amending Agreement;
NOW,
THEREFORE, in consideration of the premises and agreements herein contained,
the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. Terms
for which meanings are provided in the Arrangement Agreement are, unless
otherwise defined herein or the context otherwise requires, used in this
Amending Agreement with such meanings.
ARTICLE 2
AMENDMENTS
TO THE ARRANGEMENT AGREEMENT
Effective
on the date hereof, the Arrangement Agreement is hereby amended as
follows:
2.1 Schedule
“A” to the Arrangement Agreement (the Plan of Arrangement) is hereby deleted
in
its entirety and Schedule “A” attached to this Amending Agreement is inserted in
lieu thereof.
2.2 Each
of Old Lorus, GeneSense, XxXxxx, New Lorus, Investor and Pinnacle agree that
the
amendment to the Plan of Arrangement is intended to correct a typographical
error in Section 3.01(19) of the Plan of Arrangement in order to change the
cross reference in such Section from 3.01(24) to 3.01(23).
2.3 Each
of Old Lorus, GeneSense, XxXxxx, New Lorus, Investor and Pinnacle hereby
approve
the filing of this Amending Agreement with the Court and the making of an
application to the Court that this amendment be approved and that this amendment
need not be communicated to Old Lorus Securityholders.
ARTICLE 3
MISCELLANEOUS
3.1 No
Other Amendments. Except as specifically amended in this
Amending Agreement, the Arrangement Agreement, the Plan of Arrangement and
all
other related documents shall remain in full force and effect and are hereby
ratified and confirmed in all respects.
3.2 Headings. The
headings of the various sections of this Amending Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of
this
Amending Agreement.
3.3 Successors
and Assigns. This Agreement will be binding upon and will
enure to the benefit of the parties hereto and their respective successors
and
permitted assigns.
3.4 Further
Assurances. Each Party hereto will, from time to time, and at all times
hereafter, at the request of the other Parties hereto, but without further
consideration, do all such further acts and execute and deliver all such
further
documents and instruments as will be reasonably required in order to fully
perform and carry out the terms and intent hereof.
3.5 Counterparts. This
Agreement may be executed in any number of counterparts and each such
counterpart will be deemed to be an original instrument but all such
counterparts together will constitute one agreement.
3.6 Governing
Law. This Agreement will be governed by and interpreted in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein. Each Party hereto hereby irrevocably attorns to the
non-exclusive jurisdiction of the courts of the Province of Ontario in respect
of all matters arising under or in relation to this Agreement.
IN
WITNESS WHEREOF, Pinnacle, Investor, Old Lorus, GeneSense, XxXxxx and New
Lorus
have caused this Agreement to be executed as of the date first written above
by
their respective officers thereunto duly authorized.
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PINNACLE
INTERNATIONAL LANDS, INC.
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Per:
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“Xxxxxxx
Xx Xxxxxx”
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Per:
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“Xxxxxx
Xxxxx”
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Name:
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Xxxxxxx
Xx Xxxxxx
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Name:
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Xxxxxx
Xxxxx
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Title:
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President
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Title:
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President
and Chief Executive Officer
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GENESENSE
TECHNOLOGIES INC.
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XXXXXX
PHARMACEUTICALS INC.
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Per:
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“Xxxxxx
Xxxxx”
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Per:
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“Xxxxxx
Xxxxx”
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Name:
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Xxxxxx
Xxxxx
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Name:
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Xxxxxx
Xxxxx
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Title:
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Director
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Title:
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Director
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6650309
CANADA INC.
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6707157
CANADA INC.
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Per:
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“Xxxxxx
Xxxxx”
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Per:
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“Xxxxxxx
Xx Xxxxxx”
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Name:
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Xxxxxx
Xxxxx
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Name:
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Xxxxxxx
Xx Xxxxxx
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Title:
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President
and Chief Executive Officer
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Title:
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President
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SCHEDULE
A
PLAN
OF ARRANGEMENT
Final
version
PLAN
OF ARRANGEMENT
made
pursuant to
Section
192 of the Canada Business Corporations Act
ARTICLE 1
DEFINITIONS
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1.01
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Definitions
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In
this Plan, unless the context otherwise requires:
(1) “Act”
means the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as
from time to time amended or re-enacted, including all regulations promulgated
thereunder;
(2) “Antisense
Patent Assets” means those assets set out in the Antisense Patent
Assets Transfer Agreement;
(3) “Antisense
Patent Assets Transfer Agreement” means the asset purchase agreement to
be entered into between GeneSense and New Lorus pursuant to which GeneSense
will
transfer the Antisense Patent Assets to New Lorus and substantially in the
form
attached as Schedule C to the Arrangement Agreement;
(4) “Appropriate
Number” means that number of Old Lorus Voting
Shares which, if combined with the aggregate number of Old Lorus Voting Shares
purchased pursuant to Section 3.01(24), would result in Investor holding
a total
number of Old Lorus Voting Shares representing approximately 41% of the issued
and outstanding Old Lorus Voting Shares at the conclusion of the
Arrangement;
(5) “Arrangement”
means the business reorganization pursuant to which, among other things,
Investor will acquire approximately 41% of the issued and outstanding voting
shares and all of the issued and outstanding non-voting shares of Old Lorus
as
contemplated by this Plan pursuant to section 192 of the Act;
(6) “Arrangement
Agreement” means the arrangement agreement between Old Lorus, NuChem,
GeneSense, New Lorus, Pinnacle and Investor dated as of May 1, 2007 which
sets
out the terms and conditions pursuant to which the parties thereto will effect
the Arrangement;
(7) “Articles
of Arrangement” means the articles of arrangement of Old Lorus in
respect of the Arrangement required under subsection 193(6) of the Act to
be
filed with the Director after the Final Order has been made in order to give
effect to the Arrangement;
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(8) “Business
Day” means a day, other than a Saturday, Sunday or other day, when
banks in Toronto, Ontario or Vancouver, British Columbia are not generally
open
for business;
(9) “Court”
means the Ontario Superior Court of Justice;
(10) “Debenture
Assumption Agreement” means the agreement to be entered into between
Old Lorus and New Lorus pursuant to which New Lorus will assume Old Lorus’
obligation to pay TEMIC the aggregate principal amount of $15,000,000 plus
accrued interest owing under the Old Lorus Debentures, as contemplated by
Section 3.01(3);
(11) “Depositary”
means Computershare Investor Services Inc., the appointed depositary in respect
of the Arrangement at its principal transfer office in Toronto,
Ontario;
(12) “Director”
means the Director appointed under the Act;
(13) “Dissent
Rights” has the meaning ascribed thereto in Section 5.01;
(14) “Effective
Date” means the effective date set out in the Articles of Arrangement
which are filed with the Director;
(15) “Effective
Time” means 12:01 a.m. (Toronto time) on the Effective
Date;
(16) “Escrow
Agreement” has the meaning ascribed thereto in the Arrangement
Agreement;
(17) “Final
Order” means the final order of the Court issued in connection with the
approval of the Arrangement, providing, among other matters, for the Arrangement
to be sanctioned and to take effect, as such order may be affirmed, amended
or
modified by any court of competent jurisdiction;
(18) “GeneSense”
means GeneSense Technologies Inc., a corporation existing under the laws
of
Canada;
(19) “GeneSense
Share Purchase Agreement” means the share purchase agreement to be
entered into between Old Lorus and New Lorus pursuant to which Old Lorus
will
transfer all of the GeneSense Shares to New Lorus and substantially in the
form
attached as Schedule G to the Arrangement Agreement;
(20) “GeneSense
Shares” means common shares in the capital of GeneSense;
(21) “Information
Circular” means the management proxy circular relating to the Old Lorus
Securityholders’ Meeting and forwarded to Old Lorus Securityholders in
connection with, among other things, the transactions contemplated in this
Plan;
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(22) “Interim
Order” means an interim order of the Court concerning the Arrangement
under subsection 192(4) of the Act, containing declarations and directions
with
respect to the Arrangement and the holding of the Old Lorus Securityholders’
Meeting, as such order may be affirmed, amended or modified by any court
of
competent jurisdiction;
(23) “Investor”
means 6707157 Canada Inc., a corporation existing under the laws of
Canada;
(24) “Letter
of Transmittal” means the letter of transmittal enclosed with the
Information Circular pursuant to which an Old Lorus Securityholder is required
to surrender certificates representing Old Lorus Securities in order to receive,
upon completion of the Arrangement, New Lorus Securities issued pursuant
to the
Arrangement and, as applicable, Old Lorus Voting Shares or a cash payment
in
lieu thereof;
(25) “Lock-Up
Holders” has the meaning ascribed thereto in Section
3.01(24);
(26) “New
Lorus” means 6650309 Canada Inc., a corporation existing under the laws
of Canada;
(27) “New
Lorus Note 1” has the meaning ascribed thereto in Section
3.01(10);
(28) “New
Lorus Note 2” has the meaning ascribed thereto in Section
3.01(14);
(29) “New
Lorus Note 3” has the meaning ascribed thereto in Section
3.01(15);
(30) “New
Lorus Replacement Note” has the meaning ascribed thereto in Section
3.01(18);
(31) “New
Lorus Options” has the meaning ascribed thereto in Section
3.01(1);
(32) “New
Lorus Securities” has the meaning ascribed thereto in Section
3.01(1);
(33) “New
Lorus Shares” has the meaning ascribed thereto in Section
3.01(1);
(34) “New
Lorus Warrants” has the meaning ascribed thereto in Section
3.01(1);
(35) “XxXxxx”
means XxXxxx Pharmaceuticals Inc., a corporation existing under the laws
of
Ontario;
(36) “XxXxxx
Share Purchase Agreement” means the share purchase agreement to be
entered into between Old Lorus and New Lorus pursuant to which Old Lorus
will
transfer all of the XxXxxx Shares held by it to New Lorus and substantially
in
the form attached as Schedule H to the Arrangement Agreement;
(37) “XxXxxx
Shares” means common shares in the capital of XxXxxx;
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(38) “Old
Lorus” means Lorus Therapeutics Inc., a corporation existing under the
laws of Canada;
(39) “Old
Lorus Debentures” means the prime plus 1% secured convertible
debentures of Old Lorus due on October 6, 2009 in the aggregate principal
amount
of $15,000,000, issued to TEMIC in equal amounts of $5,000,000 each on each
of
October 6, 2004, January 15, 2005 and April 15,
2005;
(40) “Old
Lorus Non-Voting Shares” means the non-voting common shares of Old
Lorus issued and outstanding following the reorganization of Old Lorus’ share
capital pursuant to the Arrangement;
(41) “Old
Lorus Note” has the meaning ascribed thereto in Section
3.01(3);
(42) “Old
Lorus Options” means the issued and outstanding stock options issued to
directors, senior officers, employees and consultants of Old Lorus, governed
by
the terms of the Old Lorus Stock Option Plans and permitting the holders
thereof
to purchase an aggregate of up to 25,921,000 Old Lorus Shares, as such number
may be amended from time to time;
(43) “Old
Lorus Securities” means, collectively, the Old Lorus Debentures, the
Old Lorus Options, the Old Lorus Shares and the Old Lorus Warrants;
(44) “Old
Lorus Securityholders” means, collectively, the holders of Old Lorus
Shares, Old Lorus Options, Old Lorus Warrants and Old Lorus
Debentures;
(45) “Old
Lorus Securityholders’ Meeting” means the special meeting of Old Lorus
Securityholders, and any adjournments thereof, called to consider and authorize,
approve and adopt, among other things, the Arrangement in accordance with
the
Interim Order;
(46) “Old
Lorus Shareholders” means the holders of Old Lorus Shares;
(47) “Old
Lorus Share Purchase Plan” means the Old Lorus employee share purchase
plan;
(48) “Old
Lorus Shares” means the common shares of Old Lorus issued and
outstanding immediately prior to the reorganization of Old Lorus’ share capital
pursuant to the Arrangement;
(49) “Old
Lorus Stock Option Plans” means, collectively, Old Lorus’ 2003 Stock
Option Plan and the 1993 Stock Option Plan;
(50) “Old
Lorus Voting Shares” means the voting common shares of Old Lorus issued
and outstanding following the reorganization of Old Lorus’ share capital
pursuant to the Arrangement;
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(51) “Old
Lorus Warrants” means the 3,000,000 issued and outstanding common share
purchase warrants of Old Lorus issued to TEMIC, each of which entitles TEMIC
to
acquire, subject to adjustment, one Old Lorus Share at a price per share
of
$1.00;
(52) “Pinnacle”
means Pinnacle International Lands, Inc., a corporation existing under the
laws
of British Columbia;
(53) “Pinnacle
Share Purchase Agreement” means the share purchase agreement to be
entered into between Investor and New Lorus pursuant to which Investor will
purchase from New Lorus the Appropriate Number of Old Lorus Voting Shares
and
all of the Old Lorus Non-Voting Shares and substantially in the form attached
as
Schedule I to the Arrangement Agreement;
(54) “Plan”
means this plan of arrangement as amended or supplemented from time to time,
and
“hereby”, “hereof’, “herein”, “hereunder”, “herewith” and similar terms refer to
this Plan and not to any particular provision of this Plan;
(55) “Prepaid
Expenses and Receivables” means those assets set out in the Prepaid
Expenses and Receivables Transfer Agreement;
(56) “Prepaid
Expenses and Receivables Transfer Agreement” means the asset purchase
agreement to be entered into between Old Lorus and GeneSense pursuant to
which
Old Lorus will transfer the Prepaid Expenses and Receivables to GeneSense
and
substantially in the form attached as Schedule F to the Arrangement
Agreement;
(57) “resident
in the United States” shall be determined as provided in Rule
12g-4(a)(2) under the United States Securities Exchange Act of 1934, as
amended;
(58) “Tangible
Business Assets” means Old Lorus’ depreciable property set out in the
Tangible Business Assets Transfer Agreement;
(59) “Tangible
Business Assets Transfer Agreement” means the asset purchase agreement
to be entered into between Old Lorus and GeneSense pursuant to which Old
Lorus
will transfer the Tangible Business Assets to GeneSense and substantially
in the
form attached as Schedule E to the Arrangement Agreement;
(60) “TEMIC”
means The Xxxx Xxxxx Investment Corporation;
(61) “Transfer
Agent and Registrar” means Computershare Investor Services
Inc.;
(62) “United
States” means the United States of America, its territories and
possessions, any state of the United States and the District of
Columbia;
(63) “Virulizin
and Small Molecule Patent Assets” means those assets set out in the
Virulizin and Small Molecule Patent Assets Transfer Agreement;
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(64) “Virulizin
and Small Molecule Patent Assets Transfer Agreement” means the asset
purchase agreement to be entered into by Old Lorus and GeneSense pursuant
to
which Old Lorus will transfer the Virulizin and Small Molecule Patent Assets
to
GeneSense and substantially in the form attached as Schedule D to the
Arrangement Agreement; and
(65) “Warrant
Purchase Agreement” means the warrant purchase agreement between New
Lorus and TEMIC pursuant to which New Lorus has agreed to purchase the New
Lorus
Warrants from TEMIC dated May 1, 2007.
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1.02
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Headings
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The
headings contained in this Plan are for reference purposes only and will
not
affect in any way the meaning or interpretation of this Plan.
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1.03
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Interpretation
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Unless
the contrary intention appears, references in this Plan to an article, section,
paragraph, subparagraph or schedule by number or letter or both refer to
the
article, section, paragraph, subparagraph or schedule bearing that designation
in this Plan.
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1.04
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Extended
Meanings
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In
this Plan, unless the contrary intention appears, words importing the singular
include the plural and vice versa; words importing gender will include all
genders; “person” includes any individual, partnership, firm, trust, body
corporate, government, governmental body, agency or instrumentality,
unincorporated body of persons or association; and the term “including” means
“including without limiting the generality of the foregoing”.
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1.05
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Date
for any Action
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In
the event that the date on which any action is required to be taken hereunder
by
any of the parties is not a Business Day in the place where the action is
required to be taken, such action will be required to be taken on the next
succeeding day which is a Business Day in such place.
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1.06
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Statutory
References
|
References
in this Plan to any statute or sections thereof will include such statute
as
amended or substituted and any regulations promulgated thereunder from time
to
time in effect.
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1.07
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Deemed
Currency
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Unless
otherwise stated, all references in this Plan to sums of money are expressed
in
lawful money of Canada.
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ARTICLE 2
PURPOSE
AND EFFECT OF THE PLAN
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2.01
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Purpose
and Effect of the Plan
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The
purpose of this Plan is to carry out a reorganization of the business, assets,
liabilities and share capital of Old Lorus, GeneSense, XxXxxx and New Lorus
as
described in Section 3.01.
ARTICLE 3
ARRANGEMENT
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3.01
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Arrangement
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At
the Effective Time, each of the events set out below will occur and be deemed
to
occur in the sequence set out without further act or formality:
(1) The
Old Lorus Shareholders, holders of Old Lorus Options and holders of Old Lorus
Warrants will transfer their Old Lorus Shares, Old Lorus Options and Old
Lorus
Warrants, as applicable, to New Lorus in exchange for the issuance by New
Lorus
of shares (the “New Lorus Shares”), options (the “New
Lorus Options”) and warrants (the “New Lorus Warrants”
and, together with the New Lorus Shares and the
New Lorus Options, the
“New Lorus Securities”), respectively, having the same value,
terms and conditions as the Old Lorus Shares, Old Lorus Options and Old Lorus
Warrants;
(2) New
Lorus will repurchase the New Lorus Warrants from TEMIC pursuant to the Warrant
Purchase Agreement;
(3) Pursuant
to the Debenture Assumption Agreement, New Lorus will assume Old Lorus’
obligation to pay TEMIC the $15,000,000 aggregate principal amount of the
Old
Lorus Debentures plus accrued and unpaid interest thereon in consideration
for
Old Lorus issuing a non-interest bearing promissory note to New Lorus for
an
amount equal to the amount owing under the Old Lorus Debentures
(the “Old Lorus Note”). The
right of TEMIC under the Old Lorus Debentures to convert such debentures
into
Old Lorus Shares will be exchanged for the right to convert such debentures
into
an equal number of New Lorus Shares;
(4) Old
Lorus will surrender to New Lorus for cancellation the initial New Lorus
Share
that was issued to Old Lorus upon the incorporation of New Lorus;
(5) The
articles of Old Lorus will be amended to change its name to “4325231 Canada
Inc.” or a name to be used for real estate development purposes;
(6) The
articles of New Lorus will be amended to change its name to “Lorus Therapeutics
Inc.”;
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(7) The
articles of Old Lorus will be amended to conform with the form of the amended
articles agreed upon in writing by the parties to the Arrangement Agreement
on
or prior to the date of the Interim Order, such amendments to effect, among
other things, a reorganization of the share capital of Old Lorus to create
an
unlimited number of Old Lorus Voting Shares and an unlimited number of Old
Lorus
Non-Voting Shares. The Old Lorus Voting Shares and the Old Lorus
Non-Voting Shares will rank equally with respect to participation in dividends
and the liquidation of Old Lorus;
(8) As
part of the reorganization of the share capital of Old Lorus, the Old Lorus
Shares held by New Lorus will be exchanged for 21,127,828 Old Lorus Voting
Shares and 2,078,872,172 Old Lorus Non-Voting Shares, the Old Lorus Options
and
the Old Lorus Warrants will be cancelled and a right to acquire Old Lorus
Shares
under the Old Lorus Share Purchase Plan will become a right to acquire an
equivalent number of New Lorus Shares under such plan;
(9) Pursuant
to the Tangible Business Assets Transfer Agreement, Old Lorus will transfer
the
Tangible Business Assets to GeneSense in consideration for the issuance by
GeneSense of one GeneSense Share to Old Lorus;
(10) Pursuant
to the Antisense Patent Assets Transfer Agreement, GeneSense will transfer
the
Antisense Patent Assets to New Lorus in consideration for the issuance by
New
Lorus to GeneSense of a demand non-interest bearing promissory note in an
amount
equal to the fair market value of the Antisense Patent Assets (“New
Lorus Note 1”);
(11) Pursuant
to the Virulizin and Small Molecule Patent Assets Transfer Agreement, Old
Lorus
will transfer the Virulizin and Small Molecule Patent Assets to GeneSense
in
consideration for the issuance by GeneSense of one GeneSense Share to Old
Lorus;
(12) GeneSense
will repay its debt owing to Old Lorus in exchange for the issuance by GeneSense
of one GeneSense Share to Old Lorus;
(13) Pursuant
to the Prepaid Expenses and Receivables Transfer Agreement, Old Lorus will
transfer the Prepaid Expenses and Receivables to GeneSense in exchange for
the
issuance by GeneSense of one GeneSense Share to Old Lorus;
(14) Pursuant
to the GeneSense Share Purchase Agreement, Old Lorus will transfer all of
the
GeneSense Shares to New Lorus at a price equal to their fair market value
in
exchange for the assumption by New Lorus of Old Lorus’ remaining liabilities and
transaction costs (other than the Old Lorus Note) and the issuance by New
Lorus
of a demand non-interest bearing promissory note to Old Lorus for an amount
equal to the amount by which the purchase price for the GeneSense Shares
exceeds
the amount of Old Lorus’ liabilities assumed by New Lorus (“New Lorus
Note 2”);
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(15) Pursuant
to the XxXxxx Share Purchase Agreement, Old Lorus will transfer all of the
XxXxxx Shares held by it to New Lorus at a price equal to their fair market
value in consideration for the issuance by New Lorus to Old Lorus of a demand,
non-interest bearing promissory note in an amount equal to the purchase price
for the XxXxxx Shares (“New Lorus Note 3”);
(16) Old
Lorus will assign all of its contractual obligations to New Lorus or its
assignee and New Lorus or its assignee will assume such
obligations;
(17) New
Lorus will offer employment to all of the employees of Old Lorus and will
assume
all employment obligations related thereto;
(18) New
Lorus will repay the amount owing by New Lorus to Old Lorus under the New
Lorus
Note 2 and the New Lorus Note 3 by way of set off against the Old Lorus Note
and
the issuance to Old Lorus of a replacement non-interest bearing demand
promissory note (the “New Lorus Replacement Note”) for an
amount equal to the amount by which the aggregate amount owing by New Lorus
under the New Lorus Note 2 and the New Lorus Note 3 exceeds the amount of
the
Old Lorus Note;
(19) Old
Lorus will reduce its stated capital by an amount equal to its remaining
cash,
cash equivalents, and short term and long term investments, less the amount
required to fund the repurchase of Old Lorus Voting Shares described in Section
3.01(23), plus an amount equal to the amount of the New Lorus Replacement
Note
and will distribute such property to New Lorus in satisfaction of the capital
reduction amount;
(20) [intentionally
deleted]
(21) Pursuant
to the Pinnacle Share Purchase Agreement, Investor will purchase the Appropriate
Number of the Old Lorus Voting Shares and all of the Old Lorus Non-Voting
Shares
from New Lorus in consideration of a cash payment equal to $0.0040775156
per Old
Lorus Voting Share and $0.0040775156 per Old Lorus Non-Voting Share, subject
to
payment and adjustment in accordance with the Pinnacle Share Purchase Agreement
and a holdback pursuant to the Escrow Agreement;
(22) The
New Lorus Shares will be conditionally approved for listing on the Toronto
Stock
Exchange and the American Stock Exchange subject to the fulfillment of the
conditions set out in the applicable conditional approval letter;
(23) New
Lorus will reduce its stated capital by an amount equal to the fair market
value
of its Old Lorus Voting Shares, determined based on the price per Old Lorus
Voting Share paid by Investor in Section 3.01(21) above. In satisfaction
of the capital reduction, New Lorus will: (i) in the case of shareholders
of New
Lorus who are not resident in the United States, distribute Old Lorus Voting
Shares on a pro rata basis, disregarding fractions (provided such distribution
effects a distribution of not less than 90% of the Old
Lorus Voting Shares then
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owned
by New Lorus); and (ii) in the case of shareholders of New Lorus who are
resident in the United States, sell to Old Lorus for cash consideration New
Lorus’ remaining Old Lorus Voting Shares (not to exceed
10% of the Old Lorus Voting Shares then owned by New
Lorus) at the price per Old Lorus Voting Share paid by Investor at the Effective
Time in Section 3.01(21) and distribute the proceeds of
such sale to such shareholders who are resident in the United States on a
pro
rata basis, disregarding fractions, as the cash equivalent to the value of
the
Old Lorus Voting Shares otherwise distributable to them;
(24) Investor
will purchase all of the Old Lorus Voting Shares held by High Tech
Beteilingungen GmbH & Co. KG, Technifund Inc. and Xxxxxxx Xxxxxxxx
(collectively, the “Lock-Up Holders”) at a fair market price
determined based on the price per Old Lorus Voting Share paid at the Effective
Time by the Investor in Section 3.01(21);
(25) Investor
will subscribe for 294,296,851 additional Old Lorus Non-Voting Shares for
a cash
payment of $1,200,000; and
(26) Pinnacle
or an affiliate thereof will transfer interests in certain real estate
development projects to Old Lorus in return for a cash payment and a promissory
note of Old Lorus and Old Lorus will enter into certain
development, management and marketing agreements with Pinnacle and/or one
or
more affiliates thereof.
ARTICLE 4
OUTSTANDING
SECURITIES
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4.01
|
Outstanding
Certificates
|
From
and after the Effective Date, certificates representing the Old Lorus Securities
prior to the Arrangement will, thereafter represent only the right to receive
the certificates representing the New Lorus Securities which such holder
is
entitled to receive pursuant to Section 3.01(1) and any distributions
accruing to the holder of such securities, upon the holder depositing with
the
Depositary the certificates duly endorsed for transfer and accompanied by
such
other documents as such Depositary may reasonably require, subject to compliance
with the requirements set forth in this Article 4.
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4.02
|
Old
Lorus Shares
|
(1) As
soon as practicable following the Effective Time, New Lorus shall cause to
be
delivered for the benefit of the Old Lorus Shareholders, certificates
representing, in the aggregate, the New Lorus Shares to which such holders
are
entitled pursuant to Section 3.01(1). New Lorus will, as soon as
practicable following the later of the Effective Date and the date of deposit
(by a former holder of Old Lorus Shares exchanged under the Arrangement)
of a
duly completed Letter of Transmittal and the certificates representing such
Old
Lorus Shares, either:
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|
|
(a)
|
forward
or cause to be forwarded by first class mail (postage
prepaid) (or, in the case of postal disruption, by such other means
as the
Depositary may deem prudent) to such former holder at the address
specified in the Letter of Transmittal;
or
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|
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(b)
|
if
requested by such holder in the Letter of Transmittal, make available
or
cause to be made available at the Depositary for pickup by such
holder;
|
certificates
representing the number of New Lorus Shares issued to such holder under the
Arrangement.
(2) All
distributions made with respect to any New Lorus Shares allotted and issued
pursuant to this Arrangement but for which a certificate has not been issued
will be paid or delivered to the Depositary to be held by the Depositary
in
trust for the registered holder thereof. All monies received by the
Depositary will be invested by it in trust accounts upon such terms as the
Depositary may reasonably deem appropriate. The Depositary will pay
and deliver to any such registered holder, as soon as reasonably practicable
after application therefore is made by the registered holder to the Depositary
in such form as the Depositary may reasonably require, such distributions
to
which such holder is entitled, net of applicable withholding and other
taxes.
(3) Where
a certificate formerly representing Old Lorus Shares is not deposited with
all
other documents as provided for in Section 4.02(1) on or prior to the sixth
anniversary date of the Effective Time, it will cease to represent a right
or
claim of any kind or nature. Thereafter, the New Lorus Shares to be
exchanged with the former holder of such certificate will be deemed to be
surrendered to New Lorus together with all distributions and sale proceeds
thereon held for such holder.
(4) New
Lorus will be entitled to deduct and withhold from any consideration otherwise
payable to any holder of Old Lorus Securities such amounts as New Lorus is
required to deduct and withhold with respect to such payment under the
Income Tax Act (Canada), the United States Internal Revenue Code of
1986 or any provision of federal, provincial, state, local or foreign tax
law,
in each case, as amended. To the extent that amounts are so withheld,
such withheld amounts will be treated for all purposes hereof as having been
paid to the holder of the Old Lorus Securities in respect of which such
deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate taxing authority.
(5) If
any certificate which immediately prior to the Effective Time represented
an
interest in outstanding Old Lorus Shares that were exchanged pursuant to
Section 3.01(1) has been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate to have been
lost, stolen or destroyed, the Transfer Agent and Registrar will issue and
the
Depositary will deliver in exchange for such lost, stolen or destroyed
certificate the consideration to which the holder is entitled pursuant to
the
Arrangement (and any distributions
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with
respect thereto) as determined in accordance with the
Arrangement. The person who is entitled to receive such consideration
will, as a condition precedent to the receipt thereof, give a bond to each
of
New Lorus and its Depositary, which bond is in form and substance satisfactory
to each of New Lorus and the Depositary, or will otherwise indemnify New
Lorus
and its Depositary against any claim that may be made against any of them
with
respect to the certificate alleged to have been lost, stolen or
destroyed.
|
4.03
|
Old
Lorus Options and Old Lorus
Warrants
|
Each
Old Lorus Option and each Old Lorus Warrant will be cancelled without further
act or formality. Each New Lorus Option will represent a right to
purchase that number of New Lorus Shares equal to the number of Old Lorus
Shares
underlying the Old Lorus Option. The term to expiry, conditions to
and manner of exercising, vesting schedule and all other terms and conditions
of
each New Lorus Option will otherwise be the same as the terms and conditions
of
the corresponding Old Lorus Option. Except as specified in this Plan,
any document or agreement previously evidencing such Old Lorus Option will
thereafter evidence and be deemed to evidence such New Lorus Option, with
any
adjustments deemed to be made thereto as are necessary to ensure consistency
with the provisions of this Section 4.03.
|
4.04
|
Old
Lorus Share Purchase
Plan
|
From
and after the Effective Date, the entitlement of any participant to receive
Old
Lorus Shares prior to the Arrangement under the Old Lorus Share Purchase
Plan
will thereafter represent only the right to receive an equivalent number
of New
Lorus Shares. Except as specified in this Plan, the terms and
conditions of the Old Lorus Share Purchase Plan will otherwise be the
same. Except as specified in this Plan, any document or agreement
previously evidencing a right to acquire an Old Lorus Share pursuant to the
Old
Lorus Share Purchase Plan will thereafter evidence and be deemed to evidence
a
right to require a New Lorus Share, with any adjustments deemed to be made
thereto as are necessary to ensure consistency with the provisions of this
Section 4.04.
|
4.05
|
Old
Lorus Voting Shares
|
(1) As
soon as practicable following the Effective Time, New Lorus shall cause to
be
delivered for the benefit of the shareholders of New Lorus who are not resident
in the United States, certificates representing, in the aggregate, the Old
Lorus
Voting Shares to which such holders are entitled pursuant to
Section 3.01(23). New Lorus will, as soon as practicable
following the Effective Date, either:
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|
(a)
|
forward
or cause to be forwarded by first class mail (postage
prepaid) (or, in the case of postal disruption, by such other means
as the
Depositary may deem prudent) to such holder at the address specified
in
the Letter of Transmittal; or
|
|
|
(b)
|
if
requested by such holder in the Letter of Transmittal, make available
or
cause to be made available at the Depositary for pickup by such
holder,
|
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certificates
representing the number of Old Lorus Voting Shares issued to such holder
under
the Arrangement.
(2) New
Lorus will be entitled to deduct and withhold from any consideration otherwise
payable to any holder of New Lorus Shares such amounts as New Lorus is required
to deduct and withhold with respect to such payment under the Income Tax
Act (Canada), the United States Internal Revenue Code of 1986 or any
provision of federal, provincial, state, local or foreign tax law, in each
case,
as amended. To the extent that amounts are so withheld, such withheld
amounts will be treated for all purposes hereof as having been paid to the
holder of the New Lorus Shares in respect of which such deduction and
withholding was made, provided that such withheld amounts are actually remitted
to the appropriate taxing authority.
|
4.06
|
Cash
Payments Pursuant to Section
3.01(23)(ii)
|
(1) As
soon as practicable following the Effective Time, New Lorus shall cause to
be
delivered to the Transfer Agent and Registrar, for the benefit of each
shareholder of New Lorus who is resident in the United States, an amount
equal
to the aggregate of the payments representing each holder’s pro rata portion of
the cash equivalent of the value of the Old Lorus Voting Shares otherwise
distributable to New Lorus shareholders who are resident in the United States
pursuant to Section 3.01(23).
(2) Such
payment shall be made by cheque payable at par at any branch of New Lorus’
bankers for the time being in Canada (or, with the consent of the holder,
by any
other means of immediately available funds).
(3) New
Lorus will be entitled to deduct and withhold from any consideration otherwise
payable to any holder of New Lorus Shares such amounts as New Lorus is required
to deduct and withhold with respect to such payment under the Income Tax
Act (Canada), the United States Internal Revenue Code of 1986 or any
provision of federal, provincial, state, local or foreign tax law, in each
case,
as amended. To the extent that amounts are so withheld, such withheld
amounts will be treated for all purposes hereof as having been paid to the
holder of the New Lorus Shares in respect of which such deduction and
withholding was made, provided that such withheld amounts are actually remitted
to the appropriate taxing authority.
ARTICLE 5
RIGHTS
OF DISSENT
|
5.01
|
Rights
of Dissent
|
Old
Lorus Shareholders (other than the Lock-Up Holders) may exercise rights of
dissent in connection with the Arrangement with respect to their Shares pursuant
to and in the manner set forth in the Interim Order, section 190 of the Act
and
this Section 5.01 (the “Dissent Rights”)
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as
the same may be modified by the Interim Order or the Final Order. Old Lorus
Shareholders who duly exercise such Dissent Rights and who:
|
|
(a)
|
are
ultimately entitled to be paid fair value for their Old Lorus Shares
shall
be deemed to have transferred such Old Lorus Shares to New Lorus
on the
Effective Date simultaneously with the transactions described in
Section
3.01(1) without any further act or formality and free and clear
of all
liens, claims and encumbrances, with New Lorus being obligated
to pay such
Old Lorus Shareholders in consideration therefor the fair value
of such
Old Lorus Shares, which fair value, notwithstanding anything to
the
contrary in the Act, if permitted by the Court, shall be determined
as of
the close of business on the day before the special resolution
of
Securityholders approving this Plan is adopted, and the name of
each such
Old Lorus Shareholder will be removed from the register of holders
of Old
Lorus Shares and New Lorus will be recorded as the registered holder
of
the Old Lorus Shares so transferred and will be deemed to be the
legal and
beneficial owner of such Old Lorus Shares free and clear of any
liens,
claims or encumbrances; or
|
|
|
(b)
|
for
any reason are ultimately not entitled to be paid fair value for
their Old
Lorus Shares shall be deemed to have participated in the Arrangement
on
the same basis as any non-dissenting Old Lorus Shareholder who
is not a
Lock-Up Holder as at and from the Effective Time, and shall be
deemed to
have transferred their Old Lorus Shares to New Lorus in exchange
for New
Lorus Shares under Section 3.01(1), but in no case shall Old Lorus,
New
Lorus or any other person be required to recognize such Old Lorus
Shareholders as holders of Old Lorus Shares after the time set
out in
Section 3.01(1), and the names of such Old Lorus Shareholders shall
be
deleted from the register of Old Lorus Shareholders at the time
set out in
Section 3.01(1).
|
ARTICLE 6
AMENDMENTS
|
6.01
|
Amendments
|
(1) Old
Lorus, GeneSense, XxXxxx, New Lorus, Investor and Pinnacle reserve the right
to
amend, modify and/or supplement this Plan from time to time at any time prior
to
the Effective Time provided that any such amendment, modification or supplement
must be contained in a written document that is:
|
|
(a)
|
agreed
to by all such parties;
|
|
|
(b)
|
filed
with the Court and approved by the Court;
and
|
|
|
(c)
|
communicated
to Old Lorus Securityholders in the manner required by the Court
(if so
required).
|
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15 -
(2) Any
amendment, modification or supplement to this Plan which is approved by the
Court will be effective only:
|
|
(a)
|
if
it is consented to by Old Lorus and Pinnacle;
and
|
|
|
(b)
|
if
required by the Court or Applicable Law, it is consented to by
the Old
Lorus Securityholders.
|
(3) Notwithstanding
that the transactions and events set out herein will occur and be deemed
to
occur in the order set out in this Plan without any further act or formality,
each of the parties to the Arrangement Agreement shall make, do and execute,
or
cause to be made, done and executed, all such further acts, deeds, agreements,
transfers, assurances, instruments or documents as may reasonably be required
by
any of them in order further to document or evidence any of the transactions
or
events set out herein.
ARTICLE 7
GENERAL
|
7.01
|
General
|
(1) Any
director or officer of Old Lorus is hereby authorized to execute and file
the
Articles of Arrangement and to execute and deliver all other documents and
do
all such other acts and things necessary or desirable to give effect to this
Arrangement.
(2) The
directors of Old Lorus are hereby authorized, if they deem appropriate in
their
sole discretion, to revoke this Plan of Arrangement and to not proceed with
the
Arrangement without further approval of the Old Lorus
Securityholders.
