Contract
Exhibit 4.1
THIS
NOTE
AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO TM BIOSCIENCE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
UNLESS
PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS NOTE AND
THE
COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE SHALL NOT TRADE THE NOTE
AND
THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE BEFORE MARCH 23,
2006.
SECURED
CONVERTIBLE TERM NOTE
FOR
VALUE
RECEIVED, Tm Bioscience Corporation, an Ontario corporation (the “Borrower”),
hereby promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate
Services Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street, Xxxxxx
Town, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the “Holder”)
or its
permitted assigns or successors in interest, on order, on presentation and
surrender of this Note, the aggregate principal amount of Nine Million Dollars
in lawful money of the United States (US$9,000,000),
together with any accrued and unpaid interest thereon, on the
date
which is the third anniversary of the date hereof (the “Maturity
Date”)
or at
such other times as set out herein.
Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in that certain Securities Purchase Agreement dated as of the date hereof
between the Borrower and the Holder (as amended, modified or supplemented from
time to time, the “Purchase
Agreement”).
ARTICLE
I
INTEREST
& AMORTIZATION
1.1 Interest
(a) |
Interest
Rate.
Subject to Sections 1.1(b), 4.12 and 5.7 hereof, interest payable
on this
Note shall accrue at a rate per annum (the “Interest
Rate”)
equal to the greater of (x) the “prime
rate”
published in The Wall Street Journal from time to time, plus two
percent
(2%) and (y) 8.5%. The prime rate shall be increased or decreased
as the
case may be for each increase or decrease in the prime rate in an
amount
equal to such increase or decrease in the prime rate; each change
to be
effective as of the day of the change in such rate. Interest shall
be (i)
calculated daily on the basis of a 360 day year, and (ii) payable
monthly,
in arrears, commencing on January 1, 2006 and on the first business
day of
each consecutive calendar month thereafter until the Maturity Date
(and on
the Maturity Date), whether by acceleration or otherwise (each, a
“Repayment
Date”).
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(b) |
Interest
Rate Adjustment.
The Interest Rate shall be calculated on the last business day of
each
month hereafter until the Maturity Date (each a “Determination
Date”)
and shall be subject to adjustment as set forth herein. If the volume
weighted average trading price of the Issuer’s common shares (the
“Common
Stock”)
on the TSX for the five (5) trading days immediately preceding a
Determination Date exceeds the then applicable Fixed Conversion Price
by
at least twenty five percent (25%), the Interest Rate for the succeeding
calendar month shall automatically be reduced by 300 basis points
(300
b.p.) (3%) each incremental twenty five percent (25%) increase in
the
price of the Common Stock above the then applicable Fixed Conversion
Price. Notwithstanding
the foregoing (and anything to the contrary contained in herein),
in no
event shall the Interest Rate be less than zero percent
(0%).
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(c) |
Additional
Interest.
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(i)
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Any
and all payments by the Borrower hereunder, including any amounts
received
on a conversion or redemption of the Note and any amounts on account
of
interest or deemed interest, shall be made free and clear of and
without
deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and
all
liabilities with respect thereto, excluding taxes imposed on net
income or
franchise taxes of the Holder by the jurisdiction in which such person
is
organized or has its principal office (all such non-excluded taxes,
levies, imposts, deductions, charges withholdings and liabilities,
collectively or individually, “Additional
Interest”).
If the Borrower shall be required to deduct any Additional Interest
from
or in respect of any sum payable hereunder to the Holder, (i) the
sum
payable shall be increased by the amount (an “additional
amount”)
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section
1.4)
the Holder shall receive an amount equal to the sum it would have
received
had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted
to
the relevant governmental authority in accordance with applicable
law.
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(ii)
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In
addition, the Borrower agrees to pay to the relevant governmental
authority in accordance with applicable law any present or future
stamp or
documentary taxes or any other excise or property taxes, charges
or
similar levies that arise from any payment made hereunder or from
the
execution, delivery or registration of, or otherwise with respect
to, this
Note (“Other Additional Interest”). The Borrower shall deliver to the
Holder official receipts, if any, in respect of any Additional Interest
or
Other Additional Interest payable hereunder promptly after payment
of such
Additional Interest or Other Additional Interest or other evidence
of
payment reasonably acceptable to the
Holder.
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(iii)
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The
obligations of the Borrower under this Section 1.1(c) shall survive
the
termination of this Note and the payment of the Note and all other
amounts
payable hereunder.
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1.2 Minimum
Monthly Principal Payments.
Amortizing payments of the aggregate principal amount outstanding under this
Note at any time (the “Principal
Amount”)
shall
begin on April
1,
2006 and
shall
recur on the first business day of each succeeding month thereafter until the
Maturity Date (each, an “Amortization
Date”).
Subject to Article 3 below, beginning on the first Amortization Date, the
Borrower shall make monthly payments to the Holder on each Repayment Date equal
to that portion of the Principal Amount set forth in the amortization schedule
annexed hereto (the “Monthly
Amount”),
together with any accrued but unpaid interest thereon to such Repayment Date
and
any and all other unpaid amounts, if any, then due, accrued, payable or owing
under this Note, the Purchase Agreement or any Related Agreement (as defined
in
the Purchase Agreement). Any Principal Amount that remains outstanding on the
Maturity Date shall be due and payable on the Maturity Date.
1.3 Currency.
All
principal, interest and other amounts owing under this Note, the Purchase
Agreement or any Related Agreement that, in accordance with their terms, are
paid in cash shall be paid in US dollars. All amounts denominated in other
currencies shall be converted in the US dollar equivalent amount in accordance
with the Exchange Rate on the date of calculation. “Exchange
Rate”
means,
in relation to any amount of currency to be converted into US dollars pursuant
to this Note, the US dollar exchange rate as published in the Wall Street
Journal on the relevant date of calculation.
ARTICLE
II
CONVERSION
REPAYMENT
2.1
(a) |
Payment
of Monthly Amount in Cash or Common Stock.
If the Monthly Amount (or a portion of such Monthly Amount if such
portion
of the Monthly Amount would have been converted into shares of Common
Stock but for Section 2.1(b) or Section 3.2) is
required to be paid in cash pursuant to Section 2.1(b), then the
Borrower
shall pay the Holder an amount equal to 102% of the Monthly Amount
due and
owing to the Holder on the Repayment Date in cash. If the Monthly
Amount
(or a portion of such Monthly Amount if not all of the Monthly Amount
may
be converted into shares of Common Stock pursuant to Section 2.1(b)
or
Section 3.2) is required to be paid in shares of Common Stock pursuant
to
Section 2.1(b), the number of such shares to be issued by the Borrower
to
the Holder on such Repayment Date (in respect of such portion of
the
Monthly Amount converted into shares of Common Stock pursuant to
Section
2.1(b)), shall be the number determined by dividing (x) the portion
of the
Monthly Amount converted into shares
of Common Stock, by (y) the then applicable Fixed Conversion Price.
For
purposes hereof, the initial “Fixed
Conversion Price”
means:
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2
(i)
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in
respect of any portion of the Principal Amount to be converted into
shares
of Common Stock while the Principal Amount is greater than or equal
to
US$6,000,000 (and, for greater certainty, only in respect of the
amount of
such portion that does not cause the Principal Amount to fall below
US$6,000,000), CDN$2.39, being equal to 110%
of the volume weighted average trading price of the Common Stock
on the
TSX for the five (5) trading days immediately prior to the date of
this
Note (the
“Closing
Price”);
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(ii)
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in
respect of any portion of the Principal Amount to be converted into
shares
of Common Stock while the total Principal Amount is less than US$6,000,000
but greater than or equal to US$3,000,000 (and, for greater certainty,
only in respect of the amount of such portion that does not cause
the
Principal Amount to fall below US$3,000,000), CDN$2.61, being equal
to
120%
of the Closing Price; and
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(iii)
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in
respect of any remaining portion of the Principal Amount to be converted
into shares of Common Stock, CDN$2.83, being equal to 130%
of the Closing Price.
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Notwithstanding
paragraphs 2.1(a)(i), (ii) and (iii) above, if the price of the Borrower's
Common Stock on the TSX exceeds Cdn. $4.00 on the date upon which any conversion
hereunder is made, then for each additional Cdn.$0.10 increase in the Borrower's
Common Stock price above Cdn.$4.00 on such applicable conversion date, the
then
applicable Fixed Conversion Price shall increase by Cdn.$0.03 if, and only
if,
the Borrower is required to withhold and pay any taxes on the amount
representing the excess of such trading price of the Borrower's Common Stock
over the then applicable Fixed Conversion Price at the time of conversion;
provided, however, that the Borrower has utilized its best efforts to avoid
or
reduce (in each case only as permitted by law) any such withholding taxes.
For
greater certainty, the Borrower acknowledges that the foregoing sentence shall
not apply to any conversions under this Note which have already been effected.
(b) |
Monthly
Amount Conversion Guidelines.
Subject to Section 2.2 and Section 3.2 hereof, the Holder shall be
deemed
to have exercised its right to convert into shares of Common Stock
all or
a portion of the Monthly Amount due on each Repayment Date if the
following conditions are met: (i) the volume weighted average trading
price of the Common Stock on the TSX for the five (5) trading days
immediately preceding such Repayment Date is greater than or equal
to 115%
of the then applicable Fixed Conversion Price (the “Trading
Price Condition”)
and (ii) the amount of such conversion does not exceed twenty five
percent
(25%) of the aggregate dollar trading volume of the Common Stock
for the
twenty two (22) day trading period immediately preceding the applicable
Repayment Date (the “Trading
Volume Condition”).
If the Trading Price Condition is satisfied but the Trading Volume
Condition is not satisfied, the Holder shall be deemed to have exercised
its right to convert only such part of the Monthly Amount that would
permit the Trading Volume Condition to be satisfied. Any part of
the
Monthly Amount due on a Repayment Date that the Holder has not been
able
to convert into shares of Common Stock by reason of failing to meet
the
Trading Volume Condition (or otherwise as a result of Section 3.2),
shall
be paid by the Borrower in cash at the rate of 102% of the Monthly
Amount
otherwise due on such Repayment Date within three (3) business days
of the
applicable Repayment Date.
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2.2 Prospectus
and Registration Exemptions Available.
Notwithstanding anything to the contrary herein, no portion of the Principal
Amount may be converted into Common Stock unless (i) an exemption from the
prospectus and registration requirements of the Securities
Act (Ontario)
and the U.S. Securities
Act,
as
applicable, is available to issue the Common Stock issuable upon such conversion
and (ii) no Event of Default hereunder exists and is continuing, unless such
Event of Default is waived in writing by the Holder in whole or in part at
the
Holder’s option.
2.3 Optional
Redemption in Cash.
The
Borrower will have the option of prepaying this Note (“Optional
Redemption”)
by
paying to the Holder the Prepayment Premium (as hereinafter defined) together
with accrued but unpaid interest thereon to the Redemption Payment Date (as
hereinafter defined) and any and all other unpaid amounts, if any, then due,
accrued, payable or owing to the Holder under this Note, the Purchase Agreement
or any Related Agreement (the “Redemption
Amount”).
The
“Prepayment
Premium”
shall
be equal to one
hundred and
3
thirty
percent
(130%)
of the
Principal Amount at the time of such prepayment. The Borrower shall deliver
to
the Holder a written notice of redemption (the “Notice
of Redemption”)
specifying the date for such Optional Redemption (the “Redemption
Payment Date”),
which
date shall be ten (10) business days after the date of the Notice of Redemption
(the “Redemption
Period”).
A
Notice of Redemption shall not be effective with respect to any portion of
the
Principal Amount for which the Holder has a pending election to convert into
Common Stock pursuant to Section 3.1 or for conversions initiated or made by
the
Holder pursuant to Section 3.1 during the Redemption Period. The Redemption
Amount shall be determined as if such Xxxxxx’s conversion elections had been
completed immediately prior to the date of the Notice of Redemption. On the
Redemption Payment Date, the Redemption Amount must be paid in cash to the
Holder. In the event the Borrower fails to pay the Redemption Amount on the
Redemption Payment Date as set forth herein, then such Redemption Notice will
be
deemed to be null and void.
ARTICLE
III
CONVERSION
RIGHTS
3.1 Holder’s
Conversion Rights.
From
and after the date hereof and until the Principal Amount under this Note is
paid
in full, the Holder shall have the right, but not the obligation, both before
and after an Event of Default (as hereinafter defined), to convert all or any
portion of the Principal Amount into shares of Common Stock subject to the
terms
and conditions set forth in this Article 3 and to receive any accrued and unpaid
interest thereon to the Conversion Date (as hereinafter defined) and any and
all
other unpaid amounts, if any, then due, accrued, payable or owing under this
Note, the Purchase Agreement or any Related Agreement; provided that
any such
conversion hereunder only applies to those amounts that have not already been
deemed to have been converted in accordance with Section 2.1(b) above. The
Holder may exercise such right by delivery to the Borrower of a written notice
of conversion as contemplated by Section 3.3(a). The shares of Common Stock
to
be issued upon such conversion are herein referred to as the “Conversion
Shares”.
3.2 Conversion
Limitation.
Notwithstanding anything contained herein to the contrary, the Holder shall
not
be entitled to convert pursuant to the terms of this Note an amount that would
be convertible into that number of shares of Common Stock which, when added
to
the number of shares of Common Stock otherwise beneficially owned by the Holder
including those issuable upon the exercise of convertible securities, warrants
or options held by the Holder, would exceed 4.99% of the outstanding shares
of
Common Stock of the Borrower at the time of conversion. For the purposes of
the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities
Exchange Act of 1934
(the
“Exchange
Act”)
and
Regulation 13d-3 thereunder. The conversion limitation described in this Section
3.2 shall automatically become null and void without any notice to the Borrower
upon the occurrence and during the continuance of an Event of Default or upon
75
days prior notice to the Borrower, except that at no time shall the beneficial
ownership exceed 19.99% of the Common Stock. For
the
purposes of the immediately preceding sentence, beneficial ownership shall
be
determined in accordance with Section 90(1) of the Securities
Act
(Ontario).
3.3 Mechanics
of Xxxxxx’s Conversion.
(a) |
In
the event that the Holder elects to convert any portion, or the whole,
of
the Principal Amount under this Note into Common Stock, the Holder
shall
give notice of such election by telecopying or delivering to the
Borrower,
in accordance with Section 5.2, an executed and completed notice
of
conversion (“Notice
of Conversion”)
to the Borrower and such Notice of Conversion shall set out the Principal
Amount being converted; provided that
any such conversion hereunder only applies to those amounts that
have not
already been deemed to have been converted in accordance with Section
2.1
(b) above. On each Conversion Date and in accordance with its Notice
of
Conversion, the Holder shall make the appropriate reduction to the
Principal Amount, accrued interest and other amounts due, if any,
accrued,
payable or owing as entered in its records and shall provide written
notice thereof to the Borrower within one (1) business day of the
Conversion Date. Each date on which a Notice of Conversion is delivered
or
telecopied to the Borrower and deemed effectively received by the
Borrower
in accordance with the provisions of Section 5.2 shall be deemed
a
Conversion Date (the “Conversion
Date”).
A form of Notice of Conversion to be employed by the Holder is annexed
hereto as Exhibit A.
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(b) |
Pursuant
to the terms of the Notice of Conversion, the Borrower will issue
instructions to its transfer agent accompanied by an opinion of counsel
within three (3) business days of the Conversion Date and shall cause
the transfer agent to deliver certificates representing the Conversion
Shares to or to the order of the Holder within
three (3) business days of the Conversion Date (the “Delivery
Date”).
Upon the exercise of the Holder’s conversion rights set forth herein, the
conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to
have
been issued upon the date of receipt by the Borrower of the Notice
of
Conversion. The Holder shall be treated for all purposes as the record
holder of such Common Stock, unless the Holder provides the Borrower
with
written instructions to the
contrary.
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4
3.4 Conversion
Mechanics.
(a) |
The
number of shares of Common Stock to be issued upon each conversion
of the
Principal Amount under this Note shall be determined by dividing
that
portion of the Principal Amount to be converted, if any, by the then
applicable Fixed Conversion Price as set out in Section 2.1(a). In
the
event of any partial conversions of Principal Amount pursuant to
this
Article 3, such conversions shall be deemed to constitute conversions
of
Principal Amount corresponding to (and, for greater certainty, satisfying
the Borrower’s obligation to amortize) Monthly Amounts for the remaining
Amortization Dates in chronological order.
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(b) |
The
Fixed Conversion Price and number and kind of shares or other securities
to be issued upon conversion is subject to adjustment from time to
time
upon the occurrence of certain events, as
follows:
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A. Stock
Splits, Combinations and Dividends.
If the
shares of Common Stock are subdivided or combined into a greater or smaller
number of shares of Common Stock, or if a dividend is paid on the Common Stock
or any preferred stock issued by the Borrower in shares of Common Stock, the
Fixed Conversion Price shall be proportionately reduced in the case of
subdivision of shares or stock dividend or proportionately increased in the
case
of combination of shares, in each such case by the ratio which the total number
of shares of Common Stock outstanding immediately after such event bears to
the
total number of shares of Common Stock outstanding immediately prior to such
event.
B. Reservation
of Stock, Etc. Issuable on Conversion.
During
the period the conversion rights exist, the Borrower will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of Common Stock upon the full conversion of the Principal
Amount under this Note. The Borrower represents that upon issuance, such shares
will be duly and validly issued, fully paid and non-assessable. The Borrower
agrees that its issuance of this Note shall constitute full authority to its
officers, agents, and transfer agents who are charged with the duty of executing
and issuing stock certificates to execute and issue the necessary certificates
for shares of Common Stock upon any conversions under this Note.
C. Reclassification,
etc.
If the
Borrower at any time shall, by reclassification or otherwise, change the Common
Stock into the same or a different number of securities of any class or classes,
this Note (as to the Principal Amount) shall thereafter be deemed to evidence
the right to purchase an adjusted number of such securities and kind of
securities as would have been issuable as a result of such change with respect
to the Common Stock immediately prior to such reclassification or other
change.
3.5
Issuance
of New Note.
Upon
any partial conversion of this Note, a new Note containing the same date and
provisions of this Note shall, at the request of the Holder, be issued by the
Borrower to the Holder for the balance of the Principal Amount, interest thereon
and other amounts payable under this Note which shall not have been converted
or
paid. Subject to the provisions of Article 4, the Borrower will pay no costs,
fees or any other consideration to the Holder for the production and issuance
of
a new Note.
3.6 Holder
Not a Shareholder.
Nothing
in this Note shall, in itself, confer or be construed as conferring upon the
Holder any right or interest whatsoever as a shareholder of the Borrower,
including, but not limited to, the right to vote at, to receive notice of,
or to
attend, meetings of shareholders or any other proceedings of the Borrower,
or
the right to receive dividends and other distributions.
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ARTICLE
IV
EVENTS
OF DEFAULT AND DEFAULT RELATED PROVISIONS
Upon
the
occurrence and continuance of an Event of Default (as defined below), the Holder
may by notice in writing to the Borrower declare the Principal Amount and all
accruing interest thereon, and all other amounts, if any, accruing, payable
or
owing under this Note, the Purchase Agreement or any Related Agreement to be
immediately due and payable. In the event of such an acceleration, the amount
due and owing to the Holder shall be 115% of the Principal Amount at such time
together with accrued and unpaid interest thereon and any and all other amounts
due, accrued, payable or owing under this Note, the Purchase Agreement or any
Related Agreement (the “Default
Payment”).
The
Default Payment shall be applied first to any amounts due, accrued, payable
or
owing to the Holder under this Note, the Purchase Agreement or any Related
Agreement, then to accrued and unpaid interest due on this Note and then to
the
Principal Amount.
The
occurrence of any of the following events set forth in Sections 4.1 through
4.11, inclusive, constitutes an “Event
of Default”:
4.1
Failure
to Pay Principal, Interest or other Amounts.
The
Borrower fails to pay when due any instalment of principal, interest or other
amounts in accordance herewith, or the Borrower fails to pay when due any amount
due under any other promissory note issued by Borrower, and in any such case,
such failure shall continue for a period of five (5) business days following
the
date upon which any such payment was due.
4.2
Breach
of Covenant.
The
Borrower breaches any covenant or any other term or condition of this Note
or
the Purchase Agreement in any material respect, or the Borrower or any of its
Subsidiaries breaches any covenant or any other term or condition of any Related
Agreement in any material respect and, in any such case, such breach, if subject
to cure, continues for a period of twenty (20) business days after the
occurrence thereof.
4.3
Breach
of Representations and Warranties.
Any
representation or warranty made by the Borrower in this Note or the Purchase
Agreement, or by the Borrower or any of its Subsidiaries in any Related
Agreement, shall, in any such case, be false or misleading in any material
respect on the date that such representation or warranty was made or deemed
made.
4.4
Collateral.
Any
portion of the Collateral (as defined in each of the Share Pledge Agreement,
the
Master Security Agreement and the U.S. Master Security Agreement) is (i)
subjected to loss, theft, substantial damage, destruction, sale or encumbrance
unless such loss is covered by insurance proceeds which are used to replace
the
item or repay the Holder; (ii) any portion of the Collateral is subjected to
levy of execution, attachment, distraint or other judicial process; or (iii)
any
portion of the Collateral is the subject of a claim (other than by the Holder)
of a lien or other right or interest in or to the Collateral and such levy
or
claim shall not be cured, disputed or stayed within a period of fifteen (15)
business days after the occurrence thereof.
4.5
Receiver
or Trustee.
The
Borrower or any of its Subsidiaries shall make an assignment for the benefit
of
creditors, or apply for or consent to the appointment of a receiver or trustee
for it or for a substantial part of its property or business; or such a receiver
or trustee shall otherwise be appointed.
4.6 Judgments.
Any
monetary judgment, writ or similar final process shall be entered or filed
against the Borrower or any of its Subsidiaries or any of their respective
property or other assets for more than USD$100,000
and
shall remain unvacated, unbonded or unstayed for a period of ninety (90)
days.
4.7 Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings or relief under any bankruptcy law or any law for the relief of
debtors shall be instituted by or against the Borrower or any of its
Subsidiaries, unless in any case such proceeding or process is stayed,
withdrawn, dismissed or vacated, as the case may be, within ninety (90)
days.
4.8 Cease
Trade.
A cease
trade order or trading suspension of the Common Stock shall be in effect for
five (5) consecutive days or five (5) days during a period of ten (10)
consecutive days, excluding in all cases a suspension
of all trading on the TSX, provided that the Borrower shall not have been able
to cure such trading suspension within thirty (30) days of the notice thereof.
6
4.9 Failure
to Deliver Common Stock or Replacement Note. The Borrower shall fail (i) to
timely deliver Common Stock to the Holder pursuant to and in the form required
by this Note, the Purchase Agreement or any Related Agreement, if such failure
to timely deliver Common Stock shall not be cured within five (5) business
days
or (ii) to deliver a replacement Note to the Holder within seven (7) business
days following the required date of such issuance pursuant to this Note, the
Purchase Agreement or any Related Agreement (to the extent required under such
agreements).
4.10 Default
Under Related Agreements or Other Agreements. The occurrence and continuance
of any Event of Default (as defined in the Purchase Agreement or any Related
Agreement) or any event of default (or similar term) under any other
indebtedness for an amount in excess of USD$100,000.
4 .11 Change
in
Control. The occurrence of a change in Control of the ownership of the
Borrower. As used herein, “Control” shall mean either (i) the beneficial
ownership, either directly or indirectly, of more than fifty percent (50%)
of
the equity interests in the Borrower or (ii) the carrying of more than fifty
percent (50%) of the votes for the election of the directors of the Borrower,
in
each case otherwise than by way of security only.
4.12 Default
Interest Rate. Following the occurrence and during the continuance of an
Event of Default, the Borrower shall pay interest on this Note in an amount
equal to one percent (1%) per month in lieu of the interest payable on this
Note
under the provisions of Section 1.1, and all outstanding obligations under
this
Note, including unpaid interest, shall continue to accrue such interest from
the
date of such Event of Default until the date such Event of Default is cured
or
waived.
4.13
Cumulative Remedies. The remedies under this Note shall be
cumulative.
ARTICLE
V
MISCELLANEOUS
5.1 Failure
or Indulgence Not Waiver.
No
failure or delay on the part of the Holder hereof in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive
of,
any rights or remedies otherwise available.
5.2 Notices.
Any
notice herein required or permitted to be given shall be in writing and shall
be
deemed effectively received: (a) upon personal delivery to the party notified,
(b) when sent by confirmed telex or facsimile on the business day of the sending
(provided it was sent before 4:30 p.m. New York time), if not, then on the
next
business day, and the applicable printed facsimile record shall be definitive
evidence of the time and date of such telex or facsimile transmission, or (c)
one day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All communications
shall be sent to the Borrower at the address provided in the Purchase Agreement
executed in connection herewith, and to the Holder at the address provided
in
the Purchase Agreement for such Holder, with a copy to Xxxx X. Xxxxxx, Esq.,
000
Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000)
000-0000, or at such other address as the Borrower or the Holder may designate
by ten (10) days advance written notice to the other parties hereto. A Notice
of
Conversion shall be deemed given when made to the Borrower pursuant to the
Purchase Agreement.
5.3 Amendment
Provision.
The
term “Note” and all reference thereto, as used throughout this instrument, shall
mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented, and any successor instrument
issued pursuant to Section 3.5 hereof, as it may be amended or
supplemented.
5.4 Assignability.
This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and assigns, and
may
be assigned by the Holder in accordance
with the provisions of the Purchase Agreement. This Note shall not be assigned
by the Borrower without the consent of the Holder.
7
5.5 Governing
Law.
This
Note shall be governed by and construed in accordance with the laws of the
State
of New York, without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of
New
York or in the federal courts located in the State of New York and the parties
agree to waive any option of trial by jury. Both parties and the individual
signing this Note on behalf of the Borrower agree to submit to the jurisdiction
of such courts. The prevailing party shall be entitled to recover from the
other
party its reasonable attorney’s fees and costs. In the event that any provision
of this Note is invalid or unenforceable under any applicable statute or rule
of
law, then such provision shall be deemed inoperative to the extent that it
may
conflict therewith and shall be deemed modified to conform with such statute
or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Note. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower’s obligations to the
Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favour of the Holder. The
Borrower acknowledges that legal counsel participated in the preparation of
this
Note and, therefore, stipulates that the rules of construction that ambiguities
are to be resolved against the drafting party shall not be applied in the
interpretation of this Note to favour any party against the other
party.
5.6 Judgment
Currency.
(a) |
If
for the purpose of obtaining or enforcing judgment against the Borrower
in
any court in any jurisdiction it becomes necessary to convert into
any
other currency (such other currency being hereinafter in this paragraph
5.6 referred to as the “Judgment Currency”) an amount due in US dollars
under this Note, the conversion shall be made at the Exchange Rate
prevailing on the business day immediately
preceding:
|
(i)
|
the
date actual payment of the amount due, in the case of any proceeding
in
the courts of New York or in the courts of any other jurisdiction
that
will give effect to such conversion being made on such date: or
|
(ii)
|
the
date on
which the foreign court determines, in the case of any proceeding
in the
courts of any other jurisdiction (the date as of which such conversion
is
made pursuant to this paragraph 5.6(a)(ii) being hereinafter referred
to
as the “Judgment Conversion Date”).
|
(b) |
If
in the case of any proceeding in the court of any jurisdiction referred
to
in paragraph 5.6(a)(ii) above, there is a change in the Exchange
Rate
prevailing between the Judgment Conversion Date and the date of actual
payment of the amount due, the applicable party shall pay such adjusted
amount as may be necessary to ensure that the amount paid in the
Judgment
Currency, when converted at the Exchange Rate prevailing on the date
of
payment, will produce the amount of US dollars which could have been
purchased with the amount of Judgment Currency stipulated in the
judgment
or judicial order at the Exchange Rate prevailing on the Judgment
Conversion Date.
|
(c) |
Any
amount due from the Borrower under this provision shall be due as
a
separate debt and shall not be affected by judgment being obtained
for any
other amounts due under or in respect of this
Note.
|
5.7 Maximum
Payments.
Nothing
contained herein shall be deemed to establish or require the payment of a rate
of interest or other charges in excess of the maximum permitted by applicable
law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess
of
such maximum shall be credited against amounts owed by the Borrower to the
Holder and thus refunded to the Borrower.
8
5.8
Security
Interest and Guarantee.
The
Holder has been granted a security interest (i) in certain assets of the
Borrower and its Subsidiaries as more fully described in (i) the Master Security
Agreement dated as of the date hereof, (ii) the U.S. Master Security Agreement
and (iii) the Share Pledge Agreement dated as of the date hereof. The
obligations of the Borrower under this Note are guaranteed by certain
Subsidiaries of the Borrower pursuant to the Subsidiary Guaranty dated as of
the
date hereof.
5.9
Construction.
Each
party acknowledges that its legal counsel participated in the preparation of
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party against the other.
5.10
Cost
of Collection.
If
default is made in the payment of this Note, the Borrower shall pay to Holder
reasonable costs of collection, including reasonable legal fees.
5.11 Calculation
of Interest.
For the
purposes of this Note, whenever interest is calculated on the basis of a year
of
360 days, the rate of interest determined pursuant to such calculation expressed
as an annual rate for the purposes of the Interest
Act
(Canada)
is equivalent to such rate as so determined multiplied by the actual number
of
days in the calendar year in which the same is to be ascertained and divided
by
360.
IN
WITNESS WHEREOF,
the
Borrower has caused this Note to be signed in its name effective as of this
22nd
day of November, 2005.
TM
BIOSCIENCE CORPORATION
|
||
|
|
|
Date: | By: | /s/ Xxxxx Xxxxx |
Name: Xxxxx
Xxxxx
|
||
Title: Chief Financial Officer |
9
EXHIBIT
A
NOTICE
OF CONVERSION
(To
be
executed by the Holder in order to convert all or part of the Note into Common
Stock)
To:
Tm Bioscience Corporation
The
undersigned hereby converts $_________ of the principal due on
__________________ [specify
applicable Amortization Date]
under
the Convertible Term Note issued by Tm Bioscience Corporation dated November
22,
2005 by delivery of shares of Common Stock of and subject to the conditions
set
forth in Article III of such Note.
1. Date
of
Conversion _______________________
2. Shares
To
Be Delivered: _______________________
By:
______________________________________
Name: ______________________________________
Title: _______________________________________
10
AMORTIZATION
SCHEDULE
Repayment
Date
|
Monthly
Amortization
|
The
first day of each calendar month from and including
April
1, 2006 to and including November 1, 2008
|
US$281,250.00
|
Maturity
Date
|
Balance
of Principal Xxxxxx
|
11