ARRANGEMENT AGREEMENT between LORUS THERAPEUTICS INC. and NUCHEM PHARMACEUTICALS INC. and GENESENSE TECHNOLOGIES INC. and 6650309 CANADA INC. and PINNACLE INTERNATIONAL LANDS, INC. and 6707157 CANADA INC.
Exhibit
99.1
Execution
copy
ARRANGEMENT
AGREEMENT
between
and
XXXXXX
PHARMACEUTICALS INC.
and
GENESENSE
TECHNOLOGIES INC.
and
6650309
CANADA INC.
and
PINNACLE
INTERNATIONAL LANDS, INC.
and
6707157
CANADA INC.
Dated
as of May 1, 2007
TABLE
OF CONTENTS
ARTICLE
1 INTERPRETATION
|
2
|
|
1.1
|
Definitions
|
2
|
1.2
|
Extended
Meanings
|
9
|
1.3
|
Deemed
Currency
|
9
|
1.4
|
Interpretation
|
9
|
1.5
|
Article
References
|
9
|
1.6
|
Date
for any Action
|
9
|
1.7
|
Governing
Law
|
9
|
1.8
|
Accounting
Matters
|
9
|
1.9
|
Material
|
9
|
1.10
|
Incorporation
of Schedules
|
10
|
ARTICLE
2 THE ARRANGEMENT
|
10
|
|
2.1
|
General
|
10
|
2.2
|
Steps
to be taken by Old Lorus
|
10
|
2.3
|
Interim
Order
|
10
|
2.4
|
Information
Circular
|
11
|
2.5
|
Old
Lorus Board Recommendation and Fairness Opinion
|
11
|
2.6
|
Final
Order
|
12
|
ARTICLE
3 PUBLICITY
|
12
|
|
3.1
|
Publicity
|
12
|
ARTICLE
4 REPRESENTATIONS AND WARRANTIES OF OLD LORUS
|
12
|
|
4.1
|
Representations
and Warranties of Old Lorus
|
12
|
4.2
|
Investigation
|
12
|
4.3
|
No
Other Representations or Warranties
|
18
|
ARTICLE
5 REPRESENTATIONS AND WARRANTIES OF NEW LORUS
|
19
|
|
5.1
|
Representations
and Warranties of New Lorus
|
19
|
5.2
|
Investigation
|
19
|
5.3
|
No
Other Representations or Warranties
|
20
|
ARTICLE
6 REPRESENTATIONS AND WARRANTIES OF INVESTOR
|
20
|
|
6.1
|
Representations
and Warranties of Investor
|
20
|
6.2
|
Investigation
|
22
|
6.3
|
No
Other Representations or Warranties
|
22
|
ARTICLE
7 REPRESENTATIONS AND WARRANTIES OF PINNACLE
|
22
|
|
7.1
|
Representations
and Warranties of Pinnacle
|
22
|
7.2
|
Investigation
|
23
|
7.3
|
No
Other Representations or Warranties
|
23
|
ARTICLE
8 COVENANTS OF OLD LORUS
|
23
|
|
8.1
|
Covenants
of Old Lorus
|
23
|
8.2
|
Recommendation
of the Old Lorus Board of Directors
|
27
|
8.3
|
Old
Lorus Covenant Regarding Non-Solicitation
|
27
|
8.4
|
Notice
of Superior Proposal Determination
|
28
|
8.5
|
Access
to Information
|
29
|
ARTICLE
9 COVENANTS OF INVESTOR
|
29
|
|
9.1
|
Covenants
of Investor
|
29
|
ARTICLE
10 COVENANTS OF PINNACLE
|
30
|
|
10.1
|
Covenants
of Pinnacle
|
30
|
ARTICLE
11 CONDITIONS PRECEDENT
|
31
|
|
11.1
|
Mutual
Conditions Precedent
|
31
|
11.2
|
Conditions
to Obligations of Old Lorus
|
32
|
11.3
|
Conditions
to Obligations of Pinnacle and Investor
|
33
|
11.4
|
Notice
and Cure Provisions and Effect of Failure to Comply with
Conditions
|
34
|
11.5
|
Satisfaction
of Conditions
|
35
|
ARTICLE
12 AGREEMENT AS TO NON-COMPLETION FEE
|
35
|
|
12.1
|
Lorus
Non-Completion Fee
|
35
|
12.2
|
Pinnacle
Non-Completion Fee
|
36
|
12.3
|
Liquidated
Damages
|
36
|
12.4
|
Limited
Remedy
|
36
|
ARTICLE
13 INDEMNIFICATION
|
36
|
|
13.1
|
Indemnification
by Old Lorus and New Lorus
|
36
|
13.2
|
Limitation
on Indemnification by Old Lorus and New Lorus
|
37
|
13.3
|
Indemnification
by Pinnacle and Investor
|
38
|
13.4
|
Limitation
on Indemnification by Pinnacle and Investor
|
38
|
13.5
|
Exclusive
Remedy
|
38
|
13.6
|
Survival
|
39
|
ARTICLE
14 TERMINATION, AMENDMENT AND WAIVER
|
39
|
|
14.1
|
Termination
|
39
|
14.2
|
Effect
of Termination
|
39
|
14.3
|
Amendment
|
39
|
14.4
|
Waiver
|
39
|
ARTICLE
15 CLOSING
|
40
|
|
15.1
|
Closing
Date
|
40
|
15.2
|
Effect
of Closing
|
40
|
15.3
|
Place
of Closing
|
40
|
15.4
|
Other
Closing Matters
|
40
|
ARTICLE
16 GENERAL PROVISIONS
|
40
|
|
16.1
|
Notices
|
40
|
16.2
|
Fees
and Expenses
|
41
|
16.3
|
Time
of Essence
|
41
|
16.4
|
Entire
Agreement
|
41
|
16.5
|
Assignment
|
41
|
16.6
|
Binding
Effect
|
41
|
16.7
|
Further
Assurances
|
41
|
16.8
|
Severability
|
42
|
16.9
|
Counterpart
Execution
|
42
|
SCHEDULE
A Plan of Arrangement
|
A-l
|
|
SCHEDULE
B PPSA Registrations
|
X-x
|
|
SCHEDULE
C Antisense Patent Assets Transfer Agreement
|
C-l
|
|
SCHEDULE
D Virulizin and Small Molecule Patent Assets Transfer Agreement
|
D-l
|
|
SCHEDULE
E Tangible Business Assets Transfer Agreement
|
E-l
|
|
SCHEDULE
F Prepaid Expenses and Receivables Transfer Agreement
|
F-l
|
|
SCHEDULE
G GeneSense Share Purchase Agreement
|
G-l
|
|
SCHEDULE
H XxXxxx Share Purchase Agreement
|
H-l
|
|
SCHEDULE
I Pinnacle Share Purchase Agreement
|
1-1
|
|
SCHEDULE
J Indemnification Agreement
|
X-x
|
ARRANGEMENT
AGREEMENT
THIS
AGREEMENT is made as of May 1, 2007,
BETWEEN:
LORUS
THERAPEUTICS INC., a corporation existing under the laws of Canada
(hereinafter referred to as“Old Lorus”),
AND
XXXXXX
PHARMACEUTICALS INC., a corporation existing under the laws of Ontario
(hereinafter referred to as “XxXxxx”),
AND
GENESENSE
TECHNOLOGIES INC., a corporation existing under the laws of Canada
(hereinafter referred to as“GeneSense”),
AND
6650309
CANADA INC., a corporation existing under the laws of Canada
(hereinafter referred to as“New Lorus”),
AND
PINNACLE
INTERNATIONAL LANDS, INC., a corporation existing under the laws of
British Columbia (hereinafter referred to
as“Pinnacle”),
AND
6707157
CANADA INC., a corporation existing under the laws of Canada
(hereinafter referred to as“Investor”).
WHEREAS
upon the terms and subject to the conditions set out in this Agreement, the
parties hereto intend to effect a business reorganization pursuant to which,
or
in connection with, Investor will acquire approximately 41% of the voting and
all of the non-voting shares of Old Lorus;
AND
WHEREAS GeneSense and New Lorus are wholly-owned subsidiaries of Old
Lorus;
AND
WHEREAS Old Lorus holds 80% of the issued and outstanding voting shares
and 100% of the issued and outstanding non-voting preference shares of
XxXxxx;
AND
WHEREAS New Lorus is a wholly-owned subsidiary of Old Lorus and has not
carried on any active business;
AND
WHEREAS all members of the board of directors of Old Lorus entitled to
vote thereon have, after having received a preliminary fairness opinion from
Deloitte & Touche LLP, unanimously: (i) determined that the
transactions contemplated by this Agreement are fair and in the best interests
of Old Lorus and the Old Lorus Securityholders; (ii) approved this
Agreement and the transactions contemplated hereby; and (iii) determined to
recommend that the Old Lorus Securityholders vote in favour of the transactions
contemplated by this Agreement;
AND
WHEREAS in furtherance of the transactions contemplated by this
Agreement, the board of directors of Old Lorus has resolved to submit the Plan
of Arrangement to the Old Lorus Securityholders at the Old Lorus
Securityholders’ Meeting and to the Court;
AND
WHEREAS it is intended that the Arrangement be effected under Section
192 of the CBCA pursuant to the Plan of Arrangement and upon the terms and
subject to the conditions set forth herein;
NOW
THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the
respective covenants and agreements herein contained and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto covenant and agree as follows:
ARTICLE 1
INTERPRETATION
INTERPRETATION
1.1
Definitions
In
this
Agreement, including the recitals hereto, unless there is something in the
subject matter or context inconsistent therewith, the following terms will
have
the following meanings, respectively:
“Acquisition
Proposal” means any proposal by a third party or third parties that may
reasonably be expected to lead to a transaction substantially similar to that
contemplated by this Agreement or with respect to any asset purchase,
merger, amalgamation, arrangement, share exchange, take-over bid, tender offer,
recapitalization, consolidation or business combination involving Old Lorus
existing prior to the Effective Date, excluding the transactions contemplated
by
this Agreement and the Plan of Arrangement;
“Affiliate”
has the meaning ascribed thereto in the CBCA;
“Agreement”,
“this Agreement”, “herein”,
“hereto”, and “hereof”
and
similar expressions
refer to this Agreement, as the same may be amended or supplemented from time
to
time, and where applicable, to the appropriate Schedule hereto;
“AMEX”
means the American Stock Exchange;
“AMEX
Rules” means collectively, all rules, requirements and policies of the
AMEX applicable to Old Lorus, including such as are contained in the Rules
of
the AMEX and the AMEX Company Guide;
“Antisense
Patent Assets” means those assets set out in the disclosure letter to
the Antisense Patent Assets Transfer Agreement;
“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, as contemplated in the Plan
of Arrangement and substantially in the form attached hereto as
Schedule C;
“Applicable
Laws” means, in relation to any Person, Property, transaction or event,
all applicable provisions in effect at the relevant time (or mandatory
applicable provisions) of federal, provincial, territorial, state, local or
foreign laws, statutes, rules, regulations, directives and orders of all
Governmental Authorities, and all judgments, orders, decrees, decisions, rulings
or awards of all Governmental Authorities to which the Person in question is
a
party or by which it is bound or having application to the Person, Property,
transaction or event, including the Securities Laws;
“Arrangement”
means an arrangement under Section 192 of the CBCA on the terms and subject
to
the conditions set out in the Plan of Arrangement, subject to any amendments
or
variations thereto made in accordance with the terms hereof and/or of the Plan
of Arrangement or made at the direction of the Court in the Final
Order;
“Arrangement
Resolution” means the special resolution of Old Lorus Securityholders
approving the Plan of Arrangement, as required by the Interim Order and
Applicable Laws;
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2
-
“Articles
of Arrangement” means Old Lorus’ articles of arrangement giving effect
to the Arrangement which, pursuant to the CBCA, will be filed with the Director
after the Final Order has been issued;
“Assessment”
has the meaning ascribed thereto in Section 8.1(j);
“Asset
Transfer Agreements” means, collectively, the Tangible Business Assets
Transfer Agreement, the Antisense Patent Assets Transfer Agreement, the
Virulizin and Small Molecule Patent Assets Transfer Agreement and the Prepaid
Expenses and Receivables Transfer Agreement;
“Benefit
Plans” has the meaning ascribed thereto in Section 4.1(l);
“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;
“Canadian
Securities Legislation” has the meaning attributed to such term in NI
14-101 and includes published policies promulgated thereunder from time to
time
by any of the Canadian Securities Regulatory Authorities and the TSX Company
Manual;
“Canadian
Securities Regulatory Authorities” has the meaning ascribed to such
term in NI 14-101;
“CBCA”
means the Canada Business Corporations Act;
“Claim”
has the meaning ascribed thereto in Section 13.1;
“Closing”
means the closing of the Arrangement;
“Closing
Date” has the meaning ascribed thereto in
Section 15.1;
“Closing
Time” means 1:00 p.m. (Toronto time) on the Closing Date unless
otherwise agreed in writing by the Parties;
“Confidentiality
Agreement” means the confidentiality agreement dated March 3, 2006
between Old Lorus and Pinnacle;
“Continuous
Disclosure Reports” has the meaning ascribed thereto in Section
4.1(h);
“Corporate
Laws” means all applicable corporate laws, including the
CBCA;
“Court”
means the Ontario Superior Court of Justice;
“Default”
has the meaning ascribed thereto in Section 16.2(b);
“Defaulting
Party” has the meaning ascribed thereto in Section
16.2(b);
“Depository”
means Computershare Trust Company of Canada, the duly appointed depository
in
respect of the Arrangement at its principal transfer office in Toronto,
Ontario;
“Director”
means the Director appointed under section 260 of the CBCA;
“Disclosure
Letter” means the disclosure letter of Old Lorus delivered to Investor
concurrently herewith and signed by Old Lorus with receipt acknowledged thereon
by Investor;
“Dissent
Rights” means the rights of dissent in respect of the Arrangement
described in the Plan of Arrangement;
-
3
-
“Effective
Date” has the meaning ascribed thereto in the Plan of
Arrangement;
“Effective
Time” means 12:01 a.m. (Toronto time) on the Effective
Date;
“Escrow
Agreement” means the escrow agreement to be entered into on the
Effective Date between Investor, New Lorus and an escrow agent as contemplated
by the Pinnacle Share Purchase Agreement;
“Evaluation
Date” has the meaning ascribed thereto in Section 4.1(t);
“Exchange
Act” means the United States Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations promulgated
thereunder, all as the same will be in effect from time to time;
“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;
“GAAP”
has the meaning ascribed thereto in Section 4.1(h);
“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, as contemplated by
the
Plan of Arrangement and substantially in the form attached hereto as
Schedule G;
“GeneSense
Shares” means common shares in the capital of GeneSense;
“Governmental
Authority” means any federal, provincial, territorial, state, local or
foreign government or any department, agency, board, tribunal (judicial,
quasi-judicial, administrative, quasi-administrative or arbitral) or authority
thereof or other political subdivision thereof and any Person exercising
executive, legislative, judicial, regulatory or administrative functions of,
or
pertaining thereto or the operation thereof, including the Canadian Securities
Regulatory Authorities, SEC, TSX and AMEX;
“Indebtedness”
has the meaning ascribed thereto in Section 4.1(x);
“Indemnification
Agreement” means the indemnification agreement to be entered into on
the Effective Date between Old Lorus, New Lorus, XxXxxx and GeneSense as
contemplated by the Plan of Arrangement and substantially in the form attached
hereto as Schedule J;
“Indemnified
Party” has the meaning ascribed thereto in Section 13.1 and Section
13.3;
“Information
Circular” has the meaning ascribed thereto in
Section 2.4;
“Interim
Order” means the interim order of the Court concerning the Arrangement
under subsection 192(4) of the CBCA, 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;
“Intellectual
Property Rights” has the meaning ascribed thereto in Section
4.1(q);
“knowledge”
and similar expressions when used in relation to:
(i)
Old
Lorus, means the knowledge of Xxxxxx X. Xxxxx, President and Chief Executive
Officer of Old Lorus, Xxxxxxxxx Xxxxxxxx, Director of Finance and Controller
of
Old Lorus, or Xxxx Xxxxxxx, Acting Controller of Old Lorus, respectively;
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4
-
(ii)
New
Lorus, means the knowledge of Xxxxxx X. Xxxxx, President and Chief Executive
Officer of New Lorus, Xxxxxxxxx Xxxxxxxx, Director of Finance and Controller
of
New Lorus, or Xxxx Xxxxxxx, Acting Controller of New Lorus,
respectively;
(iii)
Investor,
means the knowledge of Xxxxxxx Xx Xxxxxx, President of Investor;
and
(iv)
Pinnacle,
means the knowledge of Xxxxxxx Xx Xxxxxx, President of Pinnacle, or Les Fovenyi,
Chief Financial Officer of Pinnacle.
after
reasonable enquiry and review with the relevant directors, officers and
employees of Old Lorus, New Lorus, Investor or Pinnacle, as
applicable;
“Liens”
means a lien, prior claim, security interest, hypothec, right of first refusal,
pre-emptive right or any other encumbrance, charge or restriction;
“Lock-Up
Holders” means, collectively, High Tech Beteilingungen GmbH & Co.
KG, Technifund Inc., and Xxxxxxx Xxxxxxxx;
“Lorus
Payment Event” has the meaning ascribed thereto in Section
12.1;
“Material
Adverse Change” or “Material Adverse Effect” means,
when used in connection with Old Lorus, any change, effect, event, occurrence
or
change in a state of facts that is, or would reasonably be expected to be,
material and adverse to the business, operations, assets, capitalization,
liabilities or condition (financial or otherwise) of Old Lorus or any Subsidiary
other than (i) any change in the trading price or trading volume of Old Lorus
Shares, (ii) any change affecting economic or financial conditions generally
(global, national or regional, as applicable) that does not have a
disproportionate effect on such Party, (iii) any failure by Old Lorus to meet
analysts’ or internal earnings estimates, milestones or business plans, (iv) any
action contemplated by the Old Lorus Debentures or taken by Old Lorus, at
Investor’s request, (v) any action required by Applicable Laws, or (vi) the
results of any of Old Lorus’ clinical trials for any product candidates;
“Material
Contracts” means, collectively, the Old Lorus Debentures, the NCI
Agreement and the University of Manitoba Agreement;
“Material
Permits” has the meaning ascribed thereto in Section
4.1(o);
“XxXxxxxx”
means XxXxxxxx Xxxxxxxx LLP;
“MI
52-109” means Multilateral Instrument 52-109 - Certification of
Disclosure in Issuers’ Annual and Interim Filings, of the Canadian Securities
Administrators, as such Instrument may be amended from time to time, or any
similar instrument, rule or regulation hereafter adopted by any of the Canadian
Securities Regulatory Authorities having substantially the same effect as such
instrument;
“misrepresentation”
has the meaning ascribed thereto in the Securities Act
(Ontario);
“NCI
Agreement” means the agreement entered into between Old Lorus and its
Affiliates and the National Cancer Institute dated October 25, 2002 in
connection with the co-development by such parties of GTI-2040;
“NI
14-101” means National Instrument 14-101 - Definitions, of the Canadian
Securities Administrators, as such instrument may be amended or supplemented
from time to time, or any similar instrument, rule or regulation hereafter
adopted by any of the Canadian Securities Regulatory Authorities having
substantially the same effect as such instrument;
“Notice
Period” has the meaning ascribed thereto in Section 8.4;
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5
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“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, as contemplated
by the Plan of Arrangement and substantially in the form attached hereto as
Schedule H;
“XxXxxx
Shares” means common shares in the capital of XxXxxx;
“Officer
Obligations” means any obligations or liabilities of Old Lorus to pay
any amount to its officers, directors, employees or consultants, other than
(i)
for salary, bonuses under existing bonus arrangements, or directors’ fees in the
ordinary course, in each case in amounts consistent with historic practices,
and
(ii) obligations or liabilities in respect of insurance or indemnification
contemplated by this Agreement or arising in the ordinary and usual course
of
business and subject to Corporate Laws and, without limiting the generality
of
the foregoing, Officer Obligations will include the obligations of Old Lorus
to
officers, employees or consultants for: (A) severance, termination or other
payments on or in connection with the reorganization of Old Lorus pursuant
to
any executive involuntary severance and termination agreements in the case
of
officers and pursuant to Old Lorus’ severance policy in the case of employees;
(B) retention bonus payments pursuant to any retention bonus program; or
(C) commissions, bonuses or other amounts payable to any employees,
officers, directors or consultants in connection with the reorganization,
including in connection with the Arrangement;
“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 principal amounts of $5,000,000
each on each of October 6, 2004, January 14, 2005 and April 15,
2005;
“Old
Lorus Governing Documents” means the articles and by-laws of Old Lorus
in effect as of the date hereof;
“Old
Lorus Options” means the 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
as
of the date hereof an aggregate of up to 25,921,000 Old Lorus Shares, as such
number may be amended from time to time;
“Old
Lorus Securityholders” means, collectively, the holders of Old Lorus
Shares, Old Lorus Options, Old Lorus Warrants and Old Lorus
Debentures;
“Old
Lorus Securityholders’ Meeting” means the special meeting of Old Lorus
Securityholders, and any adjournments thereof, to be called to, inter
alia, consider and, if thought fit, authorize, approve and adopt the
Arrangement Resolution in accordance with the Interim Order;
“Old
Lorus Share Equivalents” means any securities of Old Lorus or any of
the Subsidiaries which would entitle the holder thereof to acquire at any time
Old Lorus Shares, including any debt, preferred stock, rights, options, warrants
or other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Old
Lorus
Shares;
“Old
Lorus Shareholders” means the holders of Old Lorus Shares;
“Old
Lorus Shares” means common shares in the share capital of Old
Lorus;
“Old
Lorus Stock Option Plans” means, collectively, Old Lorus’ 2003 Stock
Option Plan and the 1993 Stock Option Plan;
“Old
Lorus Warrants” means the 3,000,000 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;
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6
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“Outside
Date” means July 31, 2007;
“Parties”
means Old Lorus, NuChem, GeneSense, New Lorus, Pinnacle and Investor, and
“Party” means any one of them;
“Person”
includes any individual, firm, partnership, joint venture, limited liability
company, unlimited liability company, association, trust, trustee, executor,
administrator, legal personal representative, estate, group, body corporate,
corporation, unincorporated association or organization, Governmental Authority,
syndicate or other entity, whether or not having legal status;
“Pinnacle
Information” means the information contained in the Information
Circular provided to Old Lorus by Pinnacle and Investor, all as described in
the
letter of Pinnacle and Investor dated on or before the date of the Information
Circular and delivered to Old Lorus and signed by Pinnacle and Investor, with
receipt acknowledged thereon, acting reasonably, by Old Lorus;
“Pinnacle
Material Adverse Effect” means any fact, circumstance, change, effect,
matter, action, condition, event or occurrence that, individually or in the
aggregate with all other facts, circumstances, changes, effects, matters,
actions, conditions, events or occurrences, would reasonably be expected to
materially impair or delay the consummation of the transactions contemplated
by
this Agreement by Pinnacle or Investor beyond the Outside Date or materially
impair or delay the ability of Pinnacle or Investor to pay the Pinnacle
Non-Completion Fee or perform its obligations hereunder, including each of
their
indemnification obligations pursuant to Section 13.3;
“Pinnacle
Payment Event” has the meaning ascribed thereto in Section
12.2;
“Pinnacle
Share Purchase Agreement” has the meaning ascribed thereto in the
Plan of Arrangement, which agreement will be substantially in the form attached
hereto as Schedule I;
“Plan
of Arrangement” means the plan of arrangement relating to the
Arrangement substantially in the form and content of Schedule A attached
hereto, as such plan of arrangement may be amended pursuant to this
Agreement;
“Prepaid
Expenses and Receivables” means those assets set out in the disclosure
letter to the Prepaid Expenses and Receivables Transfer Agreement;
“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,
as
contemplated in the Plan of Arrangement and substantially in the form attached
hereto as Schedule F;
“Property”
means property, real or personal, tangible or intangible, other than
Intellectual Property Rights;
“Reimbursement
Amount” has the meaning ascribed thereto in Section
16.2(b);
“Required
Approvals” has the meaning ascribed thereto in Section
4.1(e);
“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;
“Sarbanes
Oxley Act” means the United States Xxxxxxxx-Xxxxx Act of 2002, and any
successor thereto, and any rules and regulations promulgated thereunder, all
as
the same will be in effect from time to time;
“SEC”
means the United States Securities and Exchange Commission, or any other federal
agency at the time administering the United States Securities Act or the
Exchange Act;
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“Securities
Laws” means the Canadian Securities Legislation and the United States
Securities Laws;
“SEDAR”
means the System for Electronic Document Analysis and Retrieval developed by
the
Canadian Securities Administrators;
“Share
Purchase Plan” means Old Lorus’ employee share purchase
plan;
“Stock
Option Plans” means Old Lorus’ 2003 Stock Option Plan and/or the 1993
Stock Option Plan;
“Subsidiary”
has the meaning ascribed thereto in Section 4.1(a);
“Subsidiary
Share Purchase Agreements” means, collectively, the GeneSense Share
Purchase Agreement and the XxXxxx Share Purchase Agreement;
“Superior
Proposal” has the meaning ascribed thereto in
Section 8.3(b);
“Tangible
Business Assets” means Old Lorus’ depreciable Property other than
capitalized legal fees set out in the disclosure letter to the Tangible Business
Assets Transfer Agreement;
“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, as contemplated in
the
Plan of Arrangement and substantially in the form attached hereto as
Schedule E;
“TEMIC”
means The Xxxx Xxxxx Investment Corporation;
“Termination
Date” means the date of termination of this Agreement pursuant to the
terms hereof;
“Trading
Market” means the AMEX or the TSX;
“TSX”
means the Toronto Stock Exchange;
“TSX
Company Manual” means The Toronto Stock Exchange Company
Manual;
“United
States” means the United States of America, its territories and
possessions, any state of the United States and the District of
Columbia;
“United
States Securities Act” means the United States Securities Act of
1933, as amended, and any successor thereto, and any rules and regulations
promulgated thereunder, all as the same will be in effect from time to
time;
“United
States Securities Laws” means the United States Securities Act, the
Exchange Act, the Sarbanes Oxley Act, all applicable state or “blue sky” laws
and all rules and regulations promulgated thereunder or otherwise adopted from
time to time by the applicable authority having jurisdiction in respect thereof,
and the AMEX Rules, as applicable;
“University
of Manitoba Agreement” means the agreement entered into between Old
Lorus, the University of Manitoba, the Manitoba Cancer Treatment and Research
Foundation, Xx. Xxx X. Xxxxxx, Xx. Xxxxxx Xxxxx and GeneSense dated June 20,
1997 in connection with the licensing of certain patent rights;
“Virulizin
and Small Molecule Patent Assets” means those assets set out in the
disclosure letter to the Virulizin and Small Molecule Patent Assets Transfer
Agreement; and
“Virulizin
and Small Molecule Patent 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 Virulizin and
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Small
Molecule Patent Assets to GeneSense, as contemplated in the Plan of Arrangement
and substantially in the form attached hereto as Schedule D.
1.2 Extended
Meanings
In
this
Agreement, unless the contrary intention appears, words importing the singular
include the plural and vice versa; words importing gender will include all
genders; words importing persons will include a natural person, firm, trust,
partnership, association, corporation, joint venture or government (including
any Governmental Authority); and the term “including” means
“including without limiting the generality of the foregoing”.
1.3
Deemed
Currency
Unless
otherwise stated, all references in this Agreement to sums of money are
expressed in lawful money of Canada.
1.4
Interpretation
The
division of this Agreement into Articles, Sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and will
not
affect in any way the meaning or interpretation of this Agreement. The
Parties acknowledge that their respective legal counsel have reviewed and
participated in settling the terms of this Agreement, and the Parties hereby
agree that any rule of construction to the effect that any ambiguity is to
be
resolved against the drafting Party will not be applicable in the interpretation
of this Agreement.
1.5
Article
References
Unless
the contrary intention appears, references in this Agreement to an Article,
Section, subsection, paragraph or Schedule by number or letter or both refer
to
the specified Article, Section, subsection, paragraph or Schedule, respectively,
bearing that designation in this Agreement.
1.6
Date
for any Action
In
the
event that any date by or on which any action is required or permitted to be
taken hereunder by any of the Parties is not a Business Day, such action will
be
required to be taken by or on the next succeeding day which is a Business
Day.
1.7
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.
1.8
Accounting
Matters
Unless
otherwise stated, all accounting terms used in this Agreement will have the
meanings attributable thereto under GAAP and all determinations of an accounting
nature required to be made will be made in a manner consistent with
GAAP.
1.9
Material
The
terms
“material” and “materially” will, when used in
this Agreement, be construed, measured or assessed on the basis of whether
the
matter, either individually or in the aggregate with other matters, would
materially affect a Party or would significantly impede the ability to complete
the Arrangement in accordance with this Agreement.
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1.10
Incorporation
of Schedules
The
following Schedules are annexed to this Agreement and are hereby incorporated
by
reference into the Agreement and form part hereof:
Schedule
A
Plan
of
Arrangement;
Schedule
B
PPSA
Registrations;
Schedule
C
Antisense
Patent Assets Transfer Agreement;
Schedule
D
Virulizin
and Small Molecule Patent Assets Transfer Agreement;
Schedule
E
Tangible
Business Assets Transfer Agreement;
Schedule
F
Prepaid
Expenses and Receivables Transfer Agreement;
Schedule
G
GeneSense
Share Purchase Agreement;
Schedule
H
XxXxxx
Share Purchase Agreement;
Schedule
I
Pinnacle
Share Purchase Agreement; and
Schedule
J
Indemnification
Agreement.
ARTICLE 2
THE ARRANGEMENT
THE ARRANGEMENT
2.1
General
Subject
to the terms and conditions of this Agreement, each of the Parties hereto agrees
to use its reasonable commercial efforts prior to the Effective Time to take,
or
cause to be taken, all actions and to do, or cause to be done, all things
necessary or advisable to complete the transactions contemplated by this
Agreement and the Plan of Arrangement.
2.2
Steps
to be taken by Old Lorus
Old
Lorus
covenants in favour of Pinnacle and Investor that Old Lorus will:
(a)
as
soon
as reasonably practicable, apply to the Court in a manner acceptable to
Investor, acting reasonably, under Section 192 of the CBCA, for the Interim
Order, providing for, among other things, the calling of the Old Lorus
Securityholders’ Meeting, and thereafter proceed with and diligently seek the
Interim Order;
(b)
lawfully
convene and hold the Old Lorus Securityholders’ Meeting for the purpose of,
among other things, considering the Arrangement Resolution and the other matters
set forth in the Information Circular as soon as reasonably practicable and
in
any event, no later than the seventh Business Day immediately preceding the
Outside Date;
(c)
subject
to obtaining any approvals as are required by the Interim Order, proceed with
and diligently pursue the application to the Court for the Final Order;
and
(d)
subject
to obtaining the Final Order, exert reasonable commercial efforts to make such
arrangements with the Director as may be necessary or desirable to permit the
filing with the Director of the Articles of Arrangement.
2.3
Interim
Order
Old
Lorus
confirms that the Interim Order will provide:
(a)
for
the
class of persons to whom notice is to be provided in respect of the Arrangement
and the Old Lorus Securityholders’ Meeting and for the manner in which such
notice is to be provided;
(b)
that
the
requisite approval for the Arrangement will be (i) not less than 66 2/3% of
the
vote cast by the Old Lorus Securityholders, and (ii) such other approvals,
if
any, as may be required by applicable
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Securities
Laws, with each holder of Old Lorus Shares entitled to vote thereon being
entitled to one vote for each Old Lorus Share held, each holder of Old Lorus
Options entitled to vote thereon being entitled to one vote for each Old Lorus
Option held, each holder of Old Lorus Debentures entitled to vote thereon being
entitled to one vote for each whole Old Lorus Share into which such holder’s Old
Lorus Debentures are convertible and each holder of Old Lorus Warrants entitled
to vote thereon being entitled to one vote for each whole Old Lorus Share for
which such holder’s Old Lorus Warrants are exercisable;
(c)
for
the
grant of the Dissent Rights;
(d)
that,
in
all other respects, the terms and conditions of the Old Lorus Governing
Documents, including quorum requirements and all other matters, will apply
in
respect of the Old Lorus Securityholders’ Meeting; and
(e)
for
such
other matters as the Parties may agree, acting reasonably.
2.4
Information
Circular
As
promptly as practicable after execution of this Agreement, Old Lorus will
prepare, and Investor will co-operate in the preparation of, the Information
Circular (setting forth inter alia the recommendation of Old Lorus’ board
of directors set forth in Section 2.5(a)(ii) and the opinion of Old Lorus’
advisors referred to in Section 2.5(b)) and Old Lorus and Investor will, on
a timely basis, use their reasonable commercial efforts to co-operate in the
preparation of all other documents and filings and the seeking and obtaining
of
all consents, orders and approvals, including regulatory and judicial orders
and
approvals and other matters reasonably determined by Old Lorus and Investor
to
be necessary in connection with this Agreement and the Arrangement. Old Lorus
will ensure that the Information Circular and other documents, filings,
consents, orders and approvals contemplated by this Section 2.4 and mailed
to the Old Lorus Securityholders and other persons required by law are in
accordance with Securities Laws, the CBCA, the requirements of the TSX, the
requirements of the AMEX and all other Applicable Laws. The term
“Information Circular” will mean such proxy or other required
information statement or circular, as the case may be, and all related materials
at the time required to be mailed to the Old Lorus Securityholders in connection
with the Old Lorus Securityholders’ Meeting and all amendments or supplements
thereto, if any. Old Lorus, Pinnacle and Investor each will use all
reasonable commercial efforts to obtain and furnish the information required
to
be included in the Information Circular. The information to be provided by
Old
Lorus, Pinnacle and Investor for use in the Information Circular, on both the
date the Information Circular is first mailed to Old Lorus Securityholders
and
on the date the Old Lorus Securityholders’ Meeting is held, will not contain any
misrepresentation, and Old Lorus, Pinnacle and Investor each agree to correct
promptly any such information provided by any of them for use in the Information
Circular which has ceased to meet such standard. In any such event, Old Lorus
will prepare a supplement or amendment to the Information Circular or such
application or other document, as required, and, if required, will cause the
same to be distributed to the Old Lorus Securityholders and/or filed with the
Canadian Securities Regulatory Authorities, stock exchanges and/or other
Governmental Authority after Pinnacle, Investor and its advisors have had a
reasonable opportunity to review and comment on all such documentation and
all
such documentation is in form and content reasonably satisfactory to Pinnacle
and Investor.
2.5
Old
Lorus Board Recommendation and Fairness Opinion
(a)
Old
Lorus
represents and warrants to Investor and Pinnacle that all members or its board
of directors entitled to vote thereon have, upon consultation with its advisors,
has unanimously determined that:
(i)
the
Arrangement is fair, from a financial point of view, to Old Lorus
Securityholders and is otherwise in the best interests of Old Lorus and Old
Lorus Securityholders; and
(ii)
Old
Lorus’ board of directors will unanimously recommend that Old Lorus
Securityholders vote in favour of the Arrangement, which recommendation may
not
be withdrawn, modified or changed in any manner except as set forth
herein.
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(b)
Old
Lorus
represents and warrants to Investor and Pinnacle that its board of directors
has
received a preliminary opinion, subject to the qualifications set out therein,
from Deloitte & Touche LLP, that the Arrangement is fair, from a financial
point of view, to Old Lorus Securityholdersand that such financial advisor
has
advised it that it will provide a written opinion to such effect before the
application for the Interim Order.
2.6
Final
Order
As
promptly as practicable following the approval of the Arrangement by Old Lorus
Securityholders, Old Lorus will apply to the Court, in a manner acceptable
to
Investor, acting reasonably, for the Final Order.
ARTICLE 3
PUBLICITY
PUBLICITY
3.1
Publicity
Each
Party will advise, consult and cooperate with all other Parties prior to
issuing, or permitting any of its directors, officers, employees or agents
to
issue, any news release or other written public statement with respect to this
Agreement, the transactions contemplated hereby or any other matters, from
the
date hereof until the Effective Time. No Party will issue any such news release
or make any such writtenpublic statement prior to such consultation, except
as
may be required by Applicable Laws including, for greater certainty, in order
to
fulfil Old Lorus’ continuous disclosure obligations under Securities Laws or
pursuant to the rules of the TSX or the AMEX and only after using its reasonable
commercial efforts to consult the other Parties taking into account the time
constraints to which it is subject as a result of such law or
obligation.
ARTICLE 4
REPRESENTATION AND WARRANTIES OF OLD LORUS
REPRESENTATION AND WARRANTIES OF OLD LORUS
4.1
Representations
and Warranties of Old Lorus
Except
as
set out under the corresponding section of the Disclosure Letter, which
Disclosure Letter will be deemed a part hereof, Old Lorus hereby represents
and
warrants to Investor and Pinnacle as follows in this Section 4.1 and
acknowledges that Investor and Pinnacle are relying upon those representations
and warranties in connection with entering into this Agreement. Any
disclosure set forth in a section or subsection of the Disclosure Letter
discloses an exception to a representation or warranty made in the
correspondingly numbered or otherwise specified section or subsection of this
Agreement. Any disclosure made under one section or subsection of the
Disclosure Letter will be deemed to be disclosed under one or more other
sections or subsections of the Disclosure Letter only to the extent specific
reference to the relevant section(s) or subsection(s) of the representations
and
warranties or covenants of this Agreement is made.
(a)
Subsidiaries. Each
of the direct and indirect subsidiaries of Old Lorus (each, a
“Subsidiary”) is set out in Section 4.1(a) of the Disclosure
Letter. The Company owns directly (i) all of the issued and outstanding
shares or other equity interests in the capital of GeneSense, (ii) all of the
issued and outstanding shares or other equity interests in the capital of New
Lorus and (iii) 80% of the issued and outstanding voting share capital and
100%
of the issued and outstanding non-voting preference share capital of XxXxxx,
in
each case free and clear of any Liens. All the issued and outstanding
shares in the capital of each Subsidiary are validly issued and are fully paid,
non-assessable and free of pre-emptive and similar rights to subscribe for
or
purchase securities.
(b)
Organization,
Authority. Old Lorus and each Subsidiary is an entity duly
incorporated or otherwise organized, validly existing and in good standing
under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite corporate power and authority to own and use
its
Property and to carry on its business as currently conducted. Neither Old Lorus
nor any Subsidiary is in violation or default of any of the provisions of its
respective certificate or articles of incorporation, by-laws or other
organizational or constating documents. Each of Old Lorus and the
Subsidiaries is
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duly
qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or Property owned or leased by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case
may
be, could not have or reasonably be expected to result in a Material Adverse
Effect and, to the knowledge of Old Lorus, no proceeding has been instituted
in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or qualification.
(c)
Authorization;
Enforcement. Each of Old Lorus and the Subsidiaries has full right,
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise carry out its respective
obligations hereunder. The execution and delivery of this Agreement by
each of Old Lorus and the Subsidiaries and the consummation by each of them
of
the transactions contemplated hereby have been duly authorized by their
respective boards of directors, and, subject to the approval of the Arrangement
Resolution by the Old Lorus Securityholders, no further action is required
by
Old Lorus or any Subsidiary, their boards of directors or their shareholders,
in
connection therewith. This Agreement has been (or upon delivery will have
been) duly executed by each of Old Lorus and the Subsidiaries and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of each of Old Lorus and the Subsidiaries, enforceable
against them in accordance with its terms except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally; (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies; and (iii) insofar as indemnification and contribution provisions
may
be limited by Applicable Law.
(d)
No
Conflicts. The execution, delivery and performance of this Agreement
by each of Old Lorus and the Subsidiaries, the completion of the transactions
contemplated hereby and the fulfillment and compliance by each of Old Lorus
and
the Subsidiaries with any of the terms and provisions hereof will not (i)
conflict with or violate any provision of their respective certificates or
articles of incorporation, by-laws or other organizational or constating
documents, or (ii), subject to the Required Approvals, conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any
of
their respective Property, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any Material Contract, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any Intellectual Property Right or
any
Applicable Laws to which Old Lorus or a Subsidiary is subject, or by which
any
Property of Old Lorus or a Subsidiary is bound or affected; except in the case
of each of clauses (ii) and (iii), such as could not have or reasonably be
expected to result in a Material Adverse Effect.
(e)
Filings,
Consents and Approvals. Old Lorus is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any Governmental Authority or other Person in
connection with the execution, delivery and performance by Old Lorus of
this Agreement, other than (i) filings disclosed in Section 4.1(e) of the
Disclosure Letter, (ii) the obtaining of Old Lorus Securityholder approval
at
the Old Lorus Securityholders’ Meeting in accordance with Applicable Laws, (iii)
the obtaining of the Interim Order and the Final Order, (iv) applications
to the AMEX and the TSX for the delisting of the Old Lorus Shares and the
listing of the New Lorus Shares, (v) any other required filings with one or
more
of the Canadian Securities Regulatory Authorities, (vi) any other required
approvals of any Trading Market, and (vii) any notice to TEMIC if required
(collectively, the “Required Approvals”).
(f)
Capitalization.
The capitalization of Old Lorus is as described in the interim financial
statements for the six month period ended November 30, 2006 filed on SEDAR.
Since May 31, 2006, Old Lorus has not issued any securities other
than pursuant to the Old Lorus Debentures, the exercise of employee stock
options under the Old Lorus Stock Option Plans and pursuant to the conversion
or
exercise of outstanding Old Lorus Share Equivalents. No Person has any
right of first refusal, pre-emptive right, right of participation, or any
similar right to participate in the transactions contemplated by this Agreement.
Except as a result of the Old Lorus Stock Option Plans, the Old Lorus
Debentures and the Old Lorus Warrants, there are no outstanding options,
warrants, script rights to subscribe to, calls or
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commitments
of any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire, any Old Lorus Shares, or contracts,
commitments, understandings or arrangements by which Old Lorus or any Subsidiary
is or may become bound to issue additional Old Lorus Shares or Old Lorus Share
Equivalents. All of the outstanding Old Lorus Shares are validly issued,
fully paid and nonassessable and to the knowledge of Old Lorus, have been issued
in compliance with all Applicable Laws and, to the knowledge of Old Lorus,
none
of such outstanding Old Lorus Shares was issued in violation of any pre-emptive
rights or similar rights to subscribe for or purchase securities. Other
than agreements entered into in connection with the Arrangement, there are
no
shareholders agreements, voting agreements or other similar agreements with
respect to Old Lorus’ authorized capital to which Old Lorus is a party or, to
the knowledge of Old Lorus, between or among any of the Old Lorus Shareholders.
(g)
Ownership
of Shares. To the knowledge of Old Lorus, based solely on a review of
information concerning Old Lorus publicly disclosed on SEDAR as of May 1,
2007:
(i)
save
and
except for the Lock-Up Holders, no Person, whether alone or jointly or in
concert with others, beneficially owns, or exercises control or direction over,
more than 10% of the issued and outstanding Old Lorus Shares; and
(ii)
the
Lock-Up Holders (together with any person acting jointly or in concert with
the
Lock-Up Holders) do not beneficially own, or exercise control or direction
over,
in the aggregate, more than 25% of the issued and outstanding common shares
of
Old Lorus.
(h)
Continuous
Reports; Financial Statements. Old Lorus has filed or submitted all
reports, financial statements, schedules, forms, statements and other documents
required to be filed or submitted by it under the Securities Laws, for the
three
years preceding the date of this Agreement (or such shorter period as Old Lorus
may have been required by the Securities Laws to file or submit such material)
(the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as
the
“Continuous Disclosure Reports”) on a timely basis or has
received a valid extension of such time of filing or submission and has filed
or
submitted any such Continuous Disclosure Reports prior to the expiration of
any
such extension, except where a failure to do so could not have or could not
reasonably be expected to have a Material Adverse Effect. As of their
respective dates, the Continuous Disclosure Reports complied with the material
requirements of the Securities Laws, and none of the Continuous Disclosure
Reports, when filed or submitted, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of
Old Lorus included in the Continuous Disclosure Reports have been prepared
in
accordance with Canadian generally accepted accounting principles applied on
a
consistent basis during the periods involved (“GAAP”), except
as may be otherwise specified in such financial statements or the notes thereto
and except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of Old Lorus and its consolidated subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments.
(i)
No
Undisclosed Liabilities. Except for liabilities and obligations:
(i)
incurred
in the ordinary course of business and consistent with past practice;
(ii)
disclosed
in the financial statements of Old Lorus and forming part of the Continuous
Disclosure Reports; or
(iii)
incurred
pursuant to the terms of this Agreement,
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Old
Lorus
has not incurred any liabilities of any nature, whether accrued, contingent
or
otherwise (or which would be required by generally accepted accounting
principles to be reflected on a balance sheet of Old Lorus). All material
accounts payable and accrued liabilities are shown in the financial statements
included within the Continuous Disclosure Reports, have been disclosed in
writing to Investor.
(j)
Material
Changes. Since the date of the latest audited financial statements
included within the Continuous Disclosure Reports and except as specifically
disclosed in the Continuous Disclosure Reports:
(i)
there
has
been no event, occurrence or development that has had or that could reasonably
be expected to result in a Material Adverse Effect;
(ii)
Old
Lorus
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in Old Lorus’ financial statements pursuant to GAAP or required to be disclosed
in filings made or required to be made pursuant to the Securities
Laws;
(iii)
Old
Lorus
has not altered its method of accounting except as required by
GAAP;
(iv)
Old
Lorus
has not declared or made any dividend or distribution of cash or other Property
to the Old Lorus Shareholders or purchased, redeemed or made any agreements
to
purchase or redeem any of the Old Lorus Shares; and
(v)
Old
Lorus
has not issued any equity securities to any officer, director or Affiliate,
except pursuant to the Old Lorus Stock Option Plans or the Old Lorus Share
Purchase Plan.
Old
Lorus
does not have pending before any of the Canadian Securities Regulatory
Authorities any confidential material change report.
(k)
Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of Old Lorus, threatened or
contemplated (including by any of the Canadian Securities Regulatory
Authorities) against or affecting Old Lorus, any Subsidiary or any of their
respective Property, Intellectual Property Rights, or, to the knowledge of
Old
Lorus, any current officer or director or former officer or director of Old
Lorus before or by any Governmental Authority which (i) adversely affects or
challenges the legality, validity or enforceability of this Agreement or (ii)
could, if there were an unfavourable decision, have or reasonably be expected
to
result in a Material Adverse Effect. Neither Old Lorus nor any Subsidiary,
nor, to the knowledge of Old Lorus, any director or officer thereof, is the
subject of any action involving a claim of violation of or liability under
the
Applicable Laws or a claim of breach of fiduciary duty. No stop order or
other order suspending the trading in securities of Old Lorus is outstanding.
(l)
Labour
Relations. Section 4.1(l) of the Disclosure Letter contains a list of
every benefit plan, program, agreement or arrangement (whether written or
unwritten) maintained, contributed to, or provided by Old Lorus or any
Subsidiary for the benefit of any of its employees or former employees or
independent contractors of Old Lorus or any Subsidiary employed or retained
in
connection with the conduct of its business or their respective dependants
or
beneficiaries (the “Benefit Plans”) including all bonus,
deferred compensation, incentive compensation, share purchase, share option,
stock appreciation, phantom stock, savings, profit sharing, severance or
termination pay, health or other medical, life, disability or other insurance
(whether insured or self-insured), supplementary unemployment benefit, pension,
retirement and supplementary retirement plans, programs, agreements and
arrangements except for any statutory plans to which the Vendor is obliged
to
contribute or comply including the Canada/Québec Pension Plan, or plans
administered pursuant to applicable federal or provincial health, worker’s
compensation and employment insurance legislation. All of the
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Benefit
Plans are fully funded in accordance with their terms and all Applicable Laws
and generally accepted actuarial principles and practices. None of the
Benefit Plans are multi-employer plans. Old Lorus and each Subsidiary is
employing all its employees in material compliance with all applicable taxation,
health, labour and employment laws, rules, regulations, notices, and orders.
Neither Old Lorus nor any Subsidiary is a party to or bound by any
collective bargaining agreement. No labour dispute exists or, to the
knowledge of Old Lorus, is imminent with respect to any of the employees of
Old
Lorus which could reasonably be expected to result in a Material Adverse Effect.
(m)
Compliance.
To the knowledge of Old Lorus, neither Old Lorus nor any
Subsidiary:
(i)
is
in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default
by
Old Lorus or any Subsidiary under), nor has Old Lorus or any Subsidiary received
written notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other material agreement
or
instrument, including the Material Contracts, to which it is a party or by
which
it or any of its Property is bound (whether or not such default or violation
has
been waived);
(ii)
is
in
violation of any order of any Governmental Authority; or
(iii)
is
or has
been in violation of any Applicable Law,
except
in
each case as could not have a Material Adverse Effect.
(n)
Material
Contracts. The Material Contracts, the Intellectual Property Rights
and Old Lorus’s arrangements with certain of its employees constitute all
agreements, contracts, licenses, arrangements, certificates, rights and other
agreements that are material to or necessary for the conduct of Old Lorus’
business as currently conducted or expected to be conducted prior to the
Effective Time.
(o)
Regulatory
Permits. Old Lorus and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate Governmental Authorities
necessary to conduct their respective businesses as described in the Continuous
Disclosure Reports, except where the failure to possess such permits could
not
have or reasonably be expected to result in a Material Adverse Effect
(“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation
or
modification of any Material Permit.
(p)
Title
to Property. Old Lorus and the Subsidiaries do not own real property.
Old Lorus and the Subsidiaries have good and marketable title in all
personal property (tangible or intangible) owned by them that is material to
the
business of Old Lorus and the Subsidiaries, in each case free and clear of
all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by Old Lorus and the Subsidiaries and Liens for the payment of
federal, provincial, state or other taxes, the payment of which is neither
delinquent nor subject to penalties. Any real property (including
facilities) held under lease by Old Lorus and the Subsidiaries is held by them
under valid, subsisting and enforceable leases of which Old Lorus the
Subsidiaries are in compliance, except as would not have a Material Adverse
Effect.
(q)
Intellectual
Property. Old Lorus and the Subsidiaries have title to, or have rights
to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and other similar rights
necessary or material for use (as determined by Old Lorus, acting commercially
reasonably) in connection with their respective businesses as currently
conducted and anticipated to be conducted, as described in the Continuous
Disclosure Reports and except where the failure to do so would not have a
Material Adverse Effect (collectively, the “Intellectual Property
Rights”). Neither Old Lorus nor any Subsidiary has received a
written notice that the Intellectual
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Property
Rights used by Old Lorus or any Subsidiary violates or infringes upon the rights
of any Person. To the knowledge of Old Lorus: (i) all such
Intellectual Property Rights are enforceable; and (ii) there is no existing
infringement by another Person of any of the Intellectual Property Rights.
(r)
Insurance.
Old Lorus and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
are prudent and customary in the businesses in which Old Lorus and the
Subsidiaries are engaged. Neither Old Lorus nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.
(s)
Transactions
With Affiliates and Employees. Except as set out in the Continuous
Disclosure Reports, none of the current officers or directors of Old Lorus,
and,
to the knowledge of Old Lorus, none of the employees of Old Lorus, is a party
to
any transaction with Old Lorus or any Subsidiary (other than for services as
employees, officers or directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
leasing, rental or licensing to or from, or otherwise requiring payments to
or
from any officer, director or such employee or, to the knowledge of Old Lorus,
any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner, other
than:
(i)
for
payment of salary or consulting fees for services rendered;
(ii)
reimbursement
for expenses incurred on behalf of Old Lorus; and
(iii)
for
other
employee benefits, including the Share Purchase Plan and stock option agreements
under the Stock Option Plans.
(t)
Securities
Laws; Internal Accounting Controls. Old Lorus is in material
compliance with all provisions of the Securities Laws which are applicable
to
it. Old Lorus and the Subsidiaries maintain a system of internal
accounting controls as required by MI 52-109. Old Lorus has established
disclosure controls and procedures as required by MI 52-109 for Old Lorus and
designed such disclosure controls and procedures to ensure that material
information relating to Old Lorus, including its Subsidiaries, is made known
to
the certifying officers by others within those entities, particularly during
the
period in which Old Lorus’ most recently filed periodic report under Canadian
Securities Laws is being prepared. Old Lorus’ certifying officers have
evaluated the effectiveness of Old Lorus’ controls and procedures as of the date
prior to the filing date of the most recently filed periodic report under
Canadian Securities Laws (such date, the “Evaluation Date”).
Old Lorus presented in its most recently filed periodic report
under
Canadian Securities Laws the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date to the extent required by MI 52-109.
Since the Evaluation Date, except as disclosed in the Continuous
Disclosure Reports, there have been no significant changes in Old Lorus’
internal disclosure controls and procedures or its internal control over
financial reporting (as such terms are defined in Section 1.1 of MI 52-109)
or,
to Old Lorus’ knowledge, in other factors that could significantly affect Old
Lorus’ internal disclosure controls and procedures or its internal control over
financial reporting.
(u)
Certain
Fees. No brokerage or finder’s fees or commissions are or will be
payable by Old Lorus to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement.
(v)
Listing
and Maintenance Requirements. The Old Lorus Shares are listed on the
TSX and the AMEX, and except as contemplated by the Arrangement, Old Lorus
has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the listing of the Old Lorus Shares on the TSX or the
AMEX nor has Old Lorus received any notification that the TSX or the AMEX is
contemplating terminating such listing. Old Lorus has not, in the 12
months preceding the date of this Agreement, received notice from any Trading
Market on which the Old Lorus Shares are or have been
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listed
or
quoted to the effect that Old Lorus is not in compliance with the listing or
maintenance requirements of such Trading Market, except as would not have a
Material Adverse Effect.
(w)
Disclosure.
The Disclosure Letter to this Agreement and the representations and
warranties made herein are true and correct with respect to the statements
made
therein and do not contain any untrue statement of a material fact or omit
to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
(x)
Solvency.
The Continuous Disclosure Reports set out as of the dates thereof all
outstanding secured and unsecured Indebtedness of Old Lorus or any Subsidiary,
or for which Old Lorus or any Subsidiary has commitments. For the purposes
of this Agreement, “Indebtedness” will mean:
(i)
any
liabilities for borrowed money or amounts owed in excess of $50,000 (other
than
trade accounts payable incurred in the ordinary course of
business);
(ii)
all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected
in
Old Lorus’ balance sheet (or the notes thereto), except obligations in respect
of indemnification, guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business; and
(iii)
the
present value of any lease payments in excess of $50,000 due under leases
required to be capitalized in accordance with GAAP.
Neither
Old Lorus nor any Subsidiary is in default with respect to any Indebtedness,
except as would not have a Material Adverse Effect.
(y)
Tax
Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, Old Lorus and each Subsidiary has duly and timelyfiled, in prescribed
form, all necessary federal, provincial, state and foreign income and franchise
tax and information returns which accurately report income, losses, and other
information as required under Applicable Laws for all periods prior to the
date
hereof and has paid, including instalments and prepayments of taxes, or accrued
all taxes shown as due thereon and all taxes now owing have been paid, and
has
placed an adequate reserve on its books with respect to taxes owing (net of
any
instalments paid) and there are no outstanding agreements or waivers extending
the statutory period of limitations applicable to any federal, provincial or
other tax return for any period, and all payments to any non-resident of Canada
have been made in accordance with all applicable legislation in respect of
withholding tax and there are no assessments or reassessments pursuant to which
there are amounts owing or discussions in respect thereof with any taxing
authority relating to Old Lorus or any Subsidiary, and Old Lorus and each
Subsidiary has withheld from each payment made to any of its officers,
directors, and employees and former officers, directors, and employees the
amount of all taxes (including, without limitation, income tax) and other
deductions required to be withheld therefrom and has paid the same to the proper
tax or other authority within the time required by Applicable Law.
(z)
Accountants.
Old Lorus’ accountants are set out on Section 4.1(z) of the Disclosure
Letter. To the knowledge of Old Lorus, such accountants are independent
accountants as may be required by the CBCA and the Securities Laws.
4.2
Investigation
Any
investigation by Pinnacle, Investor or their respective advisors will not
mitigate, diminish or affect the representations and warranties of Old Lorus
made in or pursuant to this Agreement.
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4.3
No
Other Representations or Warranties
Except
for the representations and warranties contained in this Agreement or in any
other agreement or instrument contemplated hereby or by the Plan of Arrangement,
Old Lorus makes no other express or implied representation or warranty with
respect to any matters not specifically represented herein.
ARTICLE 5
REPRESENTATION AND WARRANTIES OF OLD LORUS
REPRESENTATION AND WARRANTIES OF OLD LORUS
5.1
Representations
and Warranties of New Lorus
New
Lorus
hereby represents and warrants to Investor and Pinnacle as of the date of this
Agreement as follows in this Section 5.1 and acknowledges that Investor and
Pinnacle are relying upon those representations and warranties in connection
with entering into this Agreement.
(a)
Organization,
Authority. New Lorus is an entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization with
full right, corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations hereunder.
(b)
Authorization;
Enforcement. The execution and delivery of this Agreement by New Lorus
and the consummation by it of the transactions contemplated hereby have been
duly authorized by the board of directors of New Lorus, and no further action
is
required by New Lorus or its board of directors or shareholders, in connection
therewith. This Agreement has been (or upon delivery will have been) duly
executed by New Lorus and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of New Lorus enforceable
against it in accordance with its terms except:
(i)
as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally;
(ii)
as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies; and
(iii)
insofar
as indemnification and contribution provisions may be limited by Applicable
Law.
(c)
No
Conflicts. The execution, delivery and performance of this Agreement
by New Lorus, the completion of the transactions contemplated hereby and the
fulfillment and compliance by New Lorus with any of the terms and provisions
hereof will not (i) conflict with or violate any provision of its certificate
or
articles of incorporation, by-laws or other organizational or constating
documents, or (ii), subject to the Required Approvals, conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any
of
its Property, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of,
any agreement, credit facility, debt or other instrument (evidencing a New
Lorus
debt or otherwise) or other understanding to which New Lorus is a party or
by
which any Property of New Lorus is bound or affected, or (iii) subject to the
Required Approvals, conflict with or result in a violation of any Applicable
Laws to which New Lorus is subject, or by which any Property of New Lorus is
bound or affected; except in the case of each of clauses (ii) and (iii), such
as
could not have or reasonably be expected to result in a Material Adverse
Effect.
(d)
Filings,
Consents and Approvals. New Lorus is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any Governmental Authority or other Person in
connection with the execution, delivery and performance by New Lorus of this
Agreement, other than:
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(i)
the
obtaining of the Interim Order and the Final Order;
(ii)
an
application to the TSX and AMEX for the listing of the New Lorus Common Shares
for trading thereon in the time and manner required hereby and
thereby;
(iii)
any
other
required filings with one or more of the Canadian Securities Regulatory
Authorities; and
(iv)
any
other
required approvals of any Trading Market.
(e)
Capitalization.
The capitalization of New Lorus consists of an unlimited number of common
shares. New Lorus has not issued any securities other than one common
share to Old Lorus. No Person has any right of first refusal, pre-emptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement and the Arrangement. There are
no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights
or
obligations convertible into or exercisable or exchangeable for, or giving
any
Person any right to subscribe for or acquire, any New Lorus Common Shares,
or
contracts, commitments, understandings or arrangements by which New Lorus is
or
may become bound to issue additional New Lorus Common Shares. All of the
outstanding New Lorus Common Shares are validly issued, fully paid and
nonassessable, to the knowledge of New Lorus, have been issued in compliance
with all Applicable Laws and, to the knowledge of New Lorus, none of such
outstanding New Lorus Common Shares was issued in violation of any pre-emptive
rights or similar rights to subscribe for or purchase securities. There
are no shareholders agreements, voting agreements or other similar agreements
with respect to New Lorus’ authorized capital to which New Lorus is a party or,
to the knowledge of New Lorus, between or among any of the shareholders of
New
Lorus.
(f)
Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of New Lorus, threatened or
contemplated (including by any of the Canadian Securities Regulatory
Authorities) against or affecting New Lorus or any of its Property or, to the
knowledge of New Lorus, any current officer or director or former officer or
director of New Lorus before or by any Governmental Authority which (i)
adversely affects or challenges the legality, validity or enforceability of
this
Agreement or (ii) could, if there were an unfavourable decision, have or
reasonably be expected to result in a Material Adverse Effect. Neither New
Lorus, nor, to the knowledge of New Lorus, any director or officer thereof,
is
the subject of any action involving a claim of violation of or liability under
the Applicable Laws or a claim of breach of fiduciary duty.
5.2
Investigation
Any
investigation by Pinnacle, Investor or their respective advisors will not
mitigate, diminish or affect the representations and warranties of New Lorus
made in or pursuant to this Agreement.
5.3
No
Other Representations or Warranties
Except
for the representations and warranties contained in this Agreement or in any
other agreement or instrument contemplated hereby or by the Plan of Arrangement,
New Lorus makes no other express or implied representation or warranty with
respect to any matters not specifically represented herein.
ARTICLE 6
REPRESENTATION AND WARRANTIES OF INVESTOR
REPRESENTATION AND WARRANTIES OF INVESTOR
6.1
Representations
and Warranties of Investor
Investor
hereby represents and warrants to Old Lorus, New Lorus, GeneSense and XxXxxx
as
of the date of this Agreement as follows in this Section 6.1 and acknowledges
that Old Lorus, New Lorus, GeneSense and XxXxxx are relying upon those
representations and warranties in connection with entering into this Agreement.
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(a)
Organization,
Authority. Investor is an entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization with
full right, corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations hereunder.
(b)
Authorization;
Enforcement. The execution and delivery of this Agreement by Investor
and the consummation by it of the transactions contemplated hereby have been
duly authorized by the board of directors of Investor, and no further action
is
required by Investor or its board of directors or shareholders, in connection
therewith. This Agreement has been (or upon delivery will have been) duly
executed by Investor and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of Investor enforceable
against it in accordance with its terms except:
(i)
as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally;
(ii)
as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies; and
(iii)
insofar
as indemnification and contribution provisions may be limited by Applicable
Laws.
(c)
No
Conflicts. The execution, delivery and performance of this Agreement
by Investor, the completion of the transactions contemplated hereby and the
fulfillment and compliance by Investor with any of the terms and provisions
hereof will not (i) conflict with or violate any provision of its certificate
or
articles of incorporation, by-laws or other organizational or constating
documents, or (ii), conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, result
in
the creation of any Lien upon any of its Property, or give to others any rights
of termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Investor debt or otherwise) or other understanding
to
which Investor is a party or by which any Property of Investor is bound or
affected, or (iii) conflict with or result in a violation of any Applicable
Laws
to which Investor is subject, or by which any Property of Investor is bound
or
affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Pinnacle Material Adverse
Effect.
(d)
Filings,
Consents and Approvals. Investor is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any Governmental Authority or other Person in
connection with the execution, delivery and performance by Investor of this
Agreement, other than (i) the obtaining of the Interim Order and the Final
Order, and (ii) any other required filings with one or more of the Canadian
Securities Regulatory Authorities.
(e)
Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of Investor, threatened or
contemplated (including by any of the Canadian Securities Regulatory
Authorities) against or affecting Investor or any of its Property or, to the
knowledge of Investor, any current officer or director or former officer or
director of Investor before or by any Governmental Authority which (i) adversely
affects or challenges the legality, validity or enforceability of this Agreement
or (ii) could, if there were an unfavourable decision, have or reasonably be
expected to result in a Pinnacle Material Adverse Effect. Neither
Investor, nor, to the knowledge of Investor, any director or officer thereof,
is
the subject of any action involving a claim of violation of or liability under
the Applicable Laws or a claim of breach of fiduciary duty.
(f)
Funds
Available. Investor has made adequate financial arrangement prior to
the execution of this Agreement to ensure that sufficient funds are available
to
allow Investor to carry out its obligations hereunder.
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6.2
Investigation
Any
investigation by Old Lorus, New Lorus, NuChem, GeneSense or their respective
advisors will not mitigate, diminish or affect the representations and
warranties of Investor made in or pursuant to this Agreement.
6.3
No
Other Representations or Warranties
Except
for the representations and warranties contained in this Agreement or in any
other agreement or instrument contemplated hereby or by the Plan of Arrangement,
Investor makes no other express or implied representation or warranty with
respect to any matters not specifically represented herein.
ARTICLE 7
REPRESENTATION AND WARRANTIES OF PINNACLE
REPRESENTATION AND WARRANTIES OF PINNACLE
7.1
Representations
and Warranties of Pinnacle
Pinnacle
hereby represents and warrants to Old Lorus, New Lorus, GeneSense and XxXxxx
as
of the date of this Agreement as follows in this Section 7.1 and acknowledges
that Old Lorus, New Lorus, GeneSense and XxXxxx are relying upon those
representations and warranties in connection with entering into this Agreement.
(a)
Organization,
Authority. Pinnacle is an entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization with
full right, corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations hereunder.
(b)
Authorization;
Enforcement. The execution and delivery of this Agreement by Pinnacle
and the consummation by it of the transactions contemplated hereby have been
duly authorized by the board of directors of Pinnacle, and no further action
is
required by Pinnacle or its board of directors or shareholders, in connection
therewith. This Agreement has been (or upon delivery will have been) duly
executed by Pinnacle and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of Pinnacle enforceable against
it in accordance with its terms except:
(i)
as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally;
(ii)
as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies; and
(iii)
insofar
as indemnification and contribution provisions may be limited by Applicable
Laws.
(c)
No
Conflicts. The execution, delivery and performance of this Agreement
by Pinnacle, the completion of the transactions contemplated hereby and the
fulfillment and compliance by Pinnacle with any of the terms and provisions
hereof will not (i) conflict with or violate any provision of its certificate
or
articles of incorporation, by-laws or other organizational or constating
documents, or (ii), conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, result
in
the creation of any Lien upon any of its Property, or give to others any rights
of termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Pinnacle debt or otherwise) or other understanding
to
which Pinnacle is a party or by which any Property of Pinnacle is bound or
affected, or (iii) conflict with or result in a violation of any Applicable
Laws
to which Pinnacle is subject, or by which any Property of Pinnacle is bound
or
affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Pinnacle Material Adverse
Effect.
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(d)
Filings,
Consents and Approvals. Pinnacle is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any Governmental Authority or other Person in
connection with the execution, delivery and performance by Pinnacle of this
Agreement, other than (i) the obtaining of the Interim Order and the Final
Order, and (ii) any other required filings with one or more of the Canadian
Securities Regulatory Authorities.
(e)
Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of Pinnacle, threatened or
contemplated (including by any of the Canadian Securities Regulatory
Authorities) against or affecting Pinnacle or any of its Property or, to the
knowledge of Pinnacle, any current officer or director or former officer or
director of Pinnacle before or by any Governmental Authority which (i) adversely
affects or challenges the legality, validity or enforceability of this Agreement
or (ii) could, if there were an unfavourable decision, have or reasonably be
expected to result in a Pinnacle Material Adverse Effect. Neither
Pinnacle, nor, to the knowledge of Pinnacle, any director or officer thereof,
is
the subject of any action involving a claim of violation of or liability under
the Applicable Laws or a claim of breach of fiduciary duty.
(f)
Funds
Available. Pinnacle has made adequate financial arrangement prior to
the execution of this Agreement to ensure that sufficient funds are available
to
allow Pinnacle and the Investor to carry out its obligations
hereunder.
7.2
Investigation
Any
investigation by Old Lorus, New Lorus, NuChem, GeneSense or their respective
advisors will not mitigate, diminish or affect the representations and
warranties of Pinnacle made in or pursuant to this Agreement.
7.3
No
Other Representations or Warranties
Except
for the representations and warranties contained in this Agreement or in any
other agreement or instrument contemplated hereby or by the Plan of Arrangement,
Pinnacle makes no other express or implied representation or warranty with
respect to any matters not specifically represented herein.
ARTICLE 8
COVENANTS OF OLD LORUS
COVENANTS OF OLD LORUS
8.1
Covenants
of Old Lorus
Old
Lorus
covenants and agrees that, except as contemplated in this Agreement or the
Plan
of Arrangement, until the Effective Date or the day upon which this Agreement
is
terminated, whichever is earlier:
(a)
except
to
the extent required to implement the transactions contemplated by this Agreement
and except as previously disclosed in writing to or with the prior written
consent of Investor, it will conduct its business, and will cause XxXxxx and
GeneSense to conduct their respective businesses, in the usual, ordinary and
regular course of business and consistent with past practices;
(b)
except
as
previously disclosed in writing to Investor or as otherwise set out in this
Agreement, it will not, without the prior written consent of Investor, which
will not (except in the case of clause 8.1(b)(v)) be unreasonably withheld
or
delayed, directly or indirectly do or permit to occur any of the
following:
(i)
issue
or
agree to issue any of its shares or any options, warrants, calls, conversion
privileges or rights of any kind to acquire any of its shares, except pursuant
to the Old Lorus Options, Old Lorus Warrants and Old Lorus
Debentures;
(ii)
sell,
pledge, hypothecate, lease, dispose of, encumber any of its assets, which,
in
such case, are individually or in the aggregate material, or agree to do any
of
the foregoing; except
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pursuant
to the purchase and sale agreements contemplated by the Plan of Arrangement
or
in the ordinary course of business consistent with past practice;
(iii)
amend
or
propose to amend the Old Lorus Governing Documents;
(iv)
split,
combine or reclassify the Old Lorus Shares, or declare, set aside or pay any
dividend or other distribution payable in cash, stock, property or otherwise
with respect to the Old Lorus Shares;
(v)
take
any
action that results in, or could reasonably be expected to result in, Old Lorus’
tax pools being reduced;
(vi)
redeem,
purchase or offer to purchase any of its securities unless otherwise required
by
the terms of such securities;
(vii)
reorganize,
amalgamate or merge with any other person, corporation, partnership or other
business organization whatsoever;
(viii)
acquire
or, unless disclosed to Investor, agree to acquire any person, corporation,
partnership, joint venture or other business organization or division or acquire
or agree to acquire any assets, which, in each case, are individually or in
the
aggregate material or out of the ordinary course of business consistent with
past practice;
(ix)
settle
or
compromise any claim brought by any present, former or purported holder of
any
of its securities in connection with the transactions contemplated by this
Agreement or the Plan of Arrangement;
(x)
take
any
action that would interfere with or be inconsistent with the completion of
the
transactions contemplated hereby or that would render, or that reasonably may
be
expected to render, any representation or warranty made by it in this Agreement
untrue in any material respect at any time prior to the Effective Date if then
made; or
(xi)
take
any
action, refrain from taking any action, or permit any action to be taken or
not
taken, inconsistent with this Agreement or which would reasonably be expected
to
significantly impede the consummation of the Arrangement;
(c)
it
will:
(i)
use
its
reasonable commercial efforts (taking into account insurance market conditions
and offerings and industry practices) to cause its current insurance (or
re-insurance) policies not to be cancelled or terminated or any of the coverage
thereunder to lapse, except where such cancellation, termination or lapse would
not individually or in the aggregate have a Material Adverse Effect, unless
simultaneously with such termination, cancellation or lapse, replacement
policies underwritten by insurance and re-insurance companies of nationally
recognized standing providing coverage equal to or greater than the coverage
under the cancelled, terminated or lapsed policies for substantially similar
premiums are in full force and effect;
(ii)
use
its
reasonable commercial efforts to preserve intact its business organization
and
goodwill, to keep available the services of its officers, employees and
consultants as a group and to maintain satisfactory relationships with partners,
suppliers, agents, distributors, customers and others having business
relationships with it;
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(iii)
perform
and comply with all material covenants and conditions contained in all
contracts, leases, grants, agreements, permits, licences orders and documents
governing its assets or to which its assets are subject;
(iv)
obtain,
on or before the Effective Date, a discharge of the Personal Property
Security Act (Ontario) registrations against Old Lorus listed in Schedule
B;
(v)
promptly
notify Investor of any Material Adverse Change, or any change, effect, event,
occurrence or change in a state of facts which could, with the passage of time,
reasonably be expected to become or result in a Material Adverse Change, and
of
any Governmental Authority or third party written complaints, investigations
or
hearings (or communications indicating that the same may be contemplated in
respect of the Arrangement); and
(vi)
satisfy
all Officer Obligations on or prior to the Effective Date, which obligation
may
be satisfied by causing New Lorus to assume such obligations on terms and
conditions satisfactory to Investor, acting reasonably;
(d)
it
will
use its reasonable commercial efforts to satisfy (or cause the satisfaction
of)
the conditions precedent to its obligations hereunder to the extent the same
is
within its control and take, or cause to be taken, all other action and do,
or
cause to be done, all other things necessary, proper or advisable under all
Applicable Laws to complete the Arrangement, including using its reasonable
commercial efforts to:
(i)
obtain
all necessary waivers, consents and approvals required to be obtained by it
from
other parties to contracts;
(ii)
obtain
all necessary consents, approvals and authorizations that are required to be
obtained by it under any Applicable Laws;
(iii)
effect
all necessary registrations and filings and submissions of information requested
by Governmental Authorities required to be effected by it in connection with
the
Arrangement and participate and appear in any proceedings of any Party before
Governmental Authorities in connection with the Arrangement;
(iv)
oppose,
lift or rescind any injunction or restraining order or other order or action
seeking to stop, or otherwise adversely affecting the ability of the Parties
to
consummate, the transactions contemplated hereby or by the Plan of
Arrangement;
(v)
fulfil
all conditions and satisfy all provisions of this Agreement;
(vi)
cooperate
with Pinnacle and Investor in connection with the performance by it of its
obligations hereunder; and
(vii)
conduct
its affairs, and cause the affairs of each of the Subsidiaries to be conducted,
so that all of their respective representations and warranties contained
hereinwill be true and correct in all material respects on and as of the
Effective Date as if made thereon;
(e)
it
will
discuss and consider such pre-arrangement steps or amendments to the Plan of
Arrangement as may be proposed by Investor and implement such pre-arrangement
steps or such amendments that it considers to be in the best interests of the
Old Lorus Securityholders, provided such steps are agreed to in writing by
Investor;
(f)
it
will
make or cooperate as necessary in the making of all necessary filings and
applications under all Applicable Laws required in connection with the
transactions contemplated hereby and take all reasonable action necessary to
be
in compliance with such Applicable Laws;
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(g)
it
will,
in a timely and expeditious manner:
(i)
file,
proceed with and diligently prosecute an application to the Court for the
Interim Order with respect to the Arrangement, provided that, notwithstanding
the foregoing, the Parties agree to consult regarding the terms of, and the
obtaining of, the Interim Order;
(ii)
carry
out
the terms of the Interim Order;
(iii)
prepare,
in consultation with Investor, and file where required by law the Information
Circular in all jurisdictions where the same is required to be filed and mail
the same as ordered by the Interim Order and in accordance with all Applicable
Laws, complying in all material respects with all Applicable Laws on the date
of
mailing thereof and containing full, true and plain disclosure of all material
facts relating to the Arrangement and Old Lorus and not containing any
misrepresentation, as defined under such Applicable Laws, with respect
thereto;
(iv)
prepare,
in consultation with Investor, and file where required by law any mutually
agreed (or otherwise required by Applicable Laws) amendments or supplements
to
the Information Circular with respect to the Old Lorus Securityholders’ Meeting
and mail the same as required by the Interim Order and in accordance with all
Applicable Laws, in all jurisdictions where the same is required;
(v)
solicit
proxies for the approval of the Arrangement and related matters in accordance
with Applicable Laws;
(vi)
convene
the Old Lorus Securityholders’ Meeting as ordered by the Interim
Order;
(vii)
provide
notice to Investor of the Old Lorus Securityholders’ Meeting and allow
Investor’s representatives to attend the Old Lorus Securityholders’ Meeting
unless such attendance is prohibited by the Interim Order;
(viii)
conduct
the Old Lorus Securityholders’ Meeting in accordance with the Interim Order, the
Old Lorus Governing Documents and any instrument governing such meeting, as
applicable, and as otherwise required by Applicable Laws;
(ix)
subject
to the approval of the Arrangement at the Old Lorus Securityholders’ Meeting,
forthwith proceed with and diligently prosecute an application for the Final
Order; and
(x)
carry
out
the terms of the Final Order (to the extent within its power);
(h)
except
for individual proxies and other non-substantive communications and materials
relating to the Old Lorus Securityholders’ Meeting, furnish promptly to Investor
a copy of each notice, report, report of proxies submitted, schedule or other
document or communication delivered, filed or received by Old Lorus in
connection with the Arrangement or the Interim Order, the Old Lorus
Securityholders’ Meeting or any other meeting of Old Lorus Securityholders or
class of security holders which all such holders, as the case may be, are
entitled to attend, any filings under Applicable Laws and any dealings with
regulatory agencies in connection with, or in any way affecting, the
transactions contemplated herein;
(i)
subject
to the terms hereof, in a timely and expeditious manner, provide to Investor
all
information as may be reasonably requested by Investor with respect to Old
Lorus
and its business and properties;
(j)
it
will,
within two Business Days of Old Lorus receiving any written audit inquiry,
assessment, reassessment, confirmation or variation of an assessment, indication
that tax assessment is being considered, request for filing of a waiver or
extension of time or any other notice in writing relating to
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taxes,
interest, penalties, losses or tax pools (an “Assessment”),
deliver to Investor a copy thereof together with a statement setting out, to
the
extent then determinable, an estimate of the obligations, if any, of Old Lorus,
or the appropriate Affiliate, on the assumption that such Assessment is valid
and binding; and
(k)
undertake
and carry out the transactions described in the Plan of
Arrangement.
8.2
Recommendation
of the Old Lorus Board of Directors
The
Information Circular will include the recommendation of the board of directors
of Old Lorus to the Old Lorus Securityholders in respect of the Arrangement
as
set out in Section 2.5. Notwithstanding any other provision of this
Agreement, the board of directors of Old Lorus may change its recommendation
to
the Old Lorus Securityholders in respect of the Arrangement from that set forth
herein, as applicable, if such board concludes, in good faith, after receiving
the advice of outside counsel and financial advisors that is reflected in the
minutes of a meeting of the board, that such action is necessary for such board
to act in a manner consistent with its fiduciary duty or Applicable Laws and,
in
the event that Sections 8.3 or 8.4 and 12.1 are applicable, if Old Lorus
and its board are in compliance with those sections and Old Lorus has paid
any
fee applicable under Article 12. The foregoing will not relieve Old Lorus
from its obligation to proceed to call and hold the Old Lorus Securityholders’
Meeting, solicit proxies for such meeting and hold the vote of Old Lorus
Securityholders in respect of the Arrangement at such meeting.
8.3
Old
Lorus Covenant Regarding Non-Solicitation
(a)
Old
Lorus
will immediately terminate and cause to be terminated all solicitations,
initiations, encouragements, discussions or negotiations with any parties
conducted prior to the date hereof by Old Lorus, or its officers, directors,
employees, legal counsel, financial advisors, experts, representatives agents,
or other persons acting on its behalf, with respect to any Acquisition
Proposal.
(b)
Old
Lorus
will not, directly or indirectly, through any officer, director, employee,
legal
counsel, financial advisor, expert, representative, agent, or other person
acting on its behalf, solicit, initiate, invite or knowingly encourage
(including by way of furnishing confidential information or entering into any
form of agreement, arrangement or understanding) the initiation of or
participate in, any inquiries or proposals regarding an Acquisition Proposal,
provided that nothing contained in this Section 8.3 or other provisions of
this Agreement (including, without limitation, Section 8.1) will prevent
the board of directors of Old Lorus from considering, negotiating, approving
or
recommending to the Old Lorus Securityholders an agreement in respect of an
unsolicited written Acquisition Proposal:
(i)
which
did
not result from a breach of this Section 8.3(b);
(ii)
in
respect of which any required financing has been demonstrated to the
satisfaction of the board of directors of Old Lorus, acting in good faith,
to be
reasonably likely to be obtained;
(iii)
in
respect of which the board of directors of Old Lorus determines (having
consulted outside counsel) that in the exercise of its fiduciary duty it would
be necessary for such board of directors to take such action in order to avoid
breaching its fiduciary duties; and
(iv)
in
respect of which the board of directors of Old Lorus determines in good faith,
after consultation with financial advisors, if consummated in accordance with
its terms, would result in a transaction more favourable financially to its
securityholders than the Arrangement,
(any
such
Acquisition Proposal that satisfies clauses (i) through (iv) above being
referred to herein as a “Superior Proposal”).
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(c)
Old
Lorus
agrees not to release any third party from any confidentiality agreement in
respect of an Acquisition Proposal to which such third party is a party.
Old Lorus further agrees not to release any third party from any
standstill agreement to which such third party is a party, unless such third
party has made a Superior Proposal.
(d)
Old
Lorus
will promptly notify Investor of any current or any future Acquisition Proposal
of which any of Old Lorus’ directors or senior officers become aware, or any
amendments to the foregoing, or any request for non-public information relating
to Old Lorus in connection with an Acquisition Proposal or for access to the
properties, books or records or for a list of the securityholders of Old Lorus
by any person or entity that informs Old Lorus that it is considering making
an
Acquisition Proposal. Such notice will include a copy of all written
communications and a description of the material terms and conditions of any
proposal and provide such details of the proposal, inquiry or contact as
Investor may reasonably request, including without limitation the identity
of
the person and controlling person, if any, making such proposal, inquiry or
contact.
(e)
If
Old
Lorus receives a request for material non-public information from a Person
who
proposes an Acquisition Proposal in respect of Old Lorus, and the board of
directors of Old Lorus determines that such proposal would be a Superior
Proposal pursuant to Section 8.3(b), assuming the satisfactory outcome of a
due diligence condition, then, and only in such case, the board of directors
may, subject to the execution of a confidentiality agreement and provided Old
Lorus sends a copy of any such confidentiality agreement to Investor immediately
upon its execution, provide such person with access to non-public information.
Old Lorus will provide Investor with a list of the information provided to
the
person making the Superior Proposal.
(f)
Old
Lorus
will ensure that its directors and officers and any financial advisors or other
advisors or representatives retained by it are aware of the provisions of this
Section 8.3, and it will be responsible for any breach of this
Section 8.3 by its financial advisors or other advisors or
representatives.
8.4
Notice
of Superior Proposal Determination
Old
Lorus
will not accept, approve or recommend or enter into any agreement (except for
a
confidentiality agreement pursuant to Section 8.3(e)) in respect of an
Acquisition Proposal on the basis that it constitutes a Superior Proposal unless
(i) it has complied with its obligations under Section 8.3(b), (ii) it has
provided Investor with a complete copy of the Acquisition Proposal document
which has been determined to be a Superior Proposal, with such deletions as
are
necessary to protect confidential portions of such Acquisition Proposal
document, provided that material terms or conditions or the identity of the
controlling person, if any, making the Acquisition Proposal may not be deleted,
(iii) four (4) Business Days (the “Notice Period”) will have
elapsed from the later of the date Investor received notice of the determination
to accept, approve or recommend an agreement in respect of such Acquisition
Proposal, and the date Investor received a copy of the Acquisition Proposal
document, and (iv) it concurrently terminates this Agreement and pays to
Investor the non-completion fee provided for in Section 12.1. During the Notice
Period, Old Lorus will provide a reasonable opportunity to Investor to consider,
discuss and offer such adjustments in the terms and conditions of this Agreement
as would enable Old Lorus to proceed with its recommendation to the Old Lorus
Securityholders with respect to the Arrangement; provided however that any
such
adjustment will be at the discretion of Old Lorus and Investor at the time.
The
board of directors of Old Lorus will review in good faith any offer made by
Investor to amend the terms of this Agreement in order to determine, in its
discretion, as part of its exercising its fiduciary duties, whether the proposed
amendments would, upon acceptance, result in such Superior Proposal ceasing
to
be a Superior Proposal. If the board of directors of Old Lorus determines that
the Superior Proposal would cease to be a Superior Proposal, it will so advise
Investor and will accept the offer by Investor to amend the terms of this
Agreement and Old Lorus and Investor agree to take such actions and execute
such
documents as are necessary to give effect to the foregoing. If the board of
directors of Old Lorus continues to believe, in good faith and after
consultation with financial advisors and outside counsel, that such Superior
Proposal remains a Superior Proposal and therefore rejects the amendments
offered by Investor, Old Lorus may, subject to the terms of this Agreement
including payment of the non-completion fee provided for in Section 12.1,
accept, approve, recommend or enter into an agreement, understanding or
arrangement in respect of such Superior Proposal. Each successive material
modification of any Acquisition Proposal or a Superior Proposal will constitute
a new Acquisition Proposal for the purposes of this Section 8.4 and will
require a four (4) Business Day Notice Period from the
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date
such
amendment is communicated to Investor. Information provided hereunder will
constitute confidential information under the Confidentiality
Agreement.
8.5
Access
to Information
Subject
to the Confidentiality Agreementand Applicable Laws, upon reasonable notice,
Old
Lorus will afford the officers, employees, counsel, accountants and other
authorized representatives and advisors of Pinnacle and Investor access, during
normal business hours from the date hereof and until the earlier of the
Effective Date or the termination of this Agreement, to its properties, books,
contracts and records as well as to its management personnel, and, during such
period, Old Lorus will furnish promptly to Pinnacle and Investor (without
duplication) all information concerning its business, properties and personnel
as Pinnacle or Investor may reasonably request.
ARTICLE 9
COVENANTS OF INVESTOR
COVENANTS OF INVESTOR
9.1
Covenants
of Investor
Investor
covenants in favour of Old Lorus, NuChem, GeneSense and New Lorus and agrees
that, except as contemplated in this Agreement or the Plan of Arrangement,
until
the Effective Date or the day upon which this Agreement is terminated, whichever
is earlier:
(a)
it
will:
(i)
not
take
any action, refrain from taking any action, or permit any action to be taken
or
not taken that would interfere with or be inconsistent with the completion
of
the transactions contemplated hereby or that would render, or that reasonably
may be expected to render, any representation or warranty made by it in this
Agreement untrue in any material respect at any time prior to the Effective
Date
if then made; and
(ii)
promptly
notify Old Lorus of receipt by Investor of any Governmental Authority or third
party written complaints, investigations or hearings (or communications
indicating that the same may be contemplated) in respect of the
Arrangement;
(b)
it
will
use all reasonable commercial efforts to satisfy (or cause the satisfaction
of)
the conditions precedent to its obligations hereunder to the extent the same
is
within its control and take, or cause to be taken, all other action and do,
or
cause to be done, all other things necessary, proper or advisable under all
Applicable Laws to complete the Arrangement, including using its reasonable
commercial efforts to:
(i)
obtain
all necessary waivers, consents and approvals required to be obtained by it
from
other parties to contracts;
(ii)
obtain
all necessary consents, approvals and authorizations that are required to be
obtained by it under any Applicable Laws;
(iii)
effect
all necessary registrations and filings and submissions of information requested
by Governmental Authorities required to be effected by it in connection with
the
Arrangement and participate and appear in any proceedings of any Party before
Governmental Authorities in connection with the Arrangement;
(iv)
oppose,
lift or rescind any injunction or restraining order or other order or action
seeking to stop, or otherwise adversely affecting the ability of the Parties
to
consummate, the transactions contemplated hereby or by the Plan of
Arrangement;
(v)
fulfil
all conditions and satisfy all provisions of this Agreement;
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(vi)
cooperate
with Old Lorus in connection with the performance by it of its obligations
hereunder; and
(vii)
conduct
its affairs so that all of its representations and warranties contained herein
will be true and correct in all material respects on and as of the Effective
Date as if made thereon;
(c)
it
will
discuss and consider such pre-arrangement steps or amendments to the Plan of
Arrangement as may be proposed by Old Lorus and implement such pre-arrangement
steps or such amendments that it considers to be in its best interests, provided
such steps are agreed to in writing by Old Lorus;
(d)
it
will
make or cooperate as necessary in the making of all necessary filings and
applications under all Applicable Laws required in connection with the
transactions contemplated hereby and take all reasonable action necessary to
be
in compliance with such laws; and
(e)
it
will,
subject to the terms hereof, in a timely and expeditious manner, provide to
Old
Lorus all information as may be reasonably requested by Old Lorus or as required
by the Interim Order or Applicable Laws with respect to Investor and its
business and properties.
ARTICLE 10
COVENANTS OF PINNACLE
COVENANTS OF PINNACLE
10.1
Covenants
of Pinnacle
Pinnacle
covenants in favour of Old Lorus, NuChem, GeneSense and New Lorus and agrees
that, except as contemplated in this Agreement or the Plan of Arrangement,
until
the Effective Date or the day upon which this Agreement is terminated, whichever
is earlier:
(a)
it
will:
(i)
not
take
any action, refrain from taking any action, or permit any action to be taken
or
not taken that would interfere with or be inconsistent with the completion
of
the transactions contemplated hereby or that would render, or that reasonably
may be expected to render, any representation or warranty made by it in this
Agreement untrue in any material respect at any time prior to the Effective
Date
if then made; and
(ii)
promptly
notify Old Lorus of receipt by Pinnacle of any Governmental Authority or third
party written complaints, investigations or hearings (or communications
indicating that the same may be contemplated) in respect of the
Arrangement;
(b)
it
will
use all reasonable commercial efforts to satisfy (or cause the satisfaction
of)
the conditions precedent to its obligations hereunder to the extent the same
is
within its control and take, or cause to be taken, all other action and do,
or
cause to be done, all other things necessary, proper or advisable under all
Applicable Laws to complete the Arrangement, including using its reasonable
commercial efforts to:
(i)
fulfil
all conditions and satisfy all provisions of this Agreement;
(ii)
cooperate
with Old Lorus in connection with the performance by it of its obligations
hereunder; and
(iii)
conduct
its affairs so that all of its representations and warranties contained herein
will be true and correct in all material respects on and as of the Effective
Date as if made thereon; and
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(c)
it
will,
subject to the terms hereof, in a timely and expeditious manner, provide to
Old
Lorus all information as may be reasonably requested by Old Lorus or as required
by the Interim Order or Applicable Laws with respect to Pinnacle and its
business and properties.
ARTICLE 11
CONDITIONS PRECEDENT
CONDITIONS PRECEDENT
11.1
Mutual
Conditions Precedent
The
respective obligations of the Parties hereto to consummate the transactions
contemplated hereby, and in particular the Arrangement, are subject to the
satisfaction, on or before the Effective Date or such other time as is specified
below, of the following conditions, any of which may be waived by the mutual
consent of such Parties without prejudice to their right to rely on any other
of
such conditions:
(a)
the
Interim Order will have been granted in form and substance satisfactory to
each
of Old Lorus and Investor, acting reasonably and will not have been set aside
or
modified in a manner unacceptable to such parties, acting reasonably, on appeal
or otherwise;
(b)
on
or
before June 30, 2007, the Arrangement Resolution will have been passed by the
Old Lorus Securityholders in form and substance satisfactory to each of Old
Lorus and Investor, acting reasonably, duly approving the Arrangement in
accordance with the Interim Order and the requirements of applicable Securities
Laws, as applicable;
(c)
on
or
before July 15, 2007, the Final Order will have been granted in form and
substance satisfactory to each of Old Lorus and Investor each acting
reasonably;
(d)
each
of
the Lock-Up Holders will have (i) voted all Old Lorus Shares held by, or under
the control or direction of, them in favour of the Arrangement, and (ii) agreed,
subject to certain terms and conditions, to sell to Investor at the Effective
Time all of the Old Lorus Voting Shares (as defined in the Plan of Arrangement)
held by each Lock-Up Holder pursuant to written documentation (which remains
in
full force and effect) in form and substance satisfactory to each of Old Lorus
and Investor, each acting reasonably, and the Investor, acting reasonably,
will
be satisfied that no condition exists that has resulted in, or could result
in,
any of the Lock-Up Holders failing to sell all of its Old Lorus Voting Shares
to
the Investor pursuant to the Arrangement;
(e)
the
Articles of Arrangement, together with the Final Order, to be filed with the
Director in accordance with the Arrangement and Section 192(6) of the CBCA,
will be in form and substance satisfactory to each of Old Lorus and Investor,
each acting reasonably;
(f)
the
TSX
will have accepted notice of the Arrangement and the transactions contemplated
thereby and will have approved the listing of the New Lorus Shares, subject
only
to the conditions that may be imposed by the TSX;
(g)
the
AMEX
will have accepted notice of the Arrangement and the transactions contemplated
and will have approved the listing of the New Lorus Shares, subject only to
the
conditions that may be imposed by the AMEX;
(h)
subject
to Section 11.4(c), the Arrangement will have become effective on or before
the
Outside Date;
(i)
there
will be no action taken under any Applicable Law that:
(i)
makes
illegal or otherwise directly or indirectly restrains, enjoins or prohibits
the
Arrangement or any other transactions contemplated herein;
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31
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(ii)
results
in a judgment or assessment of material damages directly or indirectly relating
to the transactions contemplated herein; or
(iii)
has
had
or, if the Arrangement was consummated, would reasonably be expected to result
in, a Material Adverse Effect on Old Lorus, NuChem, GeneSense, New Lorus,
Pinnacle or Investor;
(j)
the
Pinnacle Share Purchase Agreement contemplated by the Plan of Arrangement will
have been executed on terms satisfactory to New Lorus and Investor, acting
reasonably, in accordance with this Agreement;
(k)
the
Escrow Agreement will have been executed on terms satisfactory to the Investor
and New Lorus, acting reasonably;
(l)
each
of
the Asset Transfer Agreements and the Subsidiary Share Transfer Agreements
will
have been executed and delivered by each of the parties thereto and each of
the
transactions contemplated by such agreements will have been completed in
accordance with the terms thereof;
(m)
the
Indemnification Agreement will have been executed on terms satisfactory to
Investor, New Lorus and Old Lorus, each acting reasonably, in accordance with
this Agreement;
(n)
no
material action or proceeding will be pending or threatened by any Person or
Governmental Authority to enjoin or prohibit the Arrangement from being
completed, or result in a judgment in material damages relating to the
transaction as contemplated herein;
(o)
other
than the Lock-Up Holders (except to the extent that any Lock-Up Holder has
terminated any agreement contemplated by Section 11.1(d)), no Person, whether
alone or jointly or in concert with others, will, immediately prior to the
Effective Date, beneficially own, or exercise control or direction over, more
than 10% of the then issued and outstanding Old Lorus Shares;
(p)
immediately
prior to the Effective Date, the Lock-Up Holders (together with any person
acting jointly or in concert with the Lock-Up Holders) will not beneficially
own, or exercise control or direction over, in the aggregate, more than 25%
of
the then issued and outstanding common shares of Old Lorus; and
(q)
Pinnacle,
in its reasonable judgment, will be satisfied that, immediately prior to the
Effective Time, Old Lorus shareholders resident in the United States do not
hold, in the aggregate, more than 10% of the outstanding Old Lorus
Shares.
The
foregoing conditions are for the mutual benefit of each of Old Lorus and
Investor and may be asserted by each of Old Lorus and Investor regardless of
the
circumstances and may be waived by each of Old Lorus and Investor in their
sole
discretion, in whole or in part, at any time and from time to time without
prejudice to any other rights which Old Lorus or Investor may
have.
11.2
Conditions
to Obligations of Old Lorus
The
obligations of Old Lorus to consummate the transactions contemplated hereby,
and
in particular the Arrangement, are subject to the satisfaction, on or before
the
Effective Date or such other time as is specified below, of the following
conditions:
(a)
each
of
the acts and undertakings of Pinnacle and Investor to be performed on or before
the Effective Date pursuant to the terms of this Agreement will have been duly
performed by Pinnacle and Investor in accordance with the terms of this
Agreement and the Plan of Arrangement;
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(b)
except
as
affected by the transactions contemplated by this Agreement, the representations
and warranties of Investor contained in Section 6.1 and the representations
and
warranties of Pinnacle contained in Section 7.1 will be true and correct in
all
material respects on the Effective Date with the same force and effect as though
such representations and warranties had been made at and as of such time (except
to the extent that such representations and warranties speak as of a particular
date) except where the failure of such representations and warranties to be
true
and correct would not have a Material Adverse Effect on Pinnacle or Investor,
and both Pinnacle and Investor will have complied in all material respects
with
their respective covenants in this Agreement and Old Lorus will have received
certificates to that effect, dated the Effective Date, from a senior officer
of
each of Pinnacle and Investor, respectively, acting solely on behalf of the
company in question and not in his personal capacity, to the best of his
information and belief having made reasonable inquiry and Old Lorus will have
no
actual knowledge to the contrary;
(c)
there
will not have occurred a Material Adverse Change in respect of Pinnacle or
Investor;
(d)
all
requisite consents, orders, approvals and authorizations, including, without
limitation, regulatory and judicial approvals and orders, required or necessary
for the completion of the Arrangement will have been completed or obtained
on
terms and conditions satisfactory to Old Lorus, acting reasonably, and all
applicable statutory or regulatory waiting periods to the transactions
contemplated under the Arrangement, will have been expired or been terminated,
and no objection or opposition will have been filed, initiated or made by any
regulatory authority during any applicable statutory or regulatory
period;
(e)
holders
of Old Lorus Shares will not have exercised the Dissent Rights or similar
rights, and will not have instituted proceedings to exercise the Dissent Rights
or similar rights in connection with the Arrangement (other than holders of
Old
Lorus Shares representing, in the aggregate, not more than 2.5% of the
outstanding Old Lorus Shares);
(f)
Old
Lorus
will have received a written fairness opinion from Deloitte & Touche LLP
confirming its preliminary opinion that the consideration to be issued pursuant
to the Arrangement is fair, from a financial point of view, to the Old Lorus
Securityholders, which opinion will have been included in the Information
Circular; and
(g)
there
being no change in law (including a proposal by the Minister of Finance of
Canada to amend the Income Tax Act (Canada) or any announcement,
governmental or regulatory initiative, condition, event or development involving
a change or a prospective change) that in the judgment of Old Lorus, acting
reasonably, directly or indirectly, has or may have a Material Adverse Effect
on
or with respect to Old Lorus, GeneSense, XxXxxx or New Lorus, with respect
to
the regulatory regime applicable to their respective businesses and operations,
or with respect to consummating the transactions contemplated by the Plan of
Arrangement.
The
conditions in this Section 11.2 are for the exclusive benefit of Old Lorus
and may be asserted by Old Lorus regardless of the circumstances or may be
waived by Old Lorus in its sole discretion, in whole or in part, at any time
and
from time to time without prejudice to any other rights which Old Lorus may
have.
11.3
Conditions
to Obligations of Pinnacle and Investor
The
obligations of Pinnacle and Investor to consummate the transactions contemplated
hereby, are subject to the satisfaction, on or before the Effective Date or
such
other time as is specified below, of the following conditions:
(a)
each
of
the acts and undertakings of each of Old Lorus, NuChem, GeneSense and New Lorus
to be performed on or before the Effective Date pursuant to the terms of this
Agreement will have been duly performed by each of Old Lorus, NuChem, GeneSense
and New Lorus in accordance with the terms of this Agreement and the Plan of
Arrangement;
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(b)
except
as
affected by the transactions contemplated by this Agreement, the representations
and warranties of Old Lorus contained in Section 4.1 and of New Lorus contained
in Section 5.1 will be true in all material respects on the Effective Date
with
the same force and effect as though such representations and warranties had
been
made at and as of such time (except to the extent such representations and
warranties speak as of a particular date) except where the failure of such
representations and warranties to be true and correct would not have a Material
Adverse Effect on Old Lorus, and Old Lorus will have complied in all material
respects with its covenants in this Agreement and Investor will have received
certificates to that effect, dated the Effective Date, from a senior officer
of
each of Old Lorus, NuChem, GeneSense and New Lorus respectively, acting solely
on behalf of the company in question and not in his personal capacity, to the
best of his information and belief having made reasonable inquiry and Investor
will have no actual knowledge to the contrary provided that, Old Lorus will
have
the ability in such certificate to update the representation and warranty of
Old
Lorus contained in Section 4.1(g) hereof as at the Effective Date;
(c)
there
will not have occurred any Material Adverse Change in respect of Old Lorus
or
any Subsidiary;
(d)
the
directors and officers of Old Lorus identified by Investor will have provided
their resignations, together with mutual releases in favour of Old Lorus and
Investor, effective on the Effective Date, each in a form and substance and
on
such terms as are satisfactory to Investor, acting reasonably;
(e)
Old
Lorus
will not have declared or paid any dividends or made any other distributions
of
any of its securities or granted any further options or warrants or any right
or
privilege capable of becoming an option or agreement in respect of its
securities;
(f)
Investor
will be satisfied that all steps have been taken to ensure that all liabilities
and obligations of Old Lorus will have been paid or otherwise extinguished
or
assumed and Investor will have received such releases or other evidence of
the
satisfaction or assumption of such liabilities, as Investor, in its sole
discretion considers appropriate or necessary;
(g)
all
security registrations against Old Lorus will have been discharged;
and
(h)
there
being no change in law (including a proposal by the Minister of Finance of
Canada to amend the Income Tax Act (Canada) or any announcement,
governmental or regulatory initiative, condition, event or development involving
a change or a prospective change) that in the judgment of Investor or Pinnacle,
acting reasonably, directly or indirectly, has or may have a Material Adverse
Effect on or with respect to Old Lorus, GeneSense or XxXxxx, with respect to
the
regulatory regime applicable to their respective businesses and operations,
or
with respect to consummating the transactions contemplated by the Plan of
Arrangement.
The
conditions described in this Section 11.3 are for the exclusive benefit of
Investor and may be asserted by Investor regardless of the circumstances or
may
be waived by Investor in its sole discretion, in whole or in part, at any time
and from time to time without prejudice to any other rights which Investor
may
have.
11.4
Notice
and Cure Provisions and Effect of Failure to Comply with
Conditions
(a)
Each
of
Old Lorus, NuChem, GeneSense, New Lorus, Pinnacle and Investor will give prompt
notice to the others of the occurrence, or failure to occur, at any time from
the date hereof to the Effective Date of any event or state of facts which
occurrence or failure would, or would be likely to, (i) cause any of the
representations or warranties of any Party contained herein to be untrue or
inaccurate in any material respect, or (ii) result in the failure to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by any Party hereunder provided, however, that no such notification
will affect the representations or warranties of the Parties or the conditions
to the obligations of the Parties hereunder.
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(b)
Subject
to Section 11.4(c), if any of the conditions precedents set forth in
Sections 11.1, 11.2 or 11.3 hereof will not be complied with or waived by
the Party for whose benefit such conditions are provided on or before the date
required for the performance thereof, then the Party for whose benefit the
condition precedent is provided may, in addition to any other remedies they
may
have at law or equity, rescind and terminate this Agreement pursuant to Section
14.1 provided that the Party intending to rely thereon has delivered a written
notice to the other Parties, specifying in reasonable detail all breaches of
covenants, representations and warranties or other matters which the Party
delivering such notice is asserting as the basis for the non-fulfilment of
the
applicable conditions precedent. If any such notice is delivered, provided
that a Party is proceeding diligently to cure such matter and such matter is
capable of being cured (except matters arising out of the failure to make
appropriate disclosure in the Disclosure Letter delivered on the date of
execution of this Agreement) no Party may terminate this Agreement until the
later of the Outside Date and the expiration of a period of 30 days from the
date of such notice. If such notice has been delivered prior to the date of
the
Old Lorus Securityholders’ Meeting, such meeting will be postponed until the
expiry of such period. If such notice has been delivered prior to the making
of
the applications for Final Order or the filing of the Articles of Arrangement,
such applications and such filings will be postponed until the expiry of such
period. More than one such notice may be delivered by a Party.
(c)
If
the
conditions precedent set forth in Section 11.1(o) cannot be satisfied at the
Effective Date, the Effective Date will be reset to the date that is three
Business Days after the first date that such condition precedent can be complied
with, provided that the Effective Date occurs on or prior to July 31, 2007
or such other date as agreed in writing by the Parties.
11.5
Satisfaction
of Conditions
The
conditions set out in this Article 11 are conclusively deemed to have been
satisfied, waived or released when, with the agreement of the Parties, Articles
of Arrangement are filed under the CBCA to give effect to the
Arrangement.
ARTICLE 12
AGREEMENT AS TO NON-COMPLETION FEE
AGREEMENT AS TO NON-COMPLETION FEE
12.1
Lorus
Non-Completion Fee
If
at any
time after the execution of this Agreement and prior to the termination of
this
Agreement pursuant to Article 14:
(a)
the
board
of directors of Old Lorus withdraws, qualifies or changes any of its
recommendations or determinations referred to in Section 2.5(a) in a manner
adverse to Investor or resolves to do so prior to the Effective Date; provided
that if the board of directors of Old Lorus determines in good faith that
Pinnacle or Investor is in material breach of any of its representations,
warranties or covenants hereunder and communicates such determination to the
Old
Lorus Securityholders, such communication will not constitute a withdrawal
or
qualification of the recommendation of the board of directors of Old Lorus
referred to in Section 2.5(a); or
(b)
Old
Lorus
accepts, approves, recommends or enters into any contractual agreement with
any
Person in respect of an Acquisition Proposal prior to the Old Lorus
Securityholders’ Meeting, excluding a confidentiality agreement entered into in
compliance with Section 8.3; or
(c)
except
as
contemplated by Section 8.4 with respect to Investor’s right to respond to any
Superior Proposal, Old Lorus publicly announces its intention to do any of
the
foregoing; or
(d)
the
Old
Lorus Securityholders’ Meeting is cancelled, adjourned or postponed except with
the prior written consent of Pinnacle.
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(each
of
the above being a “Lorus Payment Event”), then Old Lorus will
pay to Investor the amount of $600,000 as a non-completion fee in immediately
available funds to an account designated by Investor within two Business Days
after the occurrence of any one of the Lorus Payment Events.
Notwithstanding anything to the contrary, if a payment has been made under
any of Section 12.1(a), 12.1(b), 12.1(c) or 12.1(d), no further payment will
be
required under any of Section 12.1(a), 12.1(b), 12.1(c) or
12.1(d).
12.2
Pinnacle
Non-Completion Fee
If
at any
time after the execution of this Agreement and prior to the termination of
this
Agreement pursuant to Article 14, except in the event that the board of
directors of Pinnacle or Investor determines in good faith that Old Lorus is
in
material breach of any of its representations, warranties or covenants
hereunder, the board of directors of Pinnacle or Investor withdraws its approval
for the entering into of this Agreement or, resolves to do so prior to the
Effective Date (a “Pinnacle Payment Event”), then Pinnacle and
Investor will be liable to pay to Old Lorus, on a joint and several basis,
the
amount of $600,000 as a non-completion fee in immediately available funds to
an
account designated by Old Lorus within two Business Days after the occurrence
of
any one of the Pinnacle Payment Events.
12.3
Liquidated
Damages
Each
Party acknowledges that the amounts set out in Sections 12.1 and 12.2 represent
liquidated damages which are a genuine pre-estimate of the damages, including
opportunity costs, which Investor or Old Lorus, as applicable, will suffer
or
incur as a result of the event giving rise to such damages and resultant
termination of this Agreement, and are not penalties. Each Party
irrevocably waives any right it may have to raise as a defence that any such
liquidated damages are excessive or punitive.
12.4
Limited
Remedy
For
greater certainty, each of Investor and Old Lorus agrees that the compensation
or damages to be received pursuant to this Article 12 is the sole remedy in
compensation or damages of Investor and Old Lorus in respect of a Lorus Payment
Event or a Pinnacle Payment Event, as applicable, provided however that nothing
contained in this Article 12 or Section 14.1, including the payment of
an amount under this Article 12, will relieve or have the effect of
relieving Pinnacle, Investor or Old Lorus, in any way from liability for damages
incurred or suffered by Pinnacle, Investor or Old Lorus as a result of a breach
of this Agreement by Pinnacle, Investor or Old Lorus, as applicable, acting
in
bad faith with a clear intent and design to prevent the conditions precedent
to
this Agreement’s completion from being satisfied. Nothing herein will preclude a
Party from seeking injunctive relief to restrain any breach or threatened breach
of the covenants or agreements set forth in this Agreement or the
Confidentiality Agreement or otherwise to obtain specific performance of any
of
such act, covenant or agreement.
ARTICLE 13
IDEMNIFICATION
IDEMNIFICATION
13.1
Indemnification
by Old Lorus and New Lorus
Subject
to Section 13.2(b) hereof, each of Old Lorus and New Lorus hereby covenants
and
agrees to indemnify and save harmless Pinnacle, Investor and their respective
directors, officers and employees (collectively, the “Indemnified
Parties”) from and against all liabilities, claims, losses (excluding
loss of profits and indirect or consequential losses), costs (including without
limitation legal fees and disbursements on a solicitor and his own client basis)
fines, penalties, damages and expenses to which any Indemnified Party may
be subject or may suffer or incur, whether under the provisions of any statute
or otherwise, in any way caused by or arising directly or indirectly by reason
or in consequence of:
(i)
any
incorrectness in or breach of any representation or warranty of Old Lorus or
New
Lorus contained in this Agreement or any other certificate or instrument
executed and delivered pursuant to this Agreement;
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(ii)
any
information or statement contained in the Information Circular relating to
Old
Lorus or New Lorus (other than the Pinnacle Information) or the business,
operations, results of operations, assets, capitalization, financial condition,
rights, liabilities or prospects of Old Lorus or New Lorus and whether on a
prospective or pro forma basis (other than the Pinnacle Information), containing
a misrepresentation; or
(iii)
any
breach of any covenant or other obligation of Old Lorus or New Lorus contained
herein.
If
any
matter or thing contemplated by this Section 13.1 (any such matter or thing
being hereinafter referred to as a “Claim”) is asserted against
the Indemnified Party, or if any potential Claim contemplated by this
Section 13.1 will come to the knowledge of the Indemnified Party, the
Indemnified Party will notify Old Lorus and New Lorus as soon as possible of
the
nature of such Claim (provided that any failure to so notify will not affect
Old
Lorus’ or New Lorus’ liabilities under this Section 13.1 except to the
extent that the failure materially prejudices Old Lorus or New Lorus and Old
Lorus and New Lorus will, subject as hereinafter provided, be entitled (but
not
required) at their expense to assume the defence of any suit brought to enforce
such Claim; provided, however, that the defence will be conducted through legal
counsel acceptable to the Indemnified Party, acting reasonably. No admission
of
liability or settlement of any such Claim may be made by Old Lorus, New Lorus
or
any Indemnified Party, without, in each case, the prior written consent of
the
other party, such consent not to be unreasonably withheld. In respect of any
such Claim, the Indemnified Party will have the right to retain separate or
additional counsel to act on its behalf and participate in the defence thereof;
provided that the fees and disbursements of such counsel will be paid by the
Indemnified Party unless Old Lorus or New Lorus does not assume the defence
of
such suit on behalf of the Indemnified Party within three Business Days of
Old
Lorus receiving notice of such Claim; or the named party to any such Claim
(including any added third or interpleaded party) include both the Indemnified
Party, on the one hand, and Old Lorus and New Lorus on the other hand, and
the
Indemnified Party will have been advised by their counsel that representation
of
both parties by the same counsel would be inappropriate due to the actual or
potential differing interests between them (in which case Old Lorus or New
Lorus
will not have the right to assume the defence of such Claim but will be liable
to pay the reasonable fees and expenses of counsel for the Indemnified
Party).
13.2
Limitation
on Indemnification by Old Lorus and New Lorus
(1)
Notwithstanding
the provisions of Section 13.1 and except in the case of fraud:
(a)
neither
Old Lorus nor New Lorus will have any obligation to indemnify an Indemnified
Party for any Claims contemplated by Section 13.1(i) or Section 13.1(ii) in
excess, either individually or in the aggregate, of the purchase price paid
by
Investor to New Lorus for the shares of Old Lorus pursuant to the Pinnacle
Share
Purchase Agreement (and for the purposes of this Section 13.2(1)(a), all Claims
(as determined by a non-appealable court of competent jurisdiction or pursuant
to a binding settlement between the parties) by an Indemnified Party will be
aggregated with all claims and demands by the Purchaser Indemnified Parties
(as
defined in the Pinnacle Share Purchase Agreement) pursuant to section 7.02
of
the Pinnacle Share Purchase Agreement); and
(b)
neither
Old Lorus nor New Lorus will have any obligation to indemnify an Indemnified
Party under Section 13.1 for any Claim contemplated by Section 13.1(i) or
Section 13.1(ii) unless the amount of such Claim, or series of related Claims,
exceeds an amount equal to $20,000, in which case Old Lorus and New Lorus will,
subject to Section 13.2(2), be liable for all such Claims.
(2)
Notwithstanding
any other provision of this Agreement, (i) up to the Effective Time, the
obligations of Old Lorus and New Lorus under Section 13.1 will be joint and
several, and (ii) from and after the Effective Time, Old Lorus will have no
liability whatsoever with respect to any claim for indemnification under Section
13.1 made against New Lorus, whether or not such claim relates to any matter
or
thing arising prior to the Effective Time. New Lorus agrees that it will
not make any claim or take any proceeding against Old Lorus with respect to
any
matter which any Indemnified Party is entitled to indemnification under Section
13.1 which may result in any claim arising against Old Lorus for
contribution or indemnity or other relief.
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13.3
Indemnification
by Pinnacle and Investor
Each
of
Pinnacle and Investor hereby covenants and agrees to indemnify Old Lorus,
GeneSense, XxXxxx and New Lorus and their directors, officers and employees
on a
joint and several basis with respect to from and against all liabilities,
claims, losses (excluding loss of profits and indirect or consequential losses),
costs (including without limitation legal fees and disbursements on a solicitor
and his own client basis) fines, penalties, damages and expenses to which
any Indemnified Party (as defined below) may be subject or may suffer or incur,
whether under the provisions of any statute or otherwise, in any way caused
by
or arising directly or indirectly by reason or in consequence of:
(i)
any
incorrectness in or breach of any representation or warranty of Pinnacle or
Investor contained in this Agreement or any other certificate or instrument
executed and delivered pursuant to this Agreement;
(ii)
any
misrepresentation in the Pinnacle Information; or
(iii)
any
breach of any covenant or other obligation of Pinnacle or Investor contained
herein;
and
the
provisions of subsection 13.1 will apply mutatis mutandis to such indemnity,
with Old Lorus, GeneSense, XxXxxx and New Lorus and their directors, officers
and employees as the “Indemnified Party”.
13.4
Limitation
on Indemnification by Pinnacle and Investor
Notwithstanding
the provisions of Section 11.3 and except in the case of fraud:
(a)
neither
Pinnacle nor Investor will have any obligation to indemnify Old Lorus,
GeneSense, XxXxxx or New Lorus or any of their respective directors, officers
and employees for any Claims contemplated by Section 13.3(i) or Section 13.3(ii)
in excess, either individually or in the aggregate, of the purchase price paid
by Investor to New Lorus for shares of Old Lorus pursuant to the Pinnacle Share
Purchase Agreement (and for the purposes of this Section 13.4(a), all Claims
by
Old Lorus, GeneSense, XxXxxx or New Lorus or any of their respective directors,
officers and employees will be aggregated with all claims and demands by New
Lorus pursuant to section 7.02 of the Pinnacle Share Purchase Agreement);
and
(b)
neither
Pinnacle nor Investor will have any obligation to indemnify Old Lorus,
GeneSense, XxXxxx or New Lorus or any of their respective directors, officers
and employees under Section 13.3 for any Claim contemplated by Section 13.3(i)
or Section 13.3(ii) unless the amount of such Claim, or series of related
Claims, exceeds an amount equal to $20,000, in which case Pinnacle and Investor
will be liable for all such Claims.
13.5
Exclusive
Remedy
From
and
after the completion of the transactions herein contemplated, the rights of
indemnity set forth in this Article 13 are the sole and exclusive remedies
of each party in respect of any inaccuracy or misrepresentation in any
representation or warranty, or breach of covenant or other obligation by another
Party under this Agreement, other than as set out in Article 12.
Accordingly, each of the Parties waive, from and after the Effective Date,
any and all rights, remedies and claims that such Party may have against another
Party, whether at law, under any statute or in equity (including claims for
contribution or other rights of recovery arising under any Environmental Law,
claims for breach of contract, breach of representation and warranty, negligent
representation and all claims for breach of duty), or otherwise, directly or
indirectly, relating to the provisions of this Agreement other than any right,
remedy or claim of such party (i) expressly provided for in Article 12 or
Article 13, (ii) arising with respect to any fraud, and (iii) under or
arising with respect to any agreement (other than this Agreement) to which
such
Party is a party. This Article 13 will remain in full force and
effect in all circumstances and will not be terminated by any breach
(fundamental, negligent or otherwise) by any Party of its representations,
warranties, covenants or other obligations under this Agreement or under any
ancillary document or by any termination or rescission of this Agreement by
any
Party.
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13.6
Survival
All
covenants, representations and warranties of each Party contained in this
Agreement will survive the completion of the Arrangement and will continue
in
full force and effect, subject to the provisions of this
Article 13.
ARTICLE 14
TERMINATION, AMENDMENT AND WAIVER
TERMINATION, AMENDMENT AND WAIVER
14.1
Termination
Subject
to Section 14.2, this Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the Arrangement by the
Old
Lorus Securityholders, by the mutual agreement of Old Lorus and Investor or
by
written notice promptly given to the other Parties based on the
following:
(a)
by
either
Old Lorus or Investor, with respect to termination rights specified in
Section 11.1, 11.2 or 11.3, other than as a result of a breach of this
Agreement by the terminating Party which has not been cured in accordance with
Section 11.4;
(b)
by
Investor upon the occurrence of a Lorus Payment Event as provided in Section
12.1;
(c)
by
Old
Lorus upon the acceptance of a Superior Proposal pursuant to, and in accordance
with, Sections 8.3 and 8.4 but only so long as the Arrangement has not been
approved by the requisite majority of Old Lorus Securityholders; or
(d)
by
Old
Lorus upon the occurrence of a Pinnacle Payment Event as provided in Section
12.2.
This
Agreement will be automatically terminated if the Old Lorus Securityholders
do
not approve the Arrangement at the Old Lorus Securityholders’
Meeting.
14.2
Effect
of Termination
In
the
event of the termination of this Agreement as provided in Section 14.1,
this Agreement will forthwith have no further force or effect and there will
be
no obligation on the part of Old Lorus, NuChem, GeneSense, New Lorus or Investor
hereunder except as set forth in Article 12, which provisions will survive
the termination of this Agreement. Nothing in this Section 14.2 will
relieve any Party from liability for any breach of this
Agreement.
14.3
Amendment
This
Agreement may be amended by mutual agreement between the Parties. This Agreement
may not be amended except by an instrument in writing signed by the appropriate
officers on behalf of each of the Parties.
14.4
Waiver
Old
Lorus, NuChem, GeneSense and New Lorus, on the one hand, and Investor, on the
other hand, may:
(i)
extend
the time for the performance of any of the obligations or other acts of the
other;
(ii)
waive
compliance with any of the agreements of the other or the fulfillment of any
conditions to its own obligations contained herein; or
(iii)
waive
inaccuracies in any of the representations or warranties of the other contained
herein or in any document delivered by the other; provided, however, that any
such extension or waiver will be valid only if set forth in an instrument in
writing signed on behalf of such Party.
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ARTICLE 15
CLOSING
CLOSING
15.1
Closing
Date
The
date
of Closing will be the date selected by Old Lorus and Investor, which date,
subject to Section 11.4(c) will not be later than the date that is fifteen
(15)
days following the receipt of such the Final Order (or such later date as Old
Lorus and Pinnacle may agree), and on such date the Closing will occur in
accordance with Sections 15.2 and 15.3 (the “Closing
Date”).
15.2
Effect
of Closing
On
the
Closing Date, as promptly as practicable after the satisfaction or, to the
extent permitted hereunder, the waiver of the conditions set forth in
Article 11, the Parties will cause the Arrangement to be consummated by the
filing of the Articles of Arrangement and any other necessary documents prepared
in accordance with the provisions of this Agreement and the CBCA with the
Director in accordance with the CBCA, and at the Effective Time on the Effective
Date, as specified in the Plan of Arrangement and the other transactions
contemplated by the Plan of Arrangement will occur.
15.3
Place
of Closing
The
Closing as detailed in Section 15.2 will take place at the offices of
XxXxxxxx in Toronto, Ontario at the Closing Timeon the Closing
Date.
15.4
Other
Closing Matters
In
addition to the other matters required to be delivered under the terms and
conditions of this Agreement, each of Old Lorus, NuChem, GeneSense, New Lorus
and Investor will deliver, at the Closing, such customary certificates,
resolutions and other closing documents as may be required by the other Parties
hereto, acting reasonably.
ARTICLE 16
GENERAL PROVISIONS
GENERAL PROVISIONS
16.1
Notices
Any
notice, request, consent, waiver, direction or other communication required
or
permitted to be given under this Agreement will be in writing and may be given
by delivering same or sending same by facsimile transmission or by delivery
addressed to the Party to which the notice is to be given at its address for
service herein. Any such notice, request, consent, waiver, direction or other
communication will, if delivered, be deemed to have been given and received
on
the day on which it was delivered to the address provided herein (if that day
is
a Business Day, and if it is not, then on the next succeeding Business Day),
and
if sent by facsimile transmission will be deemed to have been given and received
at the time of receipt unless actually received after 4:00 p.m. at the
point of delivery, in which case it will be deemed to have been given and
received on the next Business Day.
(a)
|
|
If
to Pinnacle or
Investor
|
Xxxxx
000
000 Xxxxx Xxxxxx Xxxxxxxxx, XX X0X 0X0 |
Attention:
President
Fax: (000)
000-0000
|
-
40
-
(b)
|
if
to Old Lorus,
NuChem,
GeneSense
or
New Lorus :
|
0
Xxxxxxxx Xxxx
Xxxxxxx,
XX X0X 0X0
Attention: Director
of Finance
Fax: (000)
000-0000
|
16.2
|
Fees
and Expenses
|
(a)
Subject
to Section 16.2(b), each Party will be responsible for its own fees and expenses
in connection with the negotiation of this Agreement and the implementation
of
the Arrangement. Old Lorus will bear all costs associated with the costs
of printing and mailing the Information Circular, transfer agent and depository
costs, audit costs, listing fees and the provision of any fairness
opinion.
(b)
If
the
Arrangement does not close as a result of the occurrence of any of the events
described in Section 12.1 (a“Default”), the defaulting Party
(the “Defaulting Party”) will pay to the other Party the
reasonable third party expenses incurred by the other Party, to a maximum of
$160,000 (the “Reimbursement Amount”). Each Party will be
entitled to receive payment for the expenses described above up to the maximum
of the Reimbursement Amount promptly upon receipt by the Defaulting Party of
invoices evidencing the incurring of such expenses by the other
Party.
16.3
Time
of Essence
Time
will
be of the essence in this Agreement.
16.4
Entire
Agreement
Except
for the various collateral agreements entered into in connection with the
Arrangement, this Agreement constitutes the entire agreement between the Parties
and cancels and supersedes all prior agreements (including the letter agreement
dated April 4, 2006, as amended) and understandings between the Parties with
respect to the subject matter hereof. To the extent that provisions of the
Confidentiality Agreement conflict with provisions of this Agreement, the
provisions of this Agreement will govern.
16.5
Assignment
Except
as
expressly permitted by the terms hereof, neither this Agreement nor any of
the
rights, interests or obligations hereunder will be assigned by any of the
Parties without the prior written consent of the other Parties. Investor may
assign all or any part of its rights to subscribe for any of the securities
to
be acquired to any party provided that if such assignment takes place, Investor
will continue to be liable to the other Parties for any default in performance
by the assignee.
16.6
Binding
Effect
This
Agreement will be binding upon and will enure to the benefit of the parties
hereto and their respective successors and permitted assigns.
16.7
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.
-
41
-
16.8
Severability
If
any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon
such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will 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 transactions contemplated
hereby are fulfilled to the extent possible.
16.9
Counterpart
Execution
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.
[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK]
-
42
-
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.
PINNACLE
INTERNATIONAL LANDS, INC.
|
||||
Per:
|
“Xxxxxxx
Xx Xxxxxx”
|
Per:
|
“Xxxxxx
Xxxxx”
|
|
Name:
|
Xxxxxxx
Xx Xxxxxx
|
Name:
|
Xxxxxx
Xxxxx
|
|
Title:
|
President
|
Title:
|
President
and Chief Executive Officer
|
|
GENESENSE
TECHNOLOGIES INC.
|
XXXXXX
PHARMACEUTICALS INC.
|
|||
Per:
|
“Xxxxxx
Xxxxx”
|
Per:
|
“Xxxxxx
Xxxxx”
|
|
Name:
|
Xxxxxx
Xxxxx
|
Name:
|
Xxxxxx
Xxxxx
|
|
Title:
|
Director
|
Title:
|
Director
|
|
6650309
CANADA INC.
|
6707157
CANADA INC.
|
|||
Per:
|
“Xxxxxx
Xxxxx”
|
Per:
|
“Xxxxxxx
Xx Xxxxxx”
|
|
Name:
|
Xxxxxx
Xxxxx
|
Name:
|
Xxxxxxx
Xx Xxxxxx
|
|
Title:
|
President
and Chief Executive Officer
|
Title:
|
President
|
-
43
-
SCHEDULE
A
PLAN
OF ARRANGEMENT
Final
version
PLAN
OF ARRANGEMENT
made
pursuant to
Section
192 of the Canada Business Corporations Act
ARTICLE 1
DEFINITIONS
DEFINITIONS
1.1
Definitions
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 , 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;
(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 ;
(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 ;
(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;
-
2 -
(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 ;
(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
;
(28)
“New
Lorus Note 2” has the meaning ascribed thereto in Section
;
(29)
“New
Lorus Note 3” has the meaning ascribed thereto in Section
;
(30)
“New
Lorus Replacement Note” has the meaning ascribed thereto in Section
;
(31)
“New
Lorus Options” has the meaning ascribed thereto in Section
;
(32)
“New
Lorus Securities” has the meaning ascribed thereto in Section
;
(33)
“New
Lorus Shares” has the meaning ascribed thereto in Section
;
(34)
“New
Lorus Warrants” has the meaning ascribed thereto in Section
;
(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;
-
3 -
(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 ;
(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;
-
4 -
(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;
-
5 -
(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.
1.2
Headings
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.
1.3
Interpretation
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.
1.4
Extended
Meanings
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”.
1.5
Date
for any Action
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.
1.6
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.
1.7
Deemed
Currency
Unless
otherwise stated, all references in this Plan to sums of money are expressed
in
lawful money of Canada.
-
6 -
ARTICLE 2
PURPOSE AND EFFECT OF THE PLAN
PURPOSE AND EFFECT OF THE PLAN
2.1
Purpose
and Effect of the Plan
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 .
ARTICLE 3
ARRANGEMENT
ARRANGEMENT
3.1
Arrangement
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.”;
-
7 -
(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”);
-
8 -
(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
, 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
-
9 -
Lorus
Voting Share paid by Investor in Section 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
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 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 ;
(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
noteof 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
OUTSTANDING SECURITIES
4.1
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 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 .
4.2
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 . New Lorus will, as soon as practicable
following the
-
10 -
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:
(a)
forward
orcause 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
(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 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 has been lost, stolen or destroyed, upon the making of an
affidavit
-
11 -
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 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.
4.3
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 .
4.4
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 .
4.5
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 .
New Lorus will, as soon as practicable following the Effective Date,
either:
(a)
forward
orcause to be forwarded by first class mail (postage prepaid) (or, in the
case
of postal disruption, by such other means as the Depositary
-
12 -
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,
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.
4.6
Cash
Payments Pursuant to Section (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 .
(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.
-
13
-
ARTICLE 5
RIGHTS OF DISSENT
RIGHTS OF DISSENT
5.1
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 (the “Dissent Rights”) 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 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
, 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 , 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 .
ARTICLE 6
AMENDMENTS
AMENDMENTS
6.1
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
-
14
-
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).
(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
GENERAL
7.1
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.
-
15 -
SCHEDULE
B
PPSA
REGISTRATIONS
Nil.
SCHEDULE
C
ANTISENSE
PATENT ASSETS TRANSFER AGREEMENT
[Antisense
Patent Assets Transfer Agreement]
ASSET
PURCHASE AGREEMENT
BETWEEN
LORUS THERAPEUTICS INC.
AND
GENESENSE TECHNOLOGIES INC.
MADE AS OF
•, 2007
BETWEEN
LORUS THERAPEUTICS INC.
AND
GENESENSE TECHNOLOGIES INC.
MADE AS OF
•, 2007
XxXxxxxx
Xxxxxxxx LLP
TABLE
OF CONTENTS
ARTICLE
1 - INTERPRETATION
|
1
|
|
1.01
|
Definitions
|
1
|
1.02
|
Headings
|
2
|
1.03
|
Extended
Meanings
|
2
|
1.04
|
Statutory
References
|
3
|
1.05
|
Accounting
Principles
|
3
|
1.06
|
Currency
|
3
|
1.07
|
Schedules
|
3
|
ARTICLE
2 - SALE
AND PURCHASE
|
3
|
|
2.01
|
Assets
to be Sold and Purchased
|
3
|
2.02
|
Purchase
Price
|
3
|
2.03
|
Payment
of Purchase Price
|
4
|
2.04
|
Non-Assignable
Contracts and Commitments
|
4
|
ARTICLE
3 - REPRESENTATIONS
AND WARRANTIES
|
4
|
|
3.01
|
Vendor’s
Representations and Warranties
|
4
|
3.02
|
Purchaser’s
Representations and Warranties
|
5
|
3.03
|
Survival
of Representations, Warranties and Covenants
|
6
|
ARTICLE
4 - COVENANTS
|
6
|
|
4.01
|
Covenants
of the Vendor
|
6
|
4.02
|
Covenants
of the Purchaser
|
7
|
4.03
|
Cooperation
|
7
|
4.04
|
Cooperationon
Tax Matters
|
7
|
ARTICLE
5 - CONDITIONS
|
7
|
|
5.01
|
Conditions
for the Benefit of the Purchaser
|
7
|
5.02
|
Conditions
for the Benefit of the Vendor
|
8
|
ARTICLE
6 - CLOSING
ARRANGEMENTS
|
9
|
|
6.01
|
Closing
|
9
|
6.02
|
Examination
of Records and Assets
|
9
|
ARTICLE
7 - GENERAL
|
10
|
|
7.01
|
Further
Assurances
|
10
|
7.02
|
Time
of the Essence
|
10
|
7.03
|
Benefit
of the Agreement
|
10
|
7.04
|
Entire
Agreement
|
10
|
7.05
|
Amendments
and Waivers
|
10
|
7.06
|
Notices
|
10
|
7.07
|
Governing
Law
|
11
|
7.08
|
Counterparts
|
11
|
7.09
|
Facsimiles
|
12
|
THIS
AGREEMENT is made as of •, 2007
BETWEEN
LORUS
THERAPEUTICS INC., a corporation incorporated under the laws of Canada
(the “Purchaser”),
-
and -
GENESENSE
TECHNOLOGIES INC., a corporation incorporated under the laws of Canada
(the “Vendor”).
WHEREAS
the Vendor is a life sciences company focused on research and development
of
effective anticancer development stage therapies with high safety;
AND
WHEREAS the Vendor desires to sell and the Purchaser desires to purchase
certain
of the assets of the Vendor pertaining to that business upon and subject
to the
terms and conditions set out in this Agreement;
NOW
THEREFORE, in consideration of the covenants and agreements herein contained,
the parties agree as follows:
ARTICLE
1 - INTERPRETATION
1.01
Definitions
In
this
Agreement, unless something in the subject matter or context is inconsistent
therewith:
“Agreement”
means this asset purchase agreement, including its recitals and schedules,
as
amended from time to time.
“Applicable
Law” means
(i)
any
applicable domestic or foreign law including any statute, subordinate
legislation or treaty, and
(ii)
any
applicable guideline, directive, rule, standard, requirement, policy, order,
judgment, injunction, award or decree of a Governmental Authority having
the
force of law.
“Business
Day” means a day other than a Saturday, Sunday or statutory holiday
in
the Province of Ontario.
“Charges”
means all liens, charges, encumbrances and/or rights of others.
“Claims”
means all losses, damages, expenses, liabilities (whether accrued, actual,
contingent, latent or otherwise), claims and demands of whatever nature or
kind
including all legal fees and costs on a solicitor and client basis.
“Closing
Date” means •, 2007 or such other date as may be agreed to in writing
between the Vendor and the Purchaser.
“Governmental
Authority” means any domestic or foreign legislative, executive,
judicial or administrative body or person having or purporting to have
jurisdiction in the relevant circumstances.
“New
Lorus Note 1” has the meaning set forth in Section 2.03.
“Permits”
means all permits, consents, waivers, licences, certificates, approvals,
authorizations, registrations, franchises, rights, privileges and exemptions,
or
any item with a similar effect, issued or granted by any person.
“Purchase
Price” has the meaning set out in Section 2.02.
“Purchased
Assets” means the patent assets described in Schedule A.
“Tax
Act” means the IncomeTax Act (Canada).
“Time
of Closing” means ••.m. (Toronto Time) on the Closing
Date.
“Transfer
Taxes” has the meaning set out in Section 4.02(1).
1.02
Headings
The
division of this Agreement into Articles and Sections and the insertion of
a
table of contents and headings are for convenience of reference only and
do not
affect the construction or interpretation of this Agreement. The terms
“hereof”, “hereunder” and similar expressions refer to this Agreement and not to
any particular Article, Section or other portion hereof. Unless something
in the subject matter or context is inconsistent therewith, references herein
to
Articles, Sections and Schedules are to Articles and Sections of and Schedules
to this Agreement.
1.03
Extended
Meanings
In
this
Agreement words importing the singular number only include the plural and
vice versa, words importing any gender include all genders and words
importing persons include individuals, corporations, limited and unlimited
liability companies, general and limited partnerships, associations, trusts,
unincorporated organizations, joint ventures and Governmental Authorities.
The term “including” means “including without limiting the generality of
the foregoing”.
-
2
-
1.04
Statutory
References
In
this
Agreement, unless something in the subject matter or context is inconsistent
therewith or unless otherwise herein provided, a reference to any statute
is to
that statute as now enacted or as the same may from time to time be amended,
re-enacted or replaced and includes any regulations made
thereunder.
1.05
Accounting
Principles
Wherever
in this Agreement reference is made to a calculation to be made or an action
to
be taken in accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting principles
from time to time approved by the Canadian Institute of Chartered Accountants,
or any successor institute, applicable as at the date on which such calculation
or action is made or taken or required to be made or taken.
1.06
Currency
All
references to currency herein are to lawful money of Canada.
1.07
Schedules
The
following are Schedules to this Agreement:
Schedule A |
-
|
Purchased
Assets; and
|
Schedule 2.03 |
-
|
New
Lorus Note 1.
|
ARTICLE
2 - SALE AND PURCHASE
2.01
Assets
to be Sold and Purchased
Upon
and
subject to the terms and conditions hereof, the Vendor will sell, assign,
transfer and convey to the Purchaser and the Purchaser will purchase from
the
Vendor, at the Time of Closing, all of the right, title, benefit and interest
of
the Vendor in and to the Purchased Assets.
2.02
Purchase
Price
The
purchase price payable to the Vendor for the Purchased Assets (such amount
being
hereinafter referred to as the “Purchase Price”) will be $•, which amount the
parties estimate to be the fair market value of the Purchased
Assets.
2.03
Payment
of Purchase Price
The
obligation of the Purchaser to pay the Purchase Price to the Vendor will
be
satisfied in full and evidenced by the issuance and delivery by the Purchaser
to
the Vendor of one non-interest bearing demand promissory note in an aggregate
principal amount equal to the
-
3
-
Purchase
Price (“New Lorus Note 1”) substantially in the form of the
note attached hereto as Schedule 0.00 to be executed by the Purchaser at
the
Time of Closing.
2.04
Non-Assignable
Contracts and Commitments
(1)
The
Vendor will use commercially reasonable efforts (other than the payment of
money
or assumption of obligations) to obtain any third party consents or waivers
necessary to permit the assignment to, and assumption by, the Purchaser of
all
of the contracts and other commitments to be assigned to and assumed by the
Purchaser pursuant to this Agreement.
(2)
Nothing
in this Agreement will constitute an agreement to assign or an attempted
assignment of any contract or other commitment for which any requisite consent
or waiver to the assignment thereof has not been obtained. To the extent
permitted by Applicable Law, if any requisite consent or waiver to the
assignment thereof has not been obtained on or prior to the Time of Closing,
the
applicable contract or other commitment will be held by the Vendor in trust
for
the benefit of the Purchaser and the Purchaser will perform the obligations
of
the Vendor thereunder and be entitled to receive all money becoming due and
payable under and other benefits derived from the contract or other commitment
immediately after receipt by the Vendor.
ARTICLE
3 - REPRESENTATIONS AND
WARRANTIES
3.01
Vendor’s
Representations and Warranties
The
Vendor hereby makes to the Purchaser the following representations and
warranties and acknowledges that the Purchaser is relying upon such
representations and warranties in connection with entering into this Agreement.
(a)
The
Vendor is a corporation duly incorporated, organized and subsisting under
the
laws of Canada with the corporate power to own its assets and to carry on
its
business.
(b)
The
Vendor has the power, authority and right to enter into and deliver this
Agreement and to complete the transactions contemplated to be completed by
the
Vendor hereunder.
(c)
This
Agreement constitutes a valid and legally binding obligation of the Vendor,
enforceable against the Vendor in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization and other laws of general
application limiting the enforcement of creditors’ rights generally and to the
fact that specific performance is an equitable remedy available only in the
discretion of the court.
(d)
Neither
the entering into nor the delivery of this Agreement nor the completion of
the
transactions contemplated hereby by the Vendor will result in the violation
of:
-
4
-
(i)
any
of
the provisions of the constating documents or by-laws of the
Vendor;
(ii)
any
agreement or other instrument to which the Vendor is a party or by which
the
Vendor is bound; or
(iii)
any
Applicable Law.
(e)
The
Purchased Assets are in good standing and have been duly registered or
applications to register the same have been filed in all appropriate offices
to
preserve the rights therein and of the Vendor thereto.
(f)
The
Vendor is registered under Part IX of the Excise Tax Act (Canada) with
registration number 88289 4165 RT0001.
(g)
The
Vendor is not a non-resident person within the meaning of section 116 of
the Tax
Act.
(h)
The
Vendor has duly elected in prescribed form and jointly with the Purchaser
to
have the rules contained in subsection 156(2) of Part IX of the Excise Tax
Act (Canada) apply to the purchase and sale of the Purchased Assets
contemplated hereunder, which election remains valid and in
effect.
3.02
Purchaser’s
Representations and Warranties
The
Purchaser hereby makes to the Vendor the following representations and
warranties and acknowledges that the Vendor is relying upon such representations
and warranties in connection with entering into this Agreement:
(a)
The
Purchaser is a corporation duly incorporated, organized and subsisting under
the
laws of Canada with the corporate power to own its assets and to carry on
its
business.
(b)
The
Purchaser has the power, authority and right to enter into and deliver this
Agreement and to complete the transactions contemplated to be completed by
the
Purchaser hereunder.
(c)
This
Agreement constitutes a valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization and other laws of general
application limiting the enforcement of creditors’ rights generally and to the
fact that specific performance is an equitable remedy available only in the
discretion of the court.
(d)
Neither
the entering into nor the delivery of this Agreement nor the completion of
the
transactions contemplated hereby by the Purchaser will result in a violation
of:
-
5
-
(i)
any
of
the provisions of the constating documents or by-laws of the
Purchaser;
(ii)
any
agreement or other instrument to which the Purchaser is a party or by which
the
Purchaser is bound; or
(iii)
any
Applicable Law.
(e)
The
Purchaser is registered under Part IX of the Excise Tax Act (Canada) with
registration number 83796 5961 RT0001.
(f)
The
Purchaser has duly elected in prescribed form and jointly with the Vendor
to
have the rules contained in subsection 156(2) of Part IX of the Excise Tax
Act (Canada) apply to the purchase and sale of the Purchased Assets
contemplated hereunder, which election remains valid and in
effect.
3.03
Survival
of Representations, Warranties and Covenants
(1)
The
respective representations and warranties of the Vendor and the Purchaser
contained in this Agreement shall survive the completion of the sale and
purchase of the Purchased Assets herein provided for and, notwithstanding
such
completion, will continue in full force and effect for a period of two years
from the Closing Date.
(2)
The
respective covenants of the Vendor and the Purchaser contained in this Agreement
shall survive the completion of the sale and purchase of the Purchased Assets
herein provided for and, notwithstanding such completion, will continue in
full
force and effect for the benefit of the Vendor or the Purchaser, as applicable,
in accordance with the terms thereof.
ARTICLE
4 - COVENANTS
4.01
Covenants
of the Vendor
(1)
The
Vendor, immediately after the Closing Date at the Purchaser’s expense and
written direction, will file all necessary notices with all relevant
Governmental Authorities evidencing the sale of the Purchased Assets to the
Purchaser.
4.02
Covenants
of the Purchaser
(1)
The
Purchaser will be liable for and will pay, or will cause to be paid, all
transfer, value added, ad-valorem, excise, sales, use, consumption, goods
or services, harmonized sales, retail sales, social services, or other similar
taxes or duties (collectively, “Transfer Taxes”) payable under
any Applicable Law on or with respect to the sale and purchase of the Purchased
Assets under this Agreement. The Purchaser will prepare and file any
affidavits or returns required in connection with the foregoing at its own
cost
and expense. To the extent that any Transfer Taxes are required to be paid
by or are imposed
-
6
-
upon
the
Vendor, the Purchaser will reimburse, or will cause to be reimbursed, to
the
Vendor such taxes within five Business Days of payment of such taxes by the
Vendor. All amounts payable by the Purchaser to the Vendor hereunder do
not include Transfer Taxes.
4.03
Cooperation
Each
of
the Purchaser and the Vendor shall use commercially reasonable efforts, at
the
expense of the Purchaser, to provide such information and assistance as is
reasonably necessary to assist the Purchaser in obtaining all necessary
consents, approvals, conveyances, assurances, assignments or any other
documentation necessary or reasonably required by the Purchaser to transfer
all
of the Vendor’s right, title and interest in and to the Purchased Assets to the
Purchaser, subject to all existing Charges.
4.04
Cooperation
on Tax Matters
Each
of
the Vendor and the Purchaser will, to the extent reasonably within such party’s
control, taking into account such party’s access to books and records, furnish
or cause to be furnished to each other, at the expense of the Purchaser,
as
promptly as practicable, such information and assistance, and provide additional
information and explanations of any materials provided, relating to the
Purchased Assets as is reasonably necessary for the filing of any tax returns,
for the preparation of any audit, and for the prosecution or defence of any
Claim, suit or proceeding relating to any adjustment or proposed adjustment
with
respect to taxes.
ARTICLE
5 - CONDITIONS
5.01
Conditions
for the Benefit of the Purchaser
(1)
The
sale
by the Vendor and the purchase by the Purchaser of the Purchased Assets is
subject to the following conditions, which are for the exclusive benefit
of the
Purchaser and which are to be performed or complied with at or prior to the
Time
of Closing:
(a)
the
representations and warranties of the Vendor set forth in Section 3.01 will
be
true and correct at the Time of Closing with the same force and effect as
if
made at and as of such time;
(b)
the
Vendor will have performed or complied with all of the terms, covenants and
conditions of this Agreement to be performed or complied with by the Vendor
at
or prior to the Time of Closing;
(c)
the
Purchaser will be furnished with such certificates or other instruments
(including instruments of conveyance with respect to the Purchased Assets)
of
the Vendor or of officers of the Vendor as the Purchaser or the Purchaser’s
counsel may reasonably think necessary in order to establish that the terms,
covenants and conditions contained in this Agreement to have been performed
or
complied with by the Vendor at or prior to the Time of Closing have been
performed or
-
7
-
complied
with and that the representations and warranties of the Vendor herein given
are
true and correct at the Time of Closing;
(d)
there
will have been obtained from all appropriate Governmental Authorities such
approvals or consents as are required to permit the change of ownership of
the
Purchased Assets contemplated hereby;
(e)
no
action
or proceeding in Canada will be pending or threatened by any person, or
Governmental Authority to enjoin, restrict or prohibit the sale and purchase
of
the Purchased Assets contemplated hereby; and
(f)
all
necessary steps and proceedings will have been taken to permit the Purchased
Assets to be duly and regularly transferred to and registered in the name
of the
Purchaser.
(2)
In
case
any term or covenant of the Vendor or condition to be performed or complied
with
for the benefit of the Purchaser at or prior to the Time of Closing has not
been
performed or complied with at or prior to the Time of Closing, the Purchaser,
without limiting any other right that the Purchaser has, may at its sole
option
either:
(a)
rescind
this Agreement by notice to the Vendor, and in such event the Purchaser will
be
released from all obligations hereunder; or
(b)
waive
compliance with any such term, covenant or condition in whole or in part
on such
terms as may be agreed upon without prejudice to any of its rights of rescission
in the event of non-performance of any other term, covenant or condition
in
whole or in part;
and,
if
the Purchaser rescinds this Agreement pursuant to Section 5.01(2)(a), the
Vendor
will also be released from all obligations hereunder unless the term, covenant
or condition for which the Purchaser has rescinded this Agreement was one
that
the Vendor had covenanted to ensure had been performed or complied with,
in
which event the Vendor will be liable to the Purchaser for any Claims incurred
by the Purchaser directly or indirectly as a result of such
breach.
5.02
Conditions
for the Benefit of the Vendor
(1)
The
sale
by the Vendor and the purchase by the Purchaser of the Purchased Assets is
subject to the following conditions, which are for the exclusive benefit
of the
Vendor and which are to be performed or complied with at or prior to the
Time of
Closing:
(a)
the
representations and warranties of the Purchaser set forth in Section 3.02
will
be true and correct at the Time of Closing with the same force and effect
as if
made at and as of such time;
-
8
-
(b)
the
Purchaser will have performed or complied with all of the terms, covenants
and
conditions of this Agreement to be performed or complied with by the Purchaser
at or prior to the Time of Closing;
(c)
the
Vendor will be furnished with such certificates or other instruments of the
Purchaser or of officers of the Purchaser as the Vendor or the Vendor’s counsel
may reasonably think necessary in order to establish that the terms, covenants
and conditions contained in this Agreement to have been performed or complied
with by the Purchaser at or prior to the Time of Closing have been performed
or
complied with and that the representations and warranties of the Purchaser
herein given are true and correct at the Time of Closing; and
(d)
the
Purchaser will have delivered to the Vendor the New Lorus Note 1.
(2)
In
case
any term or covenant of the Purchaser or condition to be performed or complied
with for the benefit of the Vendor at or prior to the Time of Closing has
not
been performed or complied with at or prior to the Time of Closing, the Vendor,
without limiting any other right that the Vendor has, may at its sole option
either:
(a)
rescind
this Agreement by notice to the Purchaser, and in such event the Vendor will
be
released from all obligations hereunder; or
(b)
waive
compliance with any such term, covenant or condition in whole or in part
on such
terms as may be agreed upon without prejudice to any of its rights of rescission
in the event of non-performance of any other term, covenant or condition
in
whole or in part;
and,
if
the Vendor rescinds this Agreement pursuant to Section 5.02(2)(a), the Purchaser
will also be released from all obligations hereunder unless the term, covenant
or condition for which the Vendor has rescinded this Agreement was one that
the
Purchaser had covenanted to ensure had been performed or complied with, in
which
event the Purchaser will be liable to the Vendor for any Claims incurred
by the
Vendor directly or indirectly as a result of such breach.
ARTICLE
6 - CLOSING ARRANGEMENTS
6.01
Closing
The
sale
and purchase of the Purchased Assets will be completed at the Time of Closing
at
the offices of XxXxxxxx Xxxxxxxx XXX, Xxxxx 0000, Xxxxxxx Xxxxxxxx Bank
Tower, Toronto -Dominion Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx X0X 0X0.
6.02
Examination
of Records and Assets
The
Purchaser will preserve any documents provided to it by the Vendor prior
to the
Closing Date for a period of five years from the Closing Date, or for such
other
period as is required by any Applicable Law, and will permit the Vendor and
its
authorized representatives
-
9
-
ARTICLE
7 - GENERAL
7.01
Further
Assurances
Each
of
the Vendor and the Purchaser will from time to time execute and deliver all
such
further documents and instruments and do all acts and things as the other
party
may reasonably require to effectively carry out or better evidence or perfect
the full intent and meaning of this Agreement.
7.02
Time
of the Essence
Time
is
of the essence of this Agreement.
7.03
Benefit
of the Agreement
This
Agreement will enure to the benefit of and be binding upon the respective
heirs,
executors, administrators, other legal representatives, successors and permitted
assigns of the parties hereto.
7.04
Entire
Agreement
Except
for the various collateral agreements entered into in connection with the
Arrangement, this Agreement constitutes the entire agreement between the
parties
hereto with respect to the subject matter hereof and cancels and supersedes
any
prior understandings and agreements between the parties hereto with respect
thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the parties other than as expressly set forth in this Agreement.
7.05
Amendments
and Waivers
No
amendment to this Agreement will be valid or binding unless set forth in
writing
and duly executed by both of the parties hereto. No waiver of any breach
of any provision of this Agreement will be effective or binding unless made
in
writing and signed by the party purporting to give the same and, unless
otherwise provided, will be limited to the specific breach
waived.
7.06
Notices
Any
demand, notice or other communication to be given in connection with this
Agreement must be given in writing and will be given by personal delivery,
by
registered mail, by facsimile or by electronic means of communication addressed
to the recipient as follows:
-
10
-
To
the
Vendor:
0 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.:
0 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.:
000-000-0000
Email:
Email:
xxxxxxxxx@xxxxxxxxxx.xxx
Attention:
Director
of Finance
To
the
Purchaser:
0 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.:
0 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.:
000-000-0000
Email:
Email:
xxxxxxxxx@xxxxxxxxxx.xxx
Attention:
Director
of Finance
or
to
such other street address, individual or electronic communication number
or
address as may be designated by notice given by either party to the other.
Any demand, notice or other communication given by personal delivery will
be conclusively deemed to have been given on the day of actual delivery thereof
and, if given by registered mail, on the fourth Business Day following the
deposit thereof in the mail and, if given by facsimile or electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal
business hours next occur if not given during such hours on any day. If
the party giving any demand, notice or other communication knows or ought
reasonably to know of any difficulties with the postal system that might
affect
the delivery of mail, any such demand, notice or other communication may
not be
mailed but must be given by personal delivery, by facsimile or by electronic
communication.
7.07
Governing
Law
This
Agreement is governed by and will be construed in accordance with the laws
of
the Province of Ontario and the laws of Canada applicable
therein.
7.08
Counterparts
This
Agreement may be executed in any number of counterparts, each of which will
be
deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument.
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11
-
7.09
|
Facsimiles
|
Delivery
of an executed signature page to this Agreement by any party by electronic
transmission will be as effective as delivery of a manually executed copy
of
this Agreement by such party.
[Remainder
of page left intentionally blank.]
-
12
-
IN
WITNESS WHEREOF the parties have executed this Agreement.
GENESENSE
TECHNOLOGIES INC.
|
||||
Per:
|
||||
Per:
|
||||
Per:
|
||||
Per:
|
||||
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13
-
SCHEDULE
A
Purchased
Assets
All
of
the Vendor’s right, title and interest in and to the following
assets:
•
the
AntiSense patent assets listed in Exhibit A attached hereto; and
•
the
exclusive license agreement dated June 20, 1997 among The University of
Manitoba, The Manitoba Cancer Treatment and Research Foundation, Xx. Xxx X.
Xxxxxx, Xx. Xxxxxx Xxxxx and GeneSense Technologies Inc.
SCHEDULE
2.03
Form
of New Lorus Note 1
PROMISSORY
NOTE
FOR
VALUE
RECEIVED, the undersigned hereby promises to pay the sum of $• in lawful money
of Canada, without interest, to or to the order of GeneSense Technologies Inc.
on demand.
All
payments hereunder will be made without days of grace, presentment, protest,
notice of dishonour or any other notice whatsoever, all of which are hereby
expressly waived by the maker and each endorser hereof.
The
principal amount hereof may at any time be repaid in full without notice or
bonus.
This
Promissory Note will be governed by and construed in accordance with the laws
of
the Province of Ontario and the federal laws of Canada applicable
therein.
DATED
as
of •, 2007.
|
||
Per:
|
||
Name:
|
||
Title:
|
SCHEDULE
D
VIRULIZIN
AND SMALL MOLECULE PATENT ASSETS TRANSFER AGREEMENT
[Virulizin
and Small Molecule Patent Assets Transfer Agreement]
ASSET
PURCHASE AGREEMENT
BETWEEN
GENESENSE TECHNOLOGIES INC.
AND
4325231 CANADA INC.
MADE AS OF
•, 2007
BETWEEN
GENESENSE TECHNOLOGIES INC.
AND
4325231 CANADA INC.
MADE AS OF
•, 2007
XxXxxxxx
Xxxxxxxx LLP
TABLE
OF CONTENTS
ARTICLE
1 - INTERPRETATION
|
1
|
|
1.01
|
Definitions
|
1
|
1.02
|
Headings
|
2
|
1.03
|
Extended
Meanings
|
2
|
1.04
|
Statutory
References
|
3
|
1.05
|
Accounting
Principles
|
3
|
1.06
|
Currency
|
3
|
1.07
|
Schedules
|
3
|
ARTICLE
2 - SALE
AND PURCHASE
|
3
|
|
2.01
|
Assets
to be Sold and Purchased
|
3
|
2.02
|
Purchase
Price
|
3
|
2.03
|
Payment
of Purchase Price
|
3
|
ARTICLE
3 - REPRESENTATIONS
AND WARRANTIES
|
4
|
|
3.01
|
Vendor’s
Representations and Warranties
|
4
|
3.02
|
Purchaser’s
Representations and Warranties
|
5
|
3.03
|
Survival
of Representations, Warranties and Covenants
|
5
|
ARTICLE
4 - COVENANTS
|
6
|
|
4.01
|
Covenants
of the Vendor
|
6
|
4.02
|
Covenants
of the Purchaser
|
6
|
4.03
|
Section
85 (1) Election
|
6
|
4.04
|
Cooperation
|
6
|
4.05
|
Cooperationon
Tax Matters
|
7
|
ARTICLE
5 - CONDITIONS
|
7
|
|
5.01
|
Conditions
for the Benefit of the Purchaser
|
7
|
5.02
|
Conditions
for the Benefit of the Vendor
|
8
|
ARTICLE
6 - CLOSING
ARRANGEMENTS
|
9
|
|
6.01
|
Closing
|
9
|
6.02
|
Examination
of Records and Assets
|
9
|
ARTICLE
7 - GENERAL
|
9
|
|
7.01
|
Further
Assurances
|
9
|
7.02
|
Time
of the Essence
|
10
|
7.03
|
Benefit
of the Agreement
|
10
|
7.04
|
Entire
Agreement
|
10
|
7.05
|
Amendments
and Waivers
|
10
|
7.06
|
Notices
|
10
|
7.07
|
Governing
Law
|
11
|
7.08
|
Counterparts
|
12
|
7.09
|
Facsimiles
|
12
|
ASSET
PURCHASE AGREEMENT
THIS
AGREEMENT is made as of •, 2007
BETWEEN
GENESENSE
TECHNOLOGIES INC., a corporation incorporated under the laws of Canada
(the “Purchaser”),
-
and -
4325231
CANADA INC., a corporation incorporated under the laws of Canada (the
“Vendor”).
WHEREAS
the Vendor is a life sciences company focused on the research and development
of
effective anticancer development stage therapies with high safety;
AND
WHEREAS the Vendor desires to sell and the Purchaser desires to purchase
certain
of the assets of the Vendor pertaining to that business upon and subject
to the
terms and conditions set out in this Agreement;
NOW
THEREFORE, in consideration of the covenants and agreements herein contained,
the parties agree as follows:
ARTICLE
1 - INTERPRETATION
1.01
Definitions
In
this
Agreement, unless something in the subject matter or context is inconsistent
therewith:
“Agreement”
means this asset purchase agreement, including its recitals and schedules,
as
amended from time to time.
“Applicable
Law” means
(i)
any
applicable domestic or foreign law including any statute, subordinate
legislation or treaty, and
(ii)
any
applicable guideline, directive, rule, standard, requirement, policy, order,
judgment, injunction, award or decree of a Governmental Authority having
the
force of law.
“Business
Day” means a day other than a Saturday, Sunday or statutory holiday
in
the Province of Ontario.
“Charges”
means all liens, charges, encumbrances and/or rights of others.
“Claims”
means all losses, damages, expenses, liabilities (whether accrued, actual,
contingent, latent or otherwise), claims and demands of whatever nature or
kind
including all legal fees and costs on a solicitor and client basis.
“Closing
Date” means •, 2007 or such other date as may be agreed to in writing
between the Vendor and the Purchaser.
“Governmental
Authority” means any domestic or foreign legislative, executive,
judicial or administrative body or person having or purporting to have
jurisdiction in the relevant circumstances.
“Permits”
means all permits, consents, waivers, licences, certificates, approvals,
authorizations, registrations, franchises, rights, privileges and exemptions,
or
any item with a similar effect, issued or granted by any person.
“Purchase
Price” has the meaning set out in Section 2.02.
“Purchased
Assets” means the patent assets described in Schedule A.
“Tax
Act” means the IncomeTax Act (Canada).
“Time
of Closing” means • •.m. (Toronto Time) on the Closing
Date.
“Transfer
Taxes” has the meaning set out in Section 4.02(1).
1.02
Headings
The
division of this Agreement into Articles and Sections and the insertion of
a
table of contents and headings are for convenience of reference only and
do not
affect the construction or interpretation of this Agreement. The terms
“hereof”, “hereunder” and similar expressions refer to this Agreement and not to
any particular Article, Section or other portion hereof. Unless something
in the subject matter or context is inconsistent therewith, references herein
to
Articles, Sections and Schedules are to Articles and Sections of and Schedules
to this Agreement.
1.03
Extended
Meanings
In
this
Agreement words importing the singular number only include the plural and
vice versa, words importing any gender include all genders and words
importing persons include individuals, corporations, limited and unlimited
liability companies, general and limited partnerships, associations, trusts,
unincorporated organizations, joint ventures and Governmental Authorities.
The term “including” means “including without limiting the generality of
the foregoing”.
-
2 -
1.04
Statutory
References
In
this
Agreement, unless something in the subject matter or context is inconsistent
therewith or unless otherwise herein provided, a reference to any statute
is to
that statute as now enacted or as the same may from time to time be amended,
re-enacted or replaced and includes any regulations made
thereunder.
1.05
Accounting
Principles
Wherever
in this Agreement reference is made to a calculation to be made or an action
to
be taken in accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting principles
from time to time approved by the Canadian Institute of Chartered Accountants,
or any successor institute, applicable as at the date on which such calculation
or action is made or taken or required to be made or taken.
1.06
Currency
All
references to currency herein are to lawful money of Canada.
1.07
Schedules
The
following is a Schedule to this Agreement:
Schedule
A - Purchased Assets.
ARTICLE
2 - SALE AND PURCHASE
2.01
Assets
to be Sold and Purchased
Upon
and
subject to the terms and conditions hereof, the Vendor will sell, assign,
transfer and convey to the Purchaser and the Purchaser will purchase from
the
Vendor, at the Time of Closing, all of the right, title, benefit and interest
of
the Vendor in and to the Purchased Assets.
2.02
Purchase
Price
The
purchase price payable to the Vendor for the Purchased Assets (such amount
being
hereinafter referred to as the “Purchase Price”) will be
$•, which amount the parties estimate to be the fair market
value of the Purchased Assets.
2.03
Payment
of Purchase Price
The
obligation of the Purchaser to pay the Purchase Price to the Vendor will
be
satisfied in full and evidenced by the issuance and delivery by the Purchaser
of
one (1) common share in the capital of the Purchaser to the Vendor at the
Time
of Closing.
-
3 -
ARTICLE
3 - REPRESENTATIONS AND
WARRANTIES
3.01
Vendor’s
Representations and Warranties
The
Vendor hereby makes to the Purchaser the following representations and
warranties and acknowledges that the Purchaser is relying upon such
representations and warranties in connection with entering into this Agreement.
(a)
The
Vendor is a corporation duly incorporated, organized and subsisting under
the
laws of Canada with the corporate power to own its assets and to carry on
its
business.
(b)
The
Vendor has the power, authority and right to enter into and deliver this
Agreement and to complete the transactions contemplated to be completed by
the
Vendor hereunder.
(c)
This
Agreement constitutes a valid and legally binding obligation of the Vendor,
enforceable against the Vendor in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization and other laws of general
application limiting the enforcement of creditors’ rights generally and to the
fact that specific performance is an equitable remedy available only in the
discretion of the court.
(d)
Neither
the entering into nor the delivery of this Agreement nor the completion of
the
transactions contemplated hereby by the Vendor will result in the violation
of:
(i)
any
of
the provisions of the constating documents or by-laws of the
Vendor;
(ii)
any
agreement or other instrument to which the Vendor is a party or by which
the
Vendor is bound; or
(iii)
any
Applicable Law.
(e)
The
Vendor is registered under Part IX of the Excise Tax Act (Canada) with
registration number 13175 3915 RT0001.
(f)
The
Vendor is not a non-resident person within the meaning of section 116 of
the Tax
Act.
(g)
The
Vendor has duly elected in prescribed form and jointly with the Purchaser
to
have the rules contained in subsection 156(2) of Part IX of the Excise Tax
Act (Canada) apply to the purchase and sale of the Purchased Assets
contemplated hereunder, which election remains valid and in effect.
-
4 -
3.02
Purchaser’s
Representations and Warranties
The
Purchaser hereby makes to the Vendor the following representations and
warranties and acknowledges that the Vendor is relying upon such representations
and warranties in connection with entering into this Agreement:
(a)
The
Purchaser is a corporation duly incorporated, organized and subsisting under
the
laws of Canada with the corporate power to own its assets and to carry on
its
business.
(b)
The
Purchaser has the power, authority and right to enter into and deliver this
Agreement and to complete the transactions contemplated to be completed by
the
Purchaser hereunder.
(c)
This
Agreement constitutes a valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization and other laws of general
application limiting the enforcement of creditors’ rights generally and to the
fact that specific performance is an equitable remedy available only in the
discretion of the court.
(d)
Neither
the entering into nor the delivery of this Agreement nor the completion of
the
transactions contemplated hereby by the Purchaser will result in a violation
of:
(i)
any
of
the provisions of the constating documents or by-laws of the
Purchaser;
(ii)
any
agreement or other instrument to which the Purchaser is a party or by which
the
Purchaser is bound; or
(iii)
any
Applicable Law.
(e)
The
Purchaser is registered under Part IX of the Excise Tax Act (Canada) with
registration number 88289 4165 RT0001.
(f)
The
Purchaser has duly elected in prescribed form and jointly with the Vendor
to
have the rules contained in subsection 156(2) of Part IX of the Excise Tax
Act (Canada) apply to the purchase and sale of the Purchased Assets
contemplated hereunder, which election remains valid and in
effect.
3.03
Survival
of Representations, Warranties and Covenants
(1)
The
respective representations and warranties of the Vendor and the Purchaser
contained in this Agreement shall survive the completion of the sale and
purchase of the Purchased
-
5 -
Assets
herein provided for and, notwithstanding such completion, will continue in
full
force and effect for a period of two years from the Closing Date.
(2)
The
respective covenants of the Vendor and the Purchaser contained in this Agreement
shall survive the completion of the sale and purchase of the Purchased Assets
herein provided for and, notwithstanding such completion, shall continue
in full
force and effect for the benefit of the Vendor or the Purchaser, as applicable,
in accordance with the terms thereof.
ARTICLE
4 - COVENANTS
4.01
Covenants
of the Vendor
(1)
The
Vendor, immediately after the Closing Date at the Purchaser’s expense and
written direction, will file all necessary notices with all relevant
Governmental Authorities evidencing the sale of the Purchased Assets to the
Purchaser.
4.02
Covenants
of the Purchaser
(1)
The
Purchaser will be liable for and will pay, or will cause to be paid, all
transfer, value added, ad-valorem, excise, sales, use, consumption, goods
or services, harmonized sales, retail sales, social services, or other similar
taxes or duties (collectively, “Transfer Taxes”) payable under
any Applicable Law on or with respect to the sale and purchase of the Purchased
Assets under this Agreement. The Purchaser will prepare and file any
affidavits or returns required in connection with the foregoing at its own
cost
and expense. To the extent that any Transfer Taxes are required to be paid
by or are imposed upon the Vendor, the Purchaser will reimburse, or will
cause
to be reimbursed, to the Vendor such taxes within five Business Days of payment
of such taxes by the Vendor. All amounts payable by the Purchaser to the
Vendor hereunder do not include Transfer Taxes.
4.03
Section
85(1) Election
The
Vendor and Purchaser will elect in the prescribed manner and within the
prescribed time, pursuant to the provisions of subsection 85(1) of the Tax
Act,
to effect the transfer of the Purchased Assets at agreed amounts equal to
the
Vendor’s cost amount (as defined in subsection 248(1) of the Tax Act) or $1 in
the event the Vendor’s cost amount for the Purchased Assets is
nil.
4.04
Cooperation
Each
of
the Purchaser and the Vendor shall use commercially reasonable efforts, at
the
expense of the Purchaser, to provide such information and assistance as is
reasonably necessary to assist the Purchaser in obtaining all necessary
consents, approvals, conveyances, assurances, assignments or any other
documentation necessary or reasonably required by the
-
6 -
Purchaser
to transfer all of the Vendor’s right, title and interest in and to the
Purchased Assets to the Purchaser, subject to all existing
Charges.
4.05
Cooperation
on Tax Matters
Each
of
the Vendor and the Purchaser will, to the extent reasonably within such party’s
control, taking into account such party’s access to books and records, furnish
or cause to be furnished to each other, at the expense of the Purchaser,
as
promptly as practicable, such information and assistance, and provide additional
information and explanations of any materials provided, relating to the
Purchased Assets as is reasonably necessary for the filing of any tax returns,
for the preparation of any audit, and for the prosecution or defence of any
Claim, suit or proceeding relating to any adjustment or proposed adjustment
with
respect to taxes.
ARTICLE
5 - CONDITIONS
5.01
Conditions
for the Benefit of the Purchaser
(1)
The
sale
by the Vendor and the purchase by the Purchaser of the Purchased Assets is
subject to the following conditions, which are for the exclusive benefit
of the
Purchaser and which are to be performed or complied with at or prior to the
Time
of Closing:
(a)
the
representations and warranties of the Vendor set forth in Section 3.01 will
be
true and correct at the Time of Closing with the same force and effect as
if
made at and as of such time;
(b)
the
Vendor will have performed or complied with all of the terms, covenants and
conditions of this Agreement to be performed or complied with by the Vendor
at
or prior to the Time of Closing;
(c)
the
Purchaser will be furnished with such certificates or other instruments
(including instruments of conveyance with respect to the Purchased Assets)
of
the Vendor or of officers of the Vendor as the Purchaser or the Purchaser’s
counsel may reasonably think necessary in order to establish that the terms,
covenants and conditions contained in this Agreement to have been performed
or
complied with by the Vendor at or prior to the Time of Closing have been
performed or complied with and that the representations and warranties of
the
Vendor herein given are true and correct at the Time of Closing;
(d)
there
will have been obtained from all appropriate Governmental Authorities such
approvals or consents as are required to permit the change of ownership of
the
Purchased Assets contemplated hereby;
(e)
no
action
or proceeding in Canada will be pending or threatened by any person, or
Governmental Authority to enjoin, restrict or prohibit the sale and purchase
of
the Purchased Assets contemplated hereby; and
-
7 -
(f)
all
necessary steps and proceedings will have been taken to permit the Purchased
Assets to be duly and regularly transferred to and registered in the name
of the
Purchaser.
(2)
In
case
any term or covenant of the Vendor or condition to be performed or complied
with
for the benefit of the Purchaser at or prior to the Time of Closing has not
been
performed or complied with at or prior to the Time of Closing, the Purchaser,
without limiting any other right that the Purchaser has, may at its sole
option
either:
(a)
rescind
this Agreement by notice to the Vendor, and in such event the Purchaser will
be
released from all obligations hereunder; or
(b)
waive
compliance with any such term, covenant or condition in whole or in part
on such
terms as may be agreed upon without prejudice to any of its rights of rescission
in the event of non-performance of any other term, covenant or condition
in
whole or in part;
and,
if
the Purchaser rescinds this Agreement pursuant to Section 5.01(2)(a), the
Vendor
will also be released from all obligations hereunder unless the term, covenant
or condition for which the Purchaser has rescinded this Agreement was one
that
the Vendor had covenanted to ensure had been performed or complied with,
in
which event the Vendor will be liable to the Purchaser for any Claims incurred
by the Purchaser directly or indirectly as a result of such
breach.
5.02
Conditions
for the Benefit of the Vendor
(1)
The
sale
by the Vendor and the purchase by the Purchaser of the Purchased Assets is
subject to the following conditions, which are for the exclusive benefit
of the
Vendor and which are to be performed or complied with at or prior to the
Time of
Closing:
(a)
the
representations and warranties of the Purchaser set forth in Section 3.02
will
be true and correct at the Time of Closing with the same force and effect
as if
made at and as of such time;
(b)
the
Purchaser will have performed or complied with all of the terms, covenants
and
conditions of this Agreement to be performed or complied with by the Purchaser
at or prior to the Time of Closing; and
(c)
the
Vendor will be furnished with such certificates or other instruments of the
Purchaser or of officers of the Purchaser as the Vendor or the Vendor’s counsel
may reasonably think necessary in order to establish that the terms, covenants
and conditions contained in this Agreement to have been performed or complied
with by the Purchaser at or prior to the Time of Closing have been performed
or
complied with and that the representations and warranties of the Purchaser
herein given are true and correct at the Time of Closing.
-
8 -
(2)
In
case
any term or covenant of the Purchaser or condition to be performed or complied
with for the benefit of the Vendor at or prior to the Time of Closing has
not
been performed or complied with at or prior to the Time of Closing, the Vendor,
without limiting any other right that the Vendor has, may at its sole option
either:
(a)
rescind
this Agreement by notice to the Purchaser, and in such event the Vendor will
be
released from all obligations hereunder; or
(b)
waive
compliance with any such term, covenant or condition in whole or in part
on such
terms as may be agreed upon without prejudice to any of its rights of rescission
in the event of non-performance of any other term, covenant or condition
in
whole or in part;
and,
if
the Vendor rescinds this Agreement pursuant to Section 5.02(2)(a), the Purchaser
will also be released from all obligations hereunder unless the term, covenant
or condition for which the Vendor has rescinded this Agreement was one that
the
Purchaser had covenanted to ensure had been performed or complied with, in
which
event the Purchaser will be liable to the Vendor for any Claims incurred
by the
Vendor directly or indirectly as a result of such breach.
ARTICLE
6 - CLOSING ARRANGEMENTS
6.01
Closing
The
sale
and purchase of the Purchased Assets will be completed at the Time of Closing
at
the offices of XxXxxxxx Xxxxxxxx XXX, Xxxxx 0000, Xxxxxxx Xxxxxxxx Bank
Tower, Toronto Xxxxxxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx X0X 0X0.
6.02
Examination
of Records and Assets
The
Purchaser will preserve any documents provided to it by the Vendor prior
to the
Closing Date for a period of five years from the Closing Date, or for such
other
period as is required by any Applicable Law, and will permit the Vendor and
its
authorized representatives reasonable access thereto in connection with the
affairs of the Vendor, but the Purchaser will not be responsible or liable
to
the Vendor for or as a result of any loss or destruction of or damage to
any
such documents.
ARTICLE
7 - GENERAL
7.01
Further
Assurances
Each
of
the Vendor and the Purchaser will from time to time execute and deliver all
such
further documents and instruments and do all acts and things as the other
party
may reasonably require to effectively carry out or better evidence or perfect
the full intent and meaning of this Agreement.
-
9 -
7.02
Time
of the Essence
Time
is
of the essence of this Agreement.
7.03
Benefit
of the Agreement
This
Agreement will enure to the benefit of and be binding upon the respective
heirs,
executors, administrators, other legal representatives, successors and permitted
assigns of the parties hereto.
7.04
Entire
Agreement
Except
for the various collateral agreements entered into in connection with the
Arrangement, this Agreement constitutes the entire agreement between the
parties
hereto with respect to the subject matter hereof and cancels and supersedes
any
prior understandings and agreements between the parties hereto with respect
thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the parties other than as expressly set forth in this Agreement.
7.05
Amendments
and Waivers
No
amendment to this Agreement will be valid or binding unless set forth in
writing
and duly executed by both of the parties hereto. No waiver of any breach
of any provision of this Agreement will be effective or binding unless made
in
writing and signed by the party purporting to give the same and, unless
otherwise provided, will be limited to the specific breach
waived.
7.06
Notices
Any
demand, notice or other communication to be given in connection with this
Agreement must be given in writing and will be given by personal delivery,
by
registered mail, by facsimile or by electronic means of communication addressed
to the recipient as follows:
-
10 -
To
the
Vendor:
0 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.:
0 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.:
000-000-0000
Email:
Email:
xxxxxxxxx@xxxxxxxxxx.xxx
Attention:
Attention:
Director
of Finance
To
the
Purchaser:
0 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.:
0 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.:
000-000-0000
Email:
Email:
xxxxxxxxx@xxxxxxxxxx.xxx
Attention:
Attention:
Director
of Finance
or
to
such other street address, individual or electronic communication number
or
address as may be designated by notice given by either party to the other.
Any demand, notice or other communication given by personal delivery will
be conclusively deemed to have been given on the day of actual delivery thereof
and, if given by registered mail, on the fourth Business Day following the
deposit thereof in the mail and, if given by facsimile or electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal
business hours next occur if not given during such hours on any day. If
the party giving any demand, notice or other communication knows or ought
reasonably to know of any difficulties with the postal system that might
affect
the delivery of mail, any such demand, notice or other communication may
not be
mailed but must be given by personal delivery, by facsimile or by electronic
communication.
7.07
Governing
Law
This
Agreement is governed by and will be construed in accordance with the laws
of
the Province of Ontario and the laws of Canada applicable therein.
-
11 -
7.08
Counterparts
This
Agreement may be executed in any number of counterparts, each of which will
be
deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument.
7.09
Facsimiles
Delivery
of an executed signature page to this Agreement by any party by electronic
transmission will be as effective as delivery of a manually executed copy
of
this Agreement by such party.
[Remainder
of page left intentionally blank.]
-
12 -
IN
WITNESS WHEREOF the parties have executed this Agreement.
GENESENSE
TECHNOLOGIES INC.
|
|||
Per:
|
|||
Per:
|
|||
4325231
CANADA INC.
|
|||
Per:
|
|||
Per:
|
|||
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13 -
SCHEDULE
A
Purchased
Assets
All
of
the Vendor’s right, title and interest in and to the following
assets:
•
the
Virulizin patent assets listed in Exhibit A attached hereto; and
•
the
Small
Molecule patent assets listed in Exhibit B attached hereto.
SCHEDULE
E
TANGIBLE
BUSINESS ASSETS TRANSFER AGREEMENT
[Tangible
Business Assets Transfer Agreement]
ASSET
PURCHASE AGREEMENT
BETWEEN
GENESENSE
TECHNOLOGIES INC.
AND
4325231
CANADA INC.
MADE
AS OF
•,
2007
XxXxxxxx
Xxxxxxxx LLP
TABLE
OF CONTENTS
ARTICLE
1 - INTERPRETATION
|
2
|
|
1.01
|
Definitions
|
2
|
1.02
|
Headings
|
4
|
1.03
|
Extended
Meanings
|
4
|
1.04
|
Statutory
References
|
5
|
1.05
|
Accounting
Principles
|
5
|
1.06
|
Currency
|
5
|
1.07
|
Schedules
|
5
|
ARTICLE
2 - SALE
AND PURCHASE
|
5
|
|
2.01
|
Assets
to be Sold and Purchased
|
5
|
2.02
|
Purchase
Price
|
5
|
2.03
|
Purchase
Price Allocation
|
6
|
2.04
|
Payment
of Purchase Price
|
6
|
2.05
|
Closing
Adjustment
|
6
|
2.06
|
Non-Assignable
Contracts and Commitments
|
6
|
ARTICLE
3 - REPRESENTATIONS
AND WARRANTIES
|
7
|
|
3.01
|
Vendor’s
Representations and Warranties
|
7
|
3.02
|
Purchaser’s
Representations and Warranties
|
8
|
3.03
|
Survival
of Representations, Warranties and Covenants
|
8
|
ARTICLE
4 - COVENANTS
|
9
|
|
4.01
|
Covenants
of the Vendor
|
9
|
4.02
|
Covenants
of the Purchaser
|
9
|
4.03
|
Cooperation
|
9
|
4.04
|
Cooperation
on Tax Matters
|
10
|
ARTICLE
5 - CONDITIONS
|
10
|
|
5.01
|
Conditions
for the Benefit of the Purchaser
|
10
|
5.02
|
Conditions
for the Benefit of the Vendor
|
11
|
ARTICLE
6 - CLOSING
ARRANGEMENTS
|
12
|
|
6.01
|
Closing
|
12
|
6.02
|
Examination
of Records and Assets
|
12
|
ARTICLE
7 - GENERAL
|
12
|
|
7.01
|
Further
Assurances
|
12
|
7.02
|
Time
of the Essence
|
12
|
7.03
|
Benefit
of the Agreement
|
13
|
7.04
|
Entire
Agreement
|
13
|
7.05
|
Amendments
and Waivers
|
13
|
7.06
|
Notices
|
13
|
7.07
|
Governing
Law
|
14
|
7.08
|
Counterparts
|
15
|
7.09
|
Facsimiles
|
15
|
ASSET
PURCHASE AGREEMENT
THIS
AGREEMENT is made as of •, 2007
BETWEEN
GENESENSE
TECHNOLOGIES INC.,
a corporation incorporated under the laws of Canada (the “Purchaser”),
-
and -
4325231
CANADA INC.,
a corporation incorporated under the laws of Canada (the “Vendor”).
WHEREAS
the Vendor is a life sciences company focused on the research and development
of
effective anticancer development stage therapies with high safety;
WHEREAS
the Vendor is undertaking an arrangement of its business by way of plan of
arrangement (the “Plan
of Arrangement”)
under Section 192(3) of the Canada
Business Corporations Act
pursuant to which the Vendor will restructure its business and obtain
non-diluting financing for its biotechnology business (the “Arrangement”);
AND
WHEREAS the Vendor, 6650309 Canada Inc. (“Newco”),
the Purchaser, XxXxxx Pharmaceuticals Inc., Pinnacle International Lands,
Inc.
and 6707157 Canada Inc. entered into an arrangement agreement (the “Arrangement
Agreement”)
dated as of May 1, 2007 in order to effect the Arrangement and implement
the
Plan of Arrangement;
AND
WHEREAS pursuant to the Plan of Arrangement, (i) all of the Vendor’s assets and
certain of its liabilities will be transferred by the Vendor on the Effective
Date to the Purchaser pursuant to (A) the Virulizin and Small Molecule Patent
Assets Transfer Agreement, (B) the Prepaid Expenses and Receivables Transfer
Agreement, and (C) this Agreement, and (ii) the Purchaser will transfer the
Antisense Patent Assets to Newco pursuant to the AntiSense Patent Assets
Transfer Agreement;
AND
WHEREAS the Vendor desires to sell and transfer and the Purchaser desires
to
purchase the Purchased Assets upon and subject to the terms and conditions
set
out in this Agreement;
NOW
THEREFORE, in consideration of the covenants and agreements herein contained,
the parties agree as follows:
ARTICLE
1 - INTERPRETATION
1.01
|
Definitions
|
Capitalized
terms not otherwise defined in this Agreement shall have the meanings given
to
them in the Arrangement Agreement. In this Agreement, unless something in
the
subject matter or context is inconsistent therewith:
“Agreement”
means this asset purchase agreement, including its recitals and schedules,
as
amended from time to time.
“Applicable
Law”
means
(i)
|
any
applicable domestic or foreign law including any statute, subordinate
legislation or treaty, and
|
(ii)
|
any
applicable guideline, directive, rule, standard, requirement, policy,
order, judgment, injunction, award or decree of a Governmental
Authority
having the force of law.
|
“Arrangement”
has
the meaning set forth in the recitals.
“Arrangement
Agreement” has
the meaning set forth in the recitals.
“Books
and Records” means
all books and records relating to the Vendor, other than the Vendor’s minute
books.
“Business
Day”
means a day other than a Saturday, Sunday or statutory holiday in the Province
of Ontario.
“Charges”
means
all liens, charges, encumbrances and/or rights of others.
“Claims”
means all losses, damages, expenses, liabilities (whether accrued, actual,
contingent, latent or otherwise), claims and demands of whatever nature or
kind
including all legal fees and costs on a solicitor and client basis.
“Closing
Balance Sheet” has
the meaning set forth in Section 2.05.
“Closing
Date”
means •, 2007 or such other date as may be agreed to in writing between the
Vendor and the Purchaser.
“Closing
Statement”
has the meaning set forth in Section 2.05.
“Governmental
Authority”
means any domestic or foreign legislative, executive, judicial or administrative
body or person having or purporting to have jurisdiction in the relevant
circumstances.
-
2
-
“Head
Office Lease”
the lease agreement dated July 27, 2001, as amended April 15, 2005, between
565991 Ontario Limited and the Vendor in connection with the premises located
at
0 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx
“Intellectual
Property”
means intellectual property of any nature and kind owned or leased by the
Vendor
including all domestic and foreign trade-marks, business names, trade names,
domain names, trading styles, patents, trade secrets, software, industrial
designs and copyrights, whether registered or unregistered, and all applications
for registration thereof, and inventions, formulae, recipes, product
formulations, processes and processing methods, technology and techniques,
and
know-how, and any confidential information, including any submissions to
a
regulatory authority, clinical trial results, any goodwill associated with
trade-marks, business names, trade names, domain names and the like and the
waiver of any moral rights in any copyright excluding the (i) AntiSense Patent
Assets and (ii) the Virulizin and Small Molecule Patent Assets.
“Newco”
has
the meaning set forth in the recitals.
“Plan
of Arrangement” has
the meaning set forth in the recitals.
“Permits
and Licences”
means all permits, consents, waivers, licences, certificates, approvals,
authorizations, registrations, franchises, rights, privileges and exemptions,
or
any item with a similar effect, issued or granted by any person.
“Purchase
Price”
has the meaning set out in Section 2.02.
“Purchased
Assets”
means the assets described in Schedule A and the Remaining Assets.
“Remaining
Assets”
means any undertaking, property and asset of the Vendor, other
than:
(a)
|
assets
which are being transferred to the Purchaser
under:
|
(i)
|
the
Antisense Patent Assets Transfer
Agreement;
|
(ii)
|
the
Virulizin and Small Molecule Patent Assets Transfer
Agreement;
|
(iii)
|
the
Prepaid Expenses and Receivables Transfer
Agreement;
|
(iv)
|
the
GeneSense Share Purchase Agreement;
and
|
(v)
|
the
XxXxxx Share Purchase Agreement;
|
(b)
|
the
assets described in Schedule A; and
|
(c)
|
any
cash and cash equivalents to remain in Old Lorus as contemplated
in the
Plan of Arrangement.
|
“Remaining
Contracts”
means any contracts of the Vendor other than the Head Office Lease, those
contracts which are being transferred to the Purchaser under the Virulizin
and
Small Molecule Patent Assets Transfer Agreement and the Prepaid Expenses
and
Receivables Transfer Agreement and such other contracts as may be agreed
in
writing between the Purchaser and the Vendor on or prior to the Closing
Date.
“Share”
means a common share in the capital of the Purchaser.
“Statements”
has the meaning set forth in Section 2.05.
-
3
-
“Tax”
and “Taxes”
means, with respect to any entity, all forms of taxation or tax, duties,
charges
(including, for the avoidance of doubt, any specific business tax or sales
tax,
corporate income tax, value added tax, stamp duty), levy, assessment, impost,
surcharge, duty or other charge or withholding of a similar nature or other
governmental charges of any nature imposed by any foreign or local Governmental
Authority (including any penalty, interest, fine, or addition thereto, whether
disputed or not, payable in connection with any failure to pay or any delay
in
paying any of the same) or any other amount imposed on, or in respect of,
any of
the above.
“Tax
Act”
means the Income Tax
Act
(Canada).
“Tax
Returns”
means all returns, reports, declarations, statements, bills, schedules, forms
or
written information of, or in respect of, Taxes that are, or are required
to be,
filed with or supplied to any Taxation Authority.
“Taxation
Authority”
means any government, agency or authority that is entitled to impose Taxes
or to
administer any applicable Tax legislation.
“Time
of Closing”
means • •.m. (Toronto Time) on the Closing Date.
“Transfer
Taxes”
has the meaning set out in Section 4.02(1).
“Unadjusted
Assets”
means the Intellectual Property, customer lists, Books and Records, Permits
and
Licenses, the Head Office Lease and the Remaining Contracts.
1.02
|
Headings
|
The
division of this Agreement into Articles and Sections and the insertion of
a
table of contents and headings are for convenience of reference only and
do not
affect the construction or interpretation of this Agreement. The terms “hereof”,
“hereunder” and similar expressions refer to this Agreement and not to any
particular Article, Section or other portion hereof. Unless something in
the
subject matter or context is inconsistent therewith, references herein to
Articles, Sections and Schedules are to Articles and Sections of and Schedules
to this Agreement.
1.03
|
Extended
Meanings
|
In
this Agreement words importing the singular number only include the plural
and
vice
versa,
words importing any gender include all genders and words importing persons
include individuals, corporations, limited and unlimited liability companies,
general and limited partnerships, associations, trusts, unincorporated
organizations, joint ventures and Governmental Authorities. The term “including”
means “including without limiting the generality of the foregoing”.
-
4
-
1.04
|
Statutory
References
|
In
this Agreement, unless something in the subject matter or context is
inconsistent therewith or unless otherwise herein provided, a reference to
any
statute is to that statute as now enacted or as the same may from time to
time
be amended, re-enacted or replaced and includes any regulations made
thereunder.
1.05
|
Accounting
Principles
|
Wherever
in this Agreement reference is made to a calculation to be made or an action
to
be taken in accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting principles
from time to time approved by the Canadian Institute of Chartered Accountants,
or any successor institute, applicable as at the date on which such calculation
or action is made or taken or required to be made or taken.
1.06
|
Currency
|
All
references to currency herein are to lawful money of Canada.
1.07
|
Schedules
|
The
following are Schedules to this Agreement:
Schedule
A - Purchased Assets; and
Schedule
2.03 - Purchase Price Allocation.
ARTICLE
2 - SALE
AND PURCHASE
2.01
|
Assets
to be Sold and
Purchased
|
Upon
and subject to the terms and conditions hereof, the Vendor will sell, assign,
transfer and convey to the Purchaser and the Purchaser will purchase from
the
Vendor, at the Time of Closing, all of the right, title, benefit and interest
of
the Vendor in and to the Purchased Assets.
2.02
|
Purchase
Price
|
The
purchase price payable to the Vendor for the Purchased Assets (such amount
being
hereinafter referred to as the “Purchase
Price”)
will be:
(a)
|
in
respect of the Purchased Assets, other than the Unadjusted Assets,
$•,
subject to adjustment in accordance with Section 2.05;
and
|
(b)
|
in
respect of each of the Unadjusted Assets, an amount equal to the
Vendor’s
cost thereof,
|
-
5
-
2.03
|
Purchase
Price Allocation
|
The Vendor and the Purchaser agree to allocate the Purchase Price in accordance
with the provisions of Schedule 2.03 and to execute and file all Tax Returns
and
prepare all financial statements, returns and other instruments on the
basis of
this allocation. The Vendor and the Purchaser also agree to timely notify
the
other party in the event of an examination, audit or other proceeding regarding
this allocation.
2.04
|
Payment
of Purchase Price
|
The
obligation of the Purchaser to pay the Purchase Price to the Vendor will
be
satisfied in full and evidenced by the issuance and delivery by the Purchaser
of
one (1) Share to the Vendor at the Time of Closing.
2.05
|
Closing
Adjustment
|
(1) On
or before the date that is 90
days after the Closing Date, the Purchaser will prepare and deliver to the
Vendor an unaudited balance sheet as at the Closing Date (the “Closing
Balance Sheet”)
and a statement of adjustments (the “Closing
Statement”
and, together with the Closing Balance Sheet, the “Statements”)
detailing the particulars of any required adjustments in the calculation
of the
Purchase Price with respect to the Purchased Assets other than the Unadjusted
Assets. If requested by the Vendor, the Purchaser will permit the Vendor
and its
auditors and other representatives to review the working papers and other
documentation used or prepared in connection with the preparation of, or
that
otherwise form the basis of, the Statements.
(2) If
the Closing Statement, as determined by the Purchaser, exceeds, or is less
than,
the Purchase Price, the Purchase Price will be increased or decreased
accordingly.
2.06
|
Non-Assignable
Contracts and
Commitments
|
(1)
|
The
Vendor will use commercially reasonable efforts (other than the
payment of
money or assumption of obligations) to obtain any third party consents
or
waivers necessary to permit the assignment to, and assumption by,
the
Purchaser of all of the contracts and other commitments to be assigned
to
and assumed by the Purchaser pursuant to this
Agreement.
|
(2)
|
Nothing
in this Agreement will constitute an agreement to assign or an
attempted
assignment of any contract or other commitment for which any requisite
consent or waiver to the assignment thereof has not been obtained.
To the
extent permitted by Applicable Law, if any requisite consent or
waiver to
the assignment thereof has not been obtained on or prior to the
Time of
Closing, the applicable contract or other commitment will be held
by the
Vendor in trust for the benefit of the Purchaser and the Purchaser
will
perform the obligations of the Vendor thereunder and be entitled
to
receive all money becoming due and payable under and other benefits
derived from the contract or other commitment immediately after
receipt by
the Vendor.
|
-
6
-
ARTICLE
3 - REPRESENTATIONS
AND WARRANTIES
3.01
|
Vendor’s
Representations and
Warranties
|
The
Vendor hereby makes to the Purchaser the following representations and
warranties and acknowledges that the Purchaser is relying upon such
representations and warranties in connection with entering into this Agreement.
(a)
|
The
Vendor is a corporation duly incorporated, organized and subsisting
under
the laws of Canada with the corporate power to own its assets and
to carry
on its business.
|
(b)
|
The
Vendor has the power, authority and right to enter into and deliver
this
Agreement and to complete the transactions contemplated to be completed
by
the Vendor hereunder.
|
(c)
|
This
Agreement constitutes a valid and legally binding obligation of
the
Vendor, enforceable against the Vendor in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization and
other
laws of general application limiting the enforcement of creditors’ rights
generally and to the fact that specific performance is an equitable
remedy
available only in the discretion of the
court.
|
(d)
|
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Vendor will result
in the
violation of:
|
(i)
|
any
of the provisions of the constating documents or by-laws of the
Vendor;
|
(ii)
|
any
agreement or other instrument to which the Vendor is a party or
by which
the Vendor is bound; or
|
(iii)
|
any
Applicable Law.
|
(e)
|
The
Vendor is registered under Part IX of the Excise
Tax Act (Canada)
with registration number 13175 3915
RT0001.
|
(f)
|
The
Vendor is not a non-resident person within the meaning of section
116 of
the Tax Act.
|
(g)
|
The
Vendor has duly elected in prescribed form and jointly with the
Purchaser
to have the rules contained in subsection 156(2) of Part IX of
the
Excise
Tax Act
(Canada) apply to the purchase and sale of the Purchased Assets
contemplated hereunder, which election remains valid and in
effect.
|
-
7
-
3.02
|
Purchaser’s
Representations and
Warranties
|
The
Purchaser hereby makes to the Vendor the following representations and
warranties and acknowledges that the Vendor is relying upon such representations
and warranties in connection with entering into this Agreement:
(a)
|
The
Purchaser is a corporation duly incorporated, organized and subsisting
under the laws of Canada with the corporate power to own its assets
and to
carry on its business.
|
(b)
|
The
Purchaser has the power, authority and right to enter into and
deliver
this Agreement and to complete the transactions contemplated to
be
completed by the Purchaser
hereunder.
|
(c)
|
This
Agreement constitutes a valid and legally binding obligation of
the
Purchaser, enforceable against the Purchaser in accordance with
its terms
subject to applicable bankruptcy, insolvency, reorganization and
other
laws of general application limiting the enforcement of creditors’ rights
generally and to the fact that specific performance is an equitable
remedy
available only in the discretion of the
court.
|
(d)
|
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Purchaser will result
in a
violation of:
|
(i)
|
any
of the provisions of the constating documents or by-laws of the
Purchaser;
|
(ii)
|
any
agreement or other instrument to which the Purchaser is a party
or by
which the Purchaser is bound; or
|
(iii)
|
any
Applicable Law.
|
(e)
|
The
Purchaser is registered under Part IX of the Excise
Tax Act (Canada)
with registration number 88289 4165 RT0001.
|
(f)
|
The
Purchaser has duly elected in prescribed form and jointly with
the Vendor
to have the rules contained in subsection 156(2) of Part IX of
the
Excise
Tax Act
(Canada) apply to the purchase and sale of the Purchased Assets
contemplated hereunder, which election remains valid and in
effect.
|
3.03
|
Survival
of Representations, Warranties
and Covenants
|
(1)
|
The
respective representations and warranties of the Vendor and the
Purchaser
contained in this Agreement shall survive the completion of the
sale and
purchase of the Purchased
|
-
8
-
|
Assets
herein provided for and, notwithstanding such completion, will
continue in
full force and effect for a period of two years
from the Closing Date.
|
(2)
|
The
respective covenants of the Vendor and the Purchaser contained
in this
Agreement shall survive the completion of the sale and purchase
of the
Purchased Assets herein provided for and, notwithstanding such
completion,
shall continue in full force and effect for the benefit of the
Vendor or
the Purchaser, as applicable, in accordance with the terms
thereof.
|
ARTICLE
4 - COVENANTS
4.01
|
Covenants
of the Vendor
|
(1)
|
The
Vendor, immediately after the Closing Date at the Purchaser’s expense and
written direction, will file all necessary notices with all relevant
Governmental Authorities evidencing the sale of the Purchased Assets
to
the Purchaser.
|
4.02
|
Covenants
of the Purchaser
|
(1)
|
The
Purchaser will be liable for and will pay, or will cause to be
paid, all
transfer, value added, ad-valorem,
excise, sales, use, consumption, goods or services, harmonized
sales,
retail sales, social services, or other similar taxes or duties
(collectively, “Transfer
Taxes”)
payable under any Applicable Law on or with respect to the sale
and
purchase of the Purchased Assets under this Agreement. The Purchaser
will
prepare and file any affidavits or returns required in connection
with the
foregoing at its own cost and expense. To the extent that any Transfer
Taxes are required to be paid by or are imposed upon the Vendor,
the
Purchaser will reimburse, or will cause to be reimbursed, to the
Vendor
such taxes within five Business Days of payment of such taxes by
the
Vendor. All amounts payable by the Purchaser to the Vendor hereunder
do
not include Transfer Taxes.
|
(2)
|
The
Purchaser shall provide the Vendor with a purchase exemption certificate
for any tangible Purchased Assets that are exempt from Ontario
retail
sales tax.
|
4.03
|
Cooperation
|
Each
of the Purchaser and the Vendor shall use commercially reasonable efforts,
at
the expense of the Purchaser, to provide such information and assistance
as is
reasonably necessary to assist the Purchaser in obtaining all necessary
consents, approvals, conveyances, assurances, assignments or any other
documentation necessary or reasonably required by the Purchaser to transfer
all
of the Vendor’s right, title and interest in and to the Purchased Assets to the
Purchaser, subject to all existing Charges.
-
9
-
4.04
|
Cooperation
on Tax Matters
|
Each
of the Vendor and the Purchaser will, to the extent reasonably within such
party’s control, taking into account such party’s access to books and records,
furnish or cause to be furnished to each other, at the expense of the Purchaser,
as promptly as practicable, such information and assistance, and provide
additional information and explanations of any materials provided, relating
to
the Purchased Assets as is reasonably necessary for the filing of any tax
returns, for the preparation of any audit, and for the prosecution or defence
of
any Claim, suit or proceeding relating to any adjustment or proposed adjustment
with respect to taxes.
ARTICLE
5 - CONDITIONS
5.01
|
Conditions
for the Benefit of the
Purchaser
|
(1)
|
The
sale by the Vendor and the purchase by the Purchaser of the Purchased
Assets is subject to the following conditions, which are for the
exclusive
benefit of the Purchaser and which are to be performed or complied
with at
or prior to the Time of Closing:
|
(a)
|
the
representations and warranties of the Vendor set forth in Section
3.01
will be true and correct at the Time of Closing with the same force
and
effect as if made at and as of such
time;
|
(b)
|
the
Vendor will have performed or complied with all of the terms, covenants
and conditions of this Agreement to be performed or complied with
by the
Vendor at or prior to the Time of
Closing;
|
(c)
|
the
Purchaser will be furnished with such certificates or other instruments
(including instruments of conveyance with respect to the Purchased
Assets)
of the Vendor or of officers of the Vendor as the Purchaser or
the
Purchaser’s counsel may reasonably think necessary in order to establish
that the terms, covenants and conditions contained in this Agreement
to
have been performed or complied with by the Vendor at or prior
to the Time
of Closing have been performed or complied with and that the
representations and warranties of the Vendor herein given are true
and
correct at the Time of Closing;
|
(d)
|
there
will have been obtained from all appropriate Governmental Authorities
such
approvals or consents as are required to permit the change of ownership
of
the Purchased Assets contemplated
hereby;
|
(e)
|
no
action or proceeding in Canada will be pending or threatened by
any
person, or Governmental Authority to enjoin, restrict or prohibit
the sale
and purchase of the Purchased Assets contemplated hereby;
and
|
(f)
|
all
necessary steps and proceedings will have been taken to permit
the
Purchased Assets to be duly and regularly transferred to and registered
in
the name of the Purchaser.
|
-
10
-
(2)
|
In
case any term or covenant of the Vendor or condition to be performed
or
complied with for the benefit of the Purchaser at or prior to the
Time of
Closing has not been performed or complied with at or prior to
the Time of
Closing, the Purchaser, without limiting any other right that the
Purchaser has, may at its sole option
either:
|
(a)
|
rescind
this Agreement by notice to the Vendor, and in such event the Purchaser
will be released from all obligations hereunder;
or
|
(b)
|
waive
compliance with any such term, covenant or condition in whole or
in part
on such terms as may be agreed upon without prejudice to any of
its rights
of rescission in the event of non-performance of any other term,
covenant
or condition in whole or in part;
|
and,
if the Purchaser rescinds this Agreement pursuant to Section 5.01(2)(a),
the
Vendor will also be released from all obligations hereunder unless the term,
covenant or condition for which the Purchaser has rescinded this Agreement
was
one that the Vendor had covenanted to ensure had been performed or complied
with, in which event the Vendor will be liable to the Purchaser for any Claims
incurred by the Purchaser directly or indirectly as a result of such
breach.
5.02
|
Conditions
for the Benefit of the
Vendor
|
(1)
|
The
sale by the Vendor and the purchase by the Purchaser of the Purchased
Assets is subject to the following conditions, which are for the
exclusive
benefit of the Vendor and which are to be performed or complied
with at or
prior to the Time of Closing:
|
(a)
|
the
representations and warranties of the Purchaser set forth in Section
3.02
will be true and correct at the Time of Closing with the same force
and
effect as if made at and as of such time;
|
(b)
|
the
Purchaser will have performed or complied with all of the terms,
covenants
and conditions of this Agreement to be performed or complied with
by the
Purchaser at or prior to the Time of Closing;
and
|
(c)
|
the
Vendor will be furnished with such certificates or other instruments
of
the Purchaser or of officers of the Purchaser as the Vendor or
the
Vendor’s counsel may reasonably think necessary in order to establish
that
the terms, covenants and conditions contained in this Agreement
to have
been performed or complied with by the Purchaser at or prior to
the Time
of Closing have been performed or complied with and that the
representations and warranties of the Purchaser herein given are
true and
correct at the Time of Closing.
|
(2)
|
In
case any term or covenant of the Purchaser or condition to be performed
or
complied with for the benefit of the Vendor at or prior to the
Time of
Closing has not been performed or complied with at or prior to
the Time of
Closing, the Vendor, without limiting any other right that the
Vendor has,
may at its sole option either:
|
-
11
-
(a)
|
rescind
this Agreement by notice to the Purchaser, and in such event the
Vendor
will be released from all obligations hereunder;
or
|
(b)
|
waive
compliance with any such term, covenant or condition in whole or
in part
on such terms as may be agreed upon without prejudice to any of
its rights
of rescission in the event of non-performance of any other term,
covenant
or condition in whole or in part;
|
and,
if the Vendor rescinds this Agreement pursuant to Section 5.02(2)(a), the
Purchaser will also be released from all obligations hereunder unless the
term,
covenant or condition for which the Vendor has rescinded this Agreement was
one
that the Purchaser had covenanted to ensure had been performed or complied
with,
in which event the Purchaser will be liable to the Vendor for any Claims
incurred by the Vendor directly or indirectly as a result of such
breach.
ARTICLE
6 - CLOSING
ARRANGEMENTS
6.01
|
Closing
|
The
sale and purchase of the Purchased Assets will be completed at the Time of
Closing at the offices of XxXxxxxx Xxxxxxxx XXX, Xxxxx 0000, Xxxxxxx
Xxxxxxxx Bank Tower, Toronto -Dominion Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx X0X
0X0.
6.02
|
Examination
of Records and Assets
|
The
Purchaser will preserve any documents provided to it by the Vendor prior
to the
Closing Date for a period of five years from the Closing Date, or for such
other
period as is required by any Applicable Law, and will permit the Vendor and
its
authorized representatives reasonable access thereto in connection with the
affairs of the Vendor, but the Purchaser will not be responsible or liable
to
the Vendor for or as a result of any loss or destruction of or damage to
any
such documents.
ARTICLE
7 - GENERAL
7.01
|
Further
Assurances
|
Each
of the Vendor and the Purchaser will from time to time execute and deliver
all
such further documents and instruments and do all acts and things as the
other
party may reasonably require to effectively carry out or better evidence
or
perfect the full intent and meaning of this Agreement.
7.02
|
Time
of the Essence
|
Time
is of the essence of this Agreement.
-
12
-
7.03
|
Benefit
of the Agreement
|
This
Agreement will enure to the benefit of and be binding upon the respective
heirs,
executors, administrators, other legal representatives, successors and permitted
assigns of the parties hereto.
7.04
|
Entire
Agreement
|
Except
for the various collateral agreements entered into in connection with the
Arrangement, this Agreement constitutes the entire agreement between the
parties
hereto with respect to the subject matter hereof and cancels and supersedes
any
prior understandings and agreements between the parties hereto with respect
thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the parties other than as expressly set forth in this Agreement.
7.05
|
Amendments
and Waivers
|
No
amendment to this Agreement will be valid or binding unless set forth in
writing
and duly executed by both of the parties hereto. No waiver of any breach
of any
provision of this Agreement will be effective or binding unless made in writing
and signed by the party purporting to give the same and, unless otherwise
provided, will be limited to the specific breach waived.
7.06
|
Notices
|
Any
demand, notice or other communication to be given in connection with this
Agreement must be given in writing and will be given by personal delivery,
by
registered mail, by facsimile or by electronic means of communication addressed
to the recipient as follows:
-
13
-
To
the Vendor:
0
Xxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax
No.: 000-000-0000
Email: xxxxxxxxx@xxxxxxxxxx.xxx
Attention: Director
of Finance
To
the Purchaser:
0
Xxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax
No.: 000-000-0000
Email: xxxxxxxxx@xxxxxxxxxx.xxx
Attention: Director
of Finance
or
to such other street address, individual or electronic communication number
or
address as may be designated by notice given by either party to the other.
Any
demand, notice or other communication given by personal delivery will be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by registered mail, on the fourth Business Day following the
deposit thereof in the mail and, if given by facsimile or electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal
business hours next occur if not given during such hours on any day. If the
party giving any demand, notice or other communication knows or ought reasonably
to know of any difficulties with the postal system that might affect the
delivery of mail, any such demand, notice or other communication may not
be
mailed but must be given by personal delivery, by facsimile or by electronic
communication.
7.07
|
Governing
Law
|
This
Agreement is governed by and will be construed in accordance with the laws
of
the Province of Ontario and the laws of Canada applicable therein.
-
14
-
7.08
|
Counterparts
|
This
Agreement may be executed in any number of counterparts, each of which will
be
deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument.
7.09
|
Facsimiles
|
Delivery
of an executed signature page to this Agreement by any party by electronic
transmission will be as effective as delivery of a manually executed copy
of
this Agreement by such party.
[Remainder
of page left intentionally blank.]
-
15
-
IN
WITNESS WHEREOF the parties have executed this Agreement.
GENESENSE
TECHNOLOGIES INC.
|
||||
Per:
|
||||
Per:
|
||||
4325231
CANADA INC.
|
||||
Per:
|
||||
Per:
|
||||
-
16
-
SCHEDULE
A
All
of the Vendor’s right, title and interest in and to the following
assets:
•
|
computer
hardware;
|
•
|
computer
software;
|
•
|
machinery
and equipment;
|
•
|
office
furniture and equipment;
|
•
|
operating
and scientific inventory;
|
•
|
Intellectual
Property;
|
•
|
customer
lists;
|
•
|
Books
and Records;
|
•
|
Permits
and Licences;
|
•
|
the
Head Office Lease; and
|
•
|
the
Remaining Contracts.
|
SCHEDULE
2.03
Purchase
Price Allocation
No.
|
Purchased
Asset
|
Amount
of Purchase Price Allocated Thereto
|
1.
|
computer
hardware
|
$•
|
2.
|
computer
software
|
$•
|
3.
|
machinery
and equipment
|
$•
|
4.
|
office
furniture and equipment
|
$•
|
5.
|
operating
and scientific inventories
|
$•
|
6.
|
Intellectual
Property, customer lists and Books and Records
|
$1.00
|
7.
|
Permits
and Licences
|
$1.00
|
8.
|
the
Head Office Lease
|
$•
|
9.
|
the
Remaining Contracts
|
$0.00.
The purchase price is satisfied in full by the assumption by
the Purchaser
of all of the Vendor’s obligations and liabilities under the Remaining
Contracts.
|
10.
|
the
Remaining Assets
|
$•
|
SCHEDULE
F
PREPAID
EXPENSES AND RECEIVABLES TRANSFER AGREEMENT
[Prepaid
Expenses and Receivables Transfer
Agreement]
ASSET
PURCHASE AGREEMENT
BETWEEN
4325231
CANADA INC.
AND
GENESENSE
TECHNOLOGIES INC.
MADE
AS OF
•,
2007
XxXxxxxx
Xxxxxxxx LLP
TABLE
OF CONTENTS
ARTICLE
1 - INTERPRETATION
|
1
|
|
1.01
|
Definitions
|
1
|
1.02
|
Headings
|
2
|
1.03
|
Extended
Meanings
|
3
|
1.04
|
Statutory
References
|
3
|
1.05
|
Accounting
Principles
|
3
|
1.06
|
Currency
|
3
|
1.07
|
Schedules
|
3
|
ARTICLE
2 - SALE AND PURCHASE
|
3
|
|
2.01
|
Assets
to be Sold and Purchased
|
3
|
2.02
|
Purchase
Price
|
4
|
2.03
|
Payment
of Purchase Price
|
4
|
2.04
|
Closing
Adjustment
|
4
|
ARTICLE
3 - REPRESENTATIONS AND WARRANTIES
|
4
|
|
3.01
|
Vendor’s
Representations and Warranties
|
4
|
3.02
|
Purchaser’s
Representations and Warranties
|
5
|
3.03
|
Survival
of Representations, Warranties and Covenants
|
6
|
ARTICLE
4 - COVENANTS
|
6
|
|
4.01
|
Covenants
of the Vendor
|
6
|
4.02
|
Covenants
of the Purchaser
|
7
|
4.03
|
Cooperation
|
7
|
4.04
|
Cooperation
on Tax Matters
|
7
|
ARTICLE
5 - CONDITIONS
|
7
|
|
5.01
|
Conditions
for the Benefit of the Purchaser
|
7
|
5.02
|
Conditions
for the Benefit of the Vendor
|
9
|
ARTICLE
6 - CLOSING ARRANGEMENTS
|
10
|
|
6.01
|
Closing
|
10
|
6.02
|
Examination
of Records and Assets
|
10
|
ARTICLE
7 - GENERAL
|
10
|
|
7.01
|
Further
Assurances
|
10
|
7.02
|
Time
of the Essence
|
10
|
7.03
|
Benefit
of the Agreement
|
10
|
7.04
|
Entire
Agreement
|
10
|
7.05
|
Amendments
and Waivers
|
10
|
7.06
|
Notices
|
11
|
7.07
|
Governing
Law
|
12
|
7.08
|
Counterparts
|
12
|
7.09
|
Facsimiles
|
12
|
ASSET
PURCHASE AGREEMENT
THIS
AGREEMENT is made as of •, 2007
BETWEEN
4325231
CANADA INC., a corporation incorporated under the laws
of Canada (the “Vendor”),
-
and
-
GENESENSE
TECHNOLOGIES INC., a corporation incorporated under the laws of Canada
(the “Purchaser”).
WHEREAS
the Vendor is a life sciences company focused on research and development of
effective anticancer development stage therapies with high safety;
AND
WHEREAS the Vendor desires to sell and the Purchaser desires to purchase certain
of the assets of the Vendor pertaining to that business upon and subject to
the
terms and conditions set out in this Agreement;
NOW
THEREFORE, in consideration of the covenants and agreements herein contained,
the parties agree as follows:
ARTICLE
1 - INTERPRETATION
1.01
|
Definitions
|
In
this
Agreement, unless something in the subject matter or context is inconsistent
therewith:
“Agreement”
means this asset purchase agreement, including its recitals and schedules,
as
amended from time to time.
“Applicable
Law” means
(i)
|
any
applicable domestic or foreign law including any statute, subordinate
legislation or treaty, and
|
(ii)
|
any
applicable guideline, directive, rule, standard, requirement, policy,
order, judgment, injunction, award or decree of a Governmental Authority
having the force of law.
|
“Business
Day” means a day other than a Saturday, Sunday or statutory holiday in
the Province of Ontario.
“Charges”
means all liens, charges, encumbrances and/or rights of others.
“Claims”
means all losses, damages, expenses, liabilities (whether accrued, actual,
contingent, latent or otherwise), claims and demands of whatever nature or
kind
including all legal fees and costs on a solicitor and client basis.
“Closing
Balance Sheet” has the meaning set out in Section 2.04(1).
“Closing
Date” means •, 2007 or such other date as may be agreed to in writing
between the Vendor and the Purchaser.
“Closing
Statement” has the meaning set out in Section 2.04(1).
“Governmental
Authority” means any domestic or foreign legislative, executive,
judicial or administrative body or person having or purporting to have
jurisdiction in the relevant circumstances.
“Permits”
means all permits, consents, waivers, licences, certificates, approvals,
authorizations, registrations, franchises, rights, privileges and exemptions,
or
any item with a similar effect, issued or granted by any person.
“Purchase
Price” has the meaning set out in Section 2.02.
“Purchased
Assets” means the prepaid expenses and receivables described in
Schedule A.
“Share”
means a common share in the capital of GeneSense.
“Statements”
has the meaning set out in Section 2.04(1).
“Tax
Act” means the Income Tax Act
(Canada).
“Time
of Closing” means • •.m. (Toronto Time) on the Closing
Date.
“Transfer
Taxes” has the meaning set out in Section 4.02(1).
1.02
|
Headings
|
The
division of this Agreement into Articles and Sections and the insertion of
a
table of contents and headings are for convenience of reference only and do
not
affect the construction or interpretation of this Agreement. The terms “hereof”,
“hereunder” and similar expressions refer to this Agreement and not to any
particular Article, Section or other portion hereof. Unless something in the
subject matter or context is inconsistent therewith, references herein to
Articles, Sections and Schedules are to Articles and Sections of and Schedules
to this Agreement.
1.03
|
Extended
Meanings
|
In
this
Agreement words importing the singular number only include the plural and
vice versa, words importing any gender include all genders and words
importing persons
-
2
-
include
individuals, corporations, limited and unlimited liability companies, general
and limited partnerships, associations, trusts, unincorporated organizations,
joint ventures and Governmental Authorities. The term “including” means
“including without limiting the generality of the foregoing”.
1.04
|
Statutory
References
|
In
this
Agreement, unless something in the subject matter or context is inconsistent
therewith or unless otherwise herein provided, a reference to any statute is
to
that statute as now enacted or as the same may from time to time be amended,
re-enacted or replaced and includes any regulations made
thereunder.
1.05
|
Accounting
Principles
|
Wherever
in this Agreement reference is made to a calculation to be made or an action
to
be taken in accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting principles
from time to time approved by the Canadian Institute of Chartered Accountants,
or any successor institute, applicable as at the date on which such calculation
or action is made or taken or required to be made or taken.
1.06
|
Currency
|
All
references to currency herein are to lawful money of Canada.
1.07
|
Schedules
|
The
following is a Schedule to this Agreement:
Schedule
A - Purchased Assets.
ARTICLE
2 - SALE AND PURCHASE
2.01
|
Assets
to be Sold and
Purchased
|
Upon
and
subject to the terms and conditions hereof, the Vendor will sell, assign,
transfer and convey to the Purchaser and the Purchaser will purchase from the
Vendor, at the Time of Closing, all of the right, title, benefit and interest
of
the Vendor in and to the Purchased Assets.
2.02
|
Purchase
Price
|
The
purchase price payable to the Vendor for the Purchased Assets (such amount
being
hereinafter referred to as the “Purchase Price”) will be
$•, subject to adjustment in accordance with Section 2.04,
which amount the parties estimate to be the fair market value of the Purchased
Assets.
-
3
-
2.03
|
Payment
of Purchase Price
|
The
obligation of the Purchaser to pay the Purchase Price to the Vendor will be
satisfied in full and evidenced by the issuance and delivery by the Purchaser
of
one (1) Share to the Vendor at the Time of Closing.
2.04
|
Closing
Adjustment
|
(1) On
or before the date that is 90 days after the Closing Date,
the Purchaser will prepare and deliver to the Vendor an unaudited balance sheet
as at the Closing Date (the “Closing Balance Sheet”) and a
statement of adjustments (the “Closing Statement” and, together
with the Closing Balance Sheet, the “Statements”) detailing the
particulars of any required adjustments to the calculation of the Purchase
Price. If requested by the Vendor, the Purchaser will permit the Vendor and
its
auditors and other representatives to review the working papers and other
documentation used or prepared in connection with the preparation of, or that
otherwise form the basis of, the Statements.
(2) If
the Closing Statement, as determined by the Purchaser, exceeds, or is less
than,
the Purchase Price, the Purchase Price will be increased or decreased
accordingly.
ARTICLE
3 - REPRESENTATIONS AND WARRANTIES
3.01
|
Vendor’s
Representations and
Warranties
|
The
Vendor hereby makes to the Purchaser the following representations and
warranties and acknowledges that the Purchaser is relying upon such
representations and warranties in connection with entering into this Agreement.
(a)
|
The
Vendor is a corporation duly incorporated, organized and subsisting
under
the laws of Canada with the corporate power to own its assets and
to carry
on its business.
|
(b)
|
The
Vendor has the power, authority and right to enter into and deliver
this
Agreement and to complete the transactions contemplated to be completed
by
the Vendor hereunder.
|
(c)
|
This
Agreement constitutes a valid and legally binding obligation of the
Vendor, enforceable against the Vendor in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization and
other
laws of general application limiting the enforcement of creditors’ rights
generally and to the fact that specific performance is an equitable
remedy
available only in the discretion of the
court.
|
(d)
|
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Vendor will result in
the
violation of:
|
-
4
-
(i)
|
any
of the provisions of the constating documents or by-laws of the
Vendor;
|
(ii)
|
any
agreement or other instrument to which the Vendor is a party or
by which
the Vendor is bound; or
|
(iii)
|
any
Applicable Law.
|
(e)
|
The
Vendor is registered under Part IX of the Excise
Tax Act (Canada)
with registration number 13175 3915
RT0001.
|
(f)
|
The
Vendor is not a non-resident person within the meaning of section
116 of
the Tax Act.
|
(g)
|
The
Vendor has duly elected in prescribed form and jointly with the
Purchaser
to have the rules contained in subsection 156(2) of Part IX of
the
Excise
Tax Act
(Canada) apply to the purchase and sale of the Purchased Assets
contemplated hereunder, which election remains valid and in
effect.
|
3.02
|
Purchaser’s
Representations and
Warranties
|
The
Purchaser hereby makes to the Vendor the following representations and
warranties and acknowledges that the Vendor is relying upon such representations
and warranties in connection with entering into this Agreement:
(a)
|
The
Purchaser is a corporation duly incorporated, organized and subsisting
under the laws of Canada with the corporate power to own its assets
and to
carry on its business.
|
(b)
|
The
Purchaser has the power, authority and right to enter into and
deliver
this Agreement and to complete the transactions contemplated to
be
completed by the Purchaser
hereunder.
|
(c)
|
This
Agreement constitutes a valid and legally binding obligation of
the
Purchaser, enforceable against the Purchaser in accordance with
its terms
subject to applicable bankruptcy, insolvency, reorganization and
other
laws of general application limiting the enforcement of creditors’ rights
generally and to the fact that specific performance is an equitable
remedy
available only in the discretion of the
court.
|
(d)
|
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Purchaser will result
in a
violation of:
|
(i)
|
any
of the provisions of the constating documents or by-laws of the
Purchaser;
|
-
5
-
(ii)
|
any
agreement or other instrument to which the Purchaser is a party
or by
which the Purchaser is bound; or
|
(iii)
|
any
Applicable Law.
|
(e)
|
The
Purchaser is registered under Part IX of the Excise
Tax Act (Canada)
with registration number 88289 4165 RT0001.
|
(f)
|
The
Purchaser has duly elected in prescribed form and jointly with
the Vendor
to have the rules contained in subsection 156(2) of Part IX of
the
Excise
Tax Act
(Canada) apply to the purchase and sale of the Purchased Assets
contemplated hereunder, which election remains valid and in
effect.
|
3.03
|
Survival
of Representations, Warranties
and Covenants
|
(1)
|
The
respective representations and warranties of the Vendor and the
Purchaser
contained in this Agreement shall survive the completion of the
sale and
purchase of the Purchased Assets herein provided for and, notwithstanding
such completion, will continue in full force and effect for a period
of
two years from the Closing Date.
|
(2)
|
The
respective covenants of the Vendor and the Purchaser contained
in this
Agreement shall survive the completion of the sale and purchase
of the
Purchased Assets herein provided for and, notwithstanding such
completion,
will continue in full force and effect for the benefit of the Vendor
or
the Purchaser, as applicable, in accordance with the terms
thereof.
|
ARTICLE
4 - COVENANTS
4.01
|
Covenants
of the Vendor
|
(1)
|
The
Vendor, immediately after the Closing Date at the Purchaser’s expense and
written direction, will file all necessary notices with all relevant
Governmental Authorities evidencing the sale of the Purchased Assets
to
the Purchaser.
|
4.02
|
Covenants
of the Purchaser
|
(1)
|
The
Purchaser will be liable for and will pay, or will cause to be
paid, all
transfer, value added, ad-valorem,
excise, sales, use, consumption, goods or services, harmonized
sales,
retail sales, social services, or other similar taxes or duties
(collectively, “Transfer
Taxes”)
payable under any Applicable Law on or with respect to the sale
and
purchase of the Purchased Assets under this Agreement. The Purchaser
will
prepare and file any affidavits or returns required in connection
with the
foregoing at its own cost and expense. To the extent that any Transfer
Taxes are required to be paid by or are imposed upon the Vendor,
the
Purchaser will reimburse, or will cause to be reimbursed, to the
Vendor
such taxes within five Business Days of payment of such taxes by
the
Vendor. All amounts payable by the Purchaser to the Vendor hereunder
do
not include Transfer Taxes.
|
-
6
-
4.03
|
Cooperation
|
Each
of the Purchaser and the Vendor shall use commercially reasonable efforts,
at
the expense of the Purchaser, to provide such information and assistance
as is
reasonably necessary to assist the Purchaser in obtaining all necessary
consents, approvals, conveyances, assurances, assignments or any other
documentation necessary or reasonably required by the Purchaser to transfer
all
of the Vendor’s right, title and interest in and to the Purchased Assets to the
Purchaser, subject to all existing Charges.
4.04
|
Cooperation
on Tax Matters
|
Each
of the Vendor and the Purchaser will, to the extent reasonably within such
party’s control, taking into account such party’s access to books and records,
furnish or cause to be furnished to each other, at the expense of the Purchaser,
as promptly as practicable, such information and assistance, and provide
additional information and explanations of any materials provided, relating
to
the Purchased Assets as is reasonably necessary for the filing of any tax
returns, for the preparation of any audit, and for the prosecution or defence
of
any Claim, suit or proceeding relating to any adjustment or proposed adjustment
with respect to taxes.
ARTICLE
5 - CONDITIONS
5.01
|
Conditions
for the Benefit of the
Purchaser
|
(1)
|
The
sale by the Vendor and the purchase by the Purchaser of the Purchased
Assets is subject to the following conditions, which are for the
exclusive
benefit of the Purchaser and which are to be performed or complied
with at
or prior to the Time of Closing:
|
(a)
|
the
representations and warranties of the Vendor set forth in Section
3.01
will be true and correct at the Time of Closing with the same force
and
effect as if made at and as of such
time;
|
(b)
|
the
Vendor will have performed or complied with all of the terms, covenants
and conditions of this Agreement to be performed or complied with
by the
Vendor at or prior to the Time of
Closing;
|
(c)
|
the
Purchaser will be furnished with such certificates or other instruments
(including instruments of conveyance with respect to the Purchased
Assets)
of the Vendor or of officers of the Vendor as the Purchaser or
the
Purchaser’s counsel may reasonably think necessary in order to establish
that the terms, covenants and conditions contained in this Agreement
to
have been performed or complied with by the Vendor at or prior
to the Time
of Closing have been performed or complied with and that the
representations and warranties of the Vendor herein given are true
and
correct at the Time of Closing;
|
-
7
-
(d)
|
there
will have been obtained from all appropriate Governmental Authorities
such
approvals or consents as are required to permit the change of ownership
of
the Purchased Assets contemplated
hereby;
|
(e)
|
no
action or proceeding in Canada will be pending or threatened by
any
person, or Governmental Authority to enjoin, restrict or prohibit
the sale
and purchase of the Purchased Assets contemplated hereby;
and
|
(f)
|
all
necessary steps and proceedings will have been taken to permit
the
Purchased Assets to be duly and regularly transferred to and registered
in
the name of the Purchaser.
|
(2)
|
In
case any term or covenant of the Vendor or condition to be performed
or
complied with for the benefit of the Purchaser at or prior to the
Time of
Closing has not been performed or complied with at or prior to
the Time of
Closing, the Purchaser, without limiting any other right that the
Purchaser has, may at its sole option
either:
|
(a)
|
rescind
this Agreement by notice to the Vendor, and in such event the Purchaser
will be released from all obligations hereunder;
or
|
(b)
|
waive
compliance with any such term, covenant or condition in whole or
in part
on such terms as may be agreed upon without prejudice to any of
its rights
of rescission in the event of non-performance of any other term,
covenant
or condition in whole or in part;
|
and,
if the Purchaser rescinds this Agreement pursuant to Section 5.01(2)(a),
the
Vendor will also be released from all obligations hereunder unless the term,
covenant or condition for which the Purchaser has rescinded this Agreement
was
one that the Vendor had covenanted to ensure had been performed or complied
with, in which event the Vendor will be liable to the Purchaser for any Claims
incurred by the Purchaser directly or indirectly as a result of such
breach.
5.02
|
Conditions
for the Benefit of the
Vendor
|
(1)
|
The
sale by the Vendor and the purchase by the Purchaser of the Purchased
Assets is subject to the following conditions, which are for the
exclusive
benefit of the Vendor and which are to be performed or complied
with at or
prior to the Time of Closing:
|
(a)
|
the
representations and warranties of the Purchaser set forth in Section
3.02
will be true and correct at the Time of Closing with the same force
and
effect as if made at and as of such
time;
|
(b)
|
the
Purchaser will have performed or complied with all of the terms,
covenants
and conditions of this Agreement to be performed or complied with
by the
Purchaser at or prior to the Time of Closing;
and
|
-
8
-
(c)
|
the
Vendor will be furnished with such certificates or other instruments
of
the Purchaser or of officers of the Purchaser as the Vendor or
the
Vendor’s counsel may reasonably think necessary in order to establish
that
the terms, covenants and conditions contained in this Agreement
to have
been performed or complied with by the Purchaser at or prior to
the Time
of Closing have been performed or complied with and that the
representations and warranties of the Purchaser herein given are
true and
correct at the Time of Closing.
|
(2)
|
In
case any term or covenant of the Purchaser or condition to be performed
or
complied with for the benefit of the Vendor at or prior to the
Time of
Closing has not been performed or complied with at or prior to
the Time of
Closing, the Vendor, without limiting any other right that the
Vendor has,
may at its sole option either:
|
(a)
|
rescind
this Agreement by notice to the Purchaser, and in such event the
Vendor
will be released from all obligations hereunder;
or
|
(b)
|
waive
compliance with any such term, covenant or condition in whole or
in part
on such terms as may be agreed upon without prejudice to any of
its rights
of rescission in the event of non-performance of any other term,
covenant
or condition in whole or in part;
|
and,
if the Vendor rescinds this Agreement pursuant to Section 5.02(2)(a), the
Purchaser will also be released from all obligations hereunder unless the
term,
covenant or condition for which the Vendor has rescinded this Agreement was
one
that the Purchaser had covenanted to ensure had been performed or complied
with,
in which event the Purchaser will be liable to the Vendor for any Claims
incurred by the Vendor directly or indirectly as a result of such
breach.
ARTICLE
6 - CLOSING ARRANGEMENTS
6.01
|
Closing
|
The
sale and purchase of the Purchased Assets will be completed at the Time of
Closing at the offices of XxXxxxxx Xxxxxxxx XXX, Xxxxx 0000, Xxxxxxx
Xxxxxxxx Bank Tower, Toronto -Dominion Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx X0X
0X0.
6.02
|
Examination
of Records and Assets
|
The
Purchaser will preserve any documents provided to it by the Vendor prior
to the
Closing Date for a period of five years from the Closing Date, or for such
other
period as is required by any Applicable Law, and will permit the Vendor and
its
authorized representatives reasonable access thereto in connection with the
affairs of the Vendor, but the Purchaser will not be responsible or liable
to
the Vendor for or as a result of any loss or destruction of or damage to
any
such documents.
-
9
-
ARTICLE
7 - GENERAL
7.01
|
Further
Assurances
|
Each
of the Vendor and the Purchaser will from time to time execute and deliver
all
such further documents and instruments and do all acts and things as the
other
party may reasonably require to effectively carry out or better evidence
or
perfect the full intent and meaning of this Agreement.
7.02
|
Time
of the Essence
|
Time
is of the essence of this Agreement.
7.03
|
Benefit
of the Agreement
|
This
Agreement will enure to the benefit of and be binding upon the respective
heirs,
executors, administrators, other legal representatives, successors and permitted
assigns of the parties hereto.
7.04
|
Entire
Agreement
|
Except
for the various collateral agreements entered into in connection with the
Arrangement, this Agreement constitutes the entire agreement between the
parties
hereto with respect to the subject matter hereof and cancels and supersedes
any
prior understandings and agreements between the parties hereto with respect
thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the parties other than as expressly set forth in this Agreement.
7.05
|
Amendments
and Waivers
|
No
amendment to this Agreement will be valid or binding unless set forth in
writing
and duly executed by both of the parties hereto. No waiver of any breach
of any
provision of this Agreement will be effective or binding unless made in writing
and signed by the party purporting to give the same and, unless otherwise
provided, will be limited to the specific breach waived.
7.06
|
Notices
|
Any
demand, notice or other communication to be given in connection with this
Agreement must be given in writing and will be given by personal delivery,
by
registered mail, by facsimile or by electronic means of communication addressed
to the recipient as follows:
-
10
-
To
the Vendor:
0
Xxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax
No.: 000-000-0000
Email: xxxxxxxxx@xxxxxxxxxx.xxx
Attention: Director
of Finance
To
the Purchaser:
0
Xxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax
No.: 000-000-0000
Email: xxxxxxxxx@xxxxxxxxxx.xxx
Attention: Director
of Finance
or
to such other street address, individual or electronic communication number
or
address as may be designated by notice given by either party to the other.
Any
demand, notice or other communication given by personal delivery will be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by registered mail, on the fourth Business Day following the
deposit thereof in the mail and, if given by facsimile or electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal
business hours next occur if not given during such hours on any day. If the
party giving any demand, notice or other communication knows or ought reasonably
to know of any difficulties with the postal system that might affect the
delivery of mail, any such demand, notice or other communication may not
be
mailed but must be given by personal delivery, by facsimile or by electronic
communication.
7.07
|
Governing
Law
|
This
Agreement is governed by and will be construed in accordance with the laws
of
the Province of Ontario and the laws of Canada applicable therein.
-
11
-
7.08
|
Counterparts
|
This
Agreement may be executed in any number of counterparts, each of which will
be
deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument.
7.09
|
Facsimiles
|
Delivery
of an executed signature page to this Agreement by any party by electronic
transmission will be as effective as delivery of a manually executed copy
of
this Agreement by such party.
[Remainder
of page left intentionally blank]
- 12 -
IN
WITNESS WHEREOF the parties have executed this Agreement.
GENESENSE
TECHNOLOGIES INC.
|
||||
Per:
|
||||
Per:
|
||||
4325231
CANADA INC.
|
||||
Per:
|
||||
Per:
|
||||
- 13 -
SCHEDULE
A
Purchased
Assets
All
of
the Vendor’s right, title and interest in and to the following
assets:
•
|
$•
in respect of accounts receivable;
|
•
|
$•
in respect of GST input tax
credits;
|
•
|
$•
in respect of QST input tax
credits;
|
•
|
$•
in respect of accrued interest;
|
•
|
$•
in respect of employee advances;
|
•
|
$•
in respect of prepaid amounts;
|
•
|
$•
in respect of security deposits and
advances;
|
•
|
$•
in respect of investment tax credits;
and
|
•
|
$•
in respect of deferred financing
costs.
|
SCHEDULE
G
GENESENSE
SHARE PURCHASE AGREEMENT
[GeneSense
Share Purchase Agreement]
SHARE
PURCHASE AGREEMENT
BETWEEN
4325231
CANADA INC.
AND
MADE
AS OF
•,
2007
XxXxxxxx
Xxxxxxxx LLP
TABLE
OF
CONTENTS
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT
ARTICLE
1 - INTERPRETATION
|
1
|
|
1.01
|
Definitions
|
1
|
1.02
|
Headings
|
2
|
1.03
|
Extended
Meanings
|
3
|
1.04
|
Statutory
References
|
3
|
1.05
|
Accounting
Principles
|
3
|
1.06
|
Currency
|
3
|
1.07
|
Schedules
|
3
|
ARTICLE
2 - PURCHASE AND SALE
|
4
|
|
2.01
|
Shares
to be Sold and Purchased
|
4
|
2.02
|
Purchase
Price
|
4
|
2.03
|
Satisfaction
of Purchase Price
|
4
|
2.04
|
Closing
|
4
|
2.05
|
Closing
Adjustment
|
4
|
ARTICLE
3 - REPRESENTATIONS AND WARRANTIES
|
5
|
|
3.01
|
Vendor’s
Representations and Warranties
|
5
|
3.02
|
Purchaser’s
Representations and Warranties
|
6
|
3.03
|
Survival
of Representations, Warranties and Covenants
|
6
|
ARTICLE
4 - COVENANTS
|
7
|
|
4.01
|
Cooperation
|
7
|
4.02
|
Cooperation
on Tax Matters
|
7
|
ARTICLE
5 - CONDITIONS
|
7
|
|
5.01
|
Conditions
for the Benefit of the Purchaser
|
7
|
5.02
|
Conditions
for the Benefit of the Vendor
|
8
|
ARTICLE
6 - GENERAL
|
9
|
|
6.01
|
Further
Assurances
|
9
|
6.02
|
Time
of the Essence
|
9
|
6.03
|
Benefit
of the Agreement
|
9
|
6.04
|
Entire
Agreement
|
10
|
6.05
|
Amendments
and Waiver
|
10
|
6.06
|
Notices
|
10
|
6.07
|
Governing
Law
|
11
|
6.08
|
Counterparts
|
11
|
6.09
|
Facsimiles | 11 |
SHARE
PURCHASE AGREEMENT
THIS
AGREEMENT made as of •, 2007;
B
E T W E
E N:
LORUS
THERAPEUTICS INC.,
a
corporation incorporated under the laws of Canada (the “Purchaser”),
-
and
-
4325231
CANADA INC.,
a
corporation incorporated under the laws of Canada (the “Vendor”).
WHEREAS
the Vendor is the beneficial owner of the Shares;
AND
WHEREAS TEMIC is the registered owner of the Shares and has consented to
the
sale of the Shares as contemplated herein;
AND
WHEREAS the Vendor desires to sell and the Purchaser desires to purchase
the
Shares upon and subject to the terms and conditions hereinafter set
forth;
NOW
THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises
and the
covenants and agreements herein contained the parties hereto agree as
follows:
ARTICLE
1 - INTERPRETATION
1.01
|
Definitions
|
In
this
Agreement, unless something in the subject matter or context is inconsistent
therewith:
“Agreement”
means
this share purchase agreement, including its recitals and schedules, as amended
from time to time and all amendments made hereto by written agreement between
the Vendor and the Purchaser.
“Applicable
Law”
means
(i)
|
any
applicable domestic or foreign law including any statute, subordinate
legislation or treaty, and
|
(ii)
|
any
applicable guideline, directive, rule, standard, requirement, policy,
order, judgment, injunction, award or decree of a Governmental
Authority
having the force of law.
|
“Assumed
Liabilities”
means
the liabilities described in Schedule B attached to this Agreement;
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1
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“Business
Day”
means a
day other than a Saturday, Sunday or statutory holiday in the Province of
Ontario.
“Charges”
means
all liens, charges, encumbrances and/or rights of others.
“Closing
Date”
means •,
2007 or such other date as may be agreed to in writing between the Vendor
and
the Purchaser.
“Closing
Statement”
has the
meaning set forth in Section 2.05(1).
“Corporation”
means
GeneSense Technologies Inc., a corporation incorporated under the laws of
Canada.
“Governmental
Authority”
means
any domestic or foreign legislative, executive, judicial or administrative
body
or person having or purporting to have jurisdiction in the relevant
circumstances.
“Newco
Note 2”
has the
meaning set forth in Section 2.03(1)(b).
“Permitted
Encumbrances” means
the
Charges described in Schedule C attached to this Agreement.
“Prepaid
Expenses and Receivables Transfer Agreement” means
the
prepaid expenses and receivables transfer agreement dated as of •, 2007 between
the Vendor and GeneSense Technologies Inc.
“Purchase
Price”
has the
meaning set forth in Section 2.02.
“Share
Pledge Agreement”
has the
meaning set forth in Section 3.01(c).
“Shares”
means
all of the issued and outstanding common shares of the Corporation.
“Tangible
Business Assets Transfer Agreement”
means
the tangible business assets transfer agreement dated as of •, 2007 between the
Vendor and GeneSense Technologies Inc.
“Tax
Act”
means
the Income Tax
Act
(Canada).
“TEMIC”
means
The Xxxx Xxxxx Investment Corporation.
“Time
of Closing”
means •
•.m. (Toronto Time) on the Closing Date.
1.02
|
Headings
|
The
division of this Agreement into Articles and Sections and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. The terms “this Agreement”,
“hereof”, “hereunder” and similar expressions refer to this Agreement and not to
any particular Article, Section or other portion
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2
-
hereof
and include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles
and
Sections are to Articles and Sections of this Agreement.
1.03
|
Extended
Meanings
|
In
this
Agreement words importing the singular number only include the plural and
vice
versa,
words
importing any gender include all genders and words importing persons include
individuals, corporations, limited and unlimited liability companies, general
and limited partnerships, associations, trusts, unincorporated organizations,
joint ventures and Governmental Authorities. The term “including” means
“including without limiting the generality of the foregoing”.
1.04
|
Statutory
References
|
In
this
Agreement, unless something in the subject matter or context is inconsistent
therewith or unless otherwise herein provided, a reference to any statute
is to
that statute as now enacted or as the same may from time to time be amended,
re-enacted or replaced and includes any regulations made
thereunder.
1.05
|
Accounting
Principles
|
Wherever
in this Agreement reference is made to a calculation to be made or an action
to
be taken in accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting principles
from time to time approved by the Canadian Institute of Chartered Accountants,
or any successor institute, applicable as at the date on which such calculation
or action is made or taken or required to be made or taken.
1.06
|
Currency
|
All
references to currency herein are to lawful money of Canada.
1.07
|
Schedules
|
The
following are Schedules to this Agreement:
Schedule
A - Newco Note 2; and
Schedule
B - Assumed Liabilities.
ARTICLE
2 - PURCHASE AND SALE
2.01
|
Shares
to be Sold and
Purchased
|
Upon
and
subject to the terms and conditions hereof, the Vendor will sell the Shares
to
the Purchaser and the Purchaser will purchase the Shares from the Vendor,
as of
the Time of Closing on the Closing Date.
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3
-
2.02
|
Purchase
Price
|
The
purchase price payable to the Vendor for the Shares (such amount being
hereinafter referred to as the “Purchase
Price”)
will be
$•, subject to adjustment in accordance with Section 2.05, which amount the
parties estimate to be the fair market value of the Shares.
2.03
|
Satisfaction
of Purchase Price
|
(1) The
Purchase Price will be satisfied in full as follows:
(a)
|
by
the assumption,
fulfillment and performance by the Purchaser, from and after the
Time of
Closing, of the Assumed Liabilities;
and
|
(b)
|
by
the issuance by the Purchaser to the Vendor of a demand non-interest
bearing promissory note in the aggregate principal amount of $• (the
“New
Lorus Note 2”),
substantially in the form of the promissory note attached hereto
as
Schedule A.
|
2.04
|
Closing
|
The
sale
and purchase of the Shares shall be completed at the Time of Closing at the
offices of XxXxxxxx Xxxxxxxx XXX, Xxxxx 0000, Xxxxxxx Xxxxxxxx Xxxx Xxxxx,
Xxxxxxx-Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx.
2.05
|
Closing
Adjustment
|
(1) On
or
before the date that is 90
days
after the Closing Date, the Purchaser will prepare and deliver to the Vendor
a
statement of adjustments detailing any changes in the valuation of the
underlying assets arising as a result of the permitted price adjustments
in the
Tangible Business Assets Transfer Agreement and the Prepaid Expenses and
Receivables Transfer Agreement or the Assumed Liabilities transferred hereunder
which in part form the basis of the valuation of the Shares and detailing
the
particulars of any required adjustments to the calculation of the Purchase
Price
(the “Closing
Statement”).
If
requested by the Vendor, the Purchaser will permit the Vendor and its auditors
and other representatives to review the working papers and other documentation
used or prepared in connection with the preparation of, or that otherwise
form
the basis of, the Closing Statement.
(2) If
the
Closing Statement, as determined by the Purchaser, exceeds, or is less than,
the
Purchase Price, the aggregate principal amount of the Newco Note 2 will be
increased, or decreased, accordingly.
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4
-
ARTICLE
3 - REPRESENTATIONS AND WARRANTIES
3.01
|
Vendor’s
Representations and
Warranties
|
The
Vendor hereby makes to the Purchaser the following representations and
warranties and acknowledges that the Purchaser is relying upon such
representations and warranties in connection with entering into this Agreement:
(a)
|
The
Corporation is a corporation duly incorporated, organized and subsisting
under the laws of Canada with the corporate power to own its assets
and to
carry on its business.
|
(b)
|
The
authorized capital of the Corporation consists of (i) an unlimited
number
of common shares, and
(ii) an unlimited number of preferred
shares.
|
(c)
|
All
of the issued and outstanding Shares are beneficially owned by
the Vendor
and pledged to TEMIC pursuant to a share pledge agreement dated
October 6,
2004 (the “Share
Pledge Agreement”).
|
(d)
|
The
Vendor has the power, authority and right to enter into and deliver
this
Agreement and to transfer the legal and beneficial title and ownership
of
the Shares to the Purchaser, subject to all existing Charges, including
the Share Pledge Agreement.
|
(e)
|
This
Agreement constitutes a valid and legally binding obligation of
the
Vendor, enforceable against the Vendor in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization and
other
laws of general application limiting the enforcement of creditors’ rights
generally and to the fact that specific performance is an equitable
remedy
available only in the discretion of the
court.
|
(f)
|
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Vendor will result
in the
violation of:
|
(i)
|
any
of the provisions of the constating documents or by-laws of the
Vendor or
of the Corporation;
|
(ii)
|
any
agreement or other instrument to which the Vendor or the Corporation
is a
party or by which the Vendor or the Corporation is bound;
or
|
(iii)
|
any
Applicable Law in respect of which the Vendor or the Corporation
must
comply, except to the extent that such violation would not reasonably
be
expected to limit in any material manner the operations of the
Corporation’s business as they are presently
conducted.
|
(g)
|
The
Vendor is not a non-resident person within the meaning of section
116 of
the Tax Act.
|
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5
-
3.02
|
Purchaser’s
Representations and
Warranties
|
The
Purchaser hereby makes to the Vendor the following representations and
warranties and acknowledges that the Vendor is relying upon such representations
and warranties in connection with entering into this Agreement:
(a)
|
The
Purchaser is a corporation duly incorporated, organized and subsisting
under the laws of Canada with the corporate power to own its assets
and to
carry on its business.
|
(b)
|
The
Purchaser has the power, authority and right to enter into and
deliver
this Agreement and to complete the transactions contemplated to
be
completed by the Purchaser
hereunder.
|
(c)
|
This
Agreement constitutes a valid and legally binding obligation of
the
Purchaser, enforceable against the Purchaser in accordance with
its terms
subject to applicable bankruptcy, insolvency, reorganization and
other
laws of general application limiting the enforcement of creditors’ rights
generally and to the fact that specific performance is an equitable
remedy
available only in the discretion of the
court.
|
(d)
|
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Purchaser will result
in a
violation of:
|
(i)
|
any
of the provisions of the constating documents or by-laws of the
Purchaser;
|
(ii)
|
any
agreement or other instrument to which the Purchaser is a party
or by
which the Purchaser is bound; or
|
(iii)
|
any
Applicable Law.
|
3.03
|
Survival
of Representations, Warranties and
Covenants
|
(1)
|
The
respective representations and warranties of the Vendor and the
Purchaser
contained in this Agreement shall survive the completion of the
sale and
purchase of the Shares herein provided for and, notwithstanding
such
completion, will continue in full force and effect for a period
of two
years from the Closing Date.
|
(2)
|
The
respective covenants of the Vendor and the Purchaser contained
in this
Agreement shall survive the completion of the sale and purchase
of the
Shares herein provided for and, notwithstanding such completion,
shall
continue in full force and effect for the benefit of the Vendor
or the
Purchaser, as applicable, in accordance with the terms
thereof.
|
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6
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ARTICLE
4 - COVENANTS
4.01
|
Cooperation
|
Each
of
the Purchaser and the Vendor shall use commercially reasonable efforts, at
the
expense of the Purchaser, to provide such information and assistance as is
reasonably necessary to assist the Purchaser in obtaining all necessary
consents, approvals, conveyances, assurances, assignments or any other
documentation necessary or reasonably required by the Purchaser to transfer
all
of the Vendor’s right, title and interest in and to the Purchased Assets to the
Purchaser, subject to all existing Charges.
4.02
|
Cooperation
on Tax Matters
|
Each
of
the Vendor and the Purchaser will, to the extent reasonably within such party’s
control, taking into account such party’s access to books and records, furnish
or cause to be furnished to each other, at the expense of the Purchaser,
as
promptly as practicable, such information and assistance, and provide additional
information and explanations of any materials provided, relating to the
Purchased Assets as is reasonably necessary for the filing of any tax returns,
for the preparation of any audit, and for the prosecution or defence of any
Claim, suit or proceeding relating to any adjustment or proposed adjustment
with
respect to taxes.
ARTICLE
5 - CONDITIONS
5.01
|
Conditions
for the Benefit of the
Purchaser
|
(1)
|
The
sale by the Vendor and the purchase by the Purchaser of the Shares
is
subject to the following conditions which are for the exclusive
benefit of
the Purchaser to be performed or complied with at or prior to the
Time of
Closing:
|
(a)
|
the
representations and warranties of the Vendor set forth in Section
3.01
will be true and correct at the Time of Closing with the same force
and
effect as if made at and as of such
time;
|
(b)
|
the
Vendor shall have performed or complied with all of the terms,
covenants
and conditions of this Agreement to be performed or complied with
by the
Vendor at or prior to the Time of
Closing;
|
(c)
|
the
Purchaser shall be furnished with such certificates, affidavits
or
statutory declarations of the Corporation and of the Vendor or
of officers
of the Corporation and of the Vendor as the Purchaser or the Purchaser’s
counsel may reasonably think necessary in order to establish that
the
terms, covenants and conditions contained in this Agreement to
have been
performed or complied with by the Vendor or by the Corporation,
as the
case may be, at or prior to the Time of Closing have been performed
and
complied with and that the representations and warranties of the
Vendor
herein given are true and correct at the Time of
Closing;
|
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7
-
(d)
|
there
will have been obtained from all appropriate Governmental Authorities
such
approvals or consents as are required to permit the change of ownership
of
the Shares contemplated hereby and to permit the business of the
Corporation to be carried on as now
conducted;
|
(e)
|
no
action or proceeding in Canada will be pending or threatened by
any person
to enjoin, restrict or prohibit
|
(i)
|
the
sale and purchase of the Shares contemplated hereby;
or
|
(ii)
|
the
right of the Corporation to conduct the business of the Corporation;
and
|
(f)
|
all
necessary steps and proceedings will have been taken to permit
the Shares
to be duly and regularly transferred to the
Purchaser.
|
(2)
|
In
case any term or covenant of the Vendor or condition to be performed
or
complied with for the benefit of the Purchaser at or prior to the
Time of
Closing shall not have been performed or complied with at or prior
to the
Time of Closing, the Purchaser may, without limiting any other
right that
the Purchaser may have, at its sole option,
either:
|
(a)
|
rescind
this Agreement by notice to the Vendor, and in such event the Purchaser
shall be released from all obligations hereunder;
or
|
(b)
|
waive
compliance with any such term, covenant or condition in whole or
in part
on such terms as may be agreed upon without prejudice to any of
its rights
of rescission in the event of non-performance of any other term,
covenant
or condition in whole or in part.
|
5.02
|
Conditions
for the Benefit of the
Vendor
|
(1)
|
The
sale by the Vendor and the purchase by the Purchaser of the Shares
is
subject to the following conditions which are for the exclusive
benefit of
the Vendor to be performed or complied with at or prior to the
Time of
Closing:
|
(a)
|
the
representations and warranties of the Purchaser set forth in Section
3.02
shall be true and correct at the Time of Closing with the same
force and
effect as if made at and as of such
time;
|
(b)
|
the
Purchaser shall have performed or complied with all of the terms,
covenants and conditions of this Agreement to be performed or complied
with by the Purchaser at or prior to the Time of
Closing;
|
(c)
|
the
Vendor shall be furnished with such certificates, affidavits or
statutory
declarations of the Purchaser or of officers of the Purchaser as
the
Vendor or the Vendor’s counsel may reasonably think necessary in order to
establish that the
|
-
8
-
|
terms,
covenants and conditions contained in this Agreement to have
been
performed or complied with by the Purchaser at or prior to the
Time of
Closing have been performed and complied with and that the representations
and warranties of the Purchaser herein given are true and correct
at the
Time of Closing; and
|
(d)
|
the
Purchaser will have delivered to the Vendor an original executed
copy of
Newco Note 2.
|
(2)
|
In
case any term or covenant of the Purchaser or condition to be performed
or
complied with for the benefit of the Vendor at or prior to the
Time of
Closing shall not have been performed or complied with at or prior
to the
Time of Closing, the Vendor may, without limiting any other right
that the
Vendor may have, at its sole option,
either:
|
(a)
|
rescind
this Agreement by notice to the Purchaser, and in such event the
Vendor
shall be released from all obligations hereunder;
or
|
(b)
|
waive
compliance with any such term, covenant or condition in whole or
in part
on such terms as may be agreed upon without prejudice to any of
its rights
of rescission in the event of non-performance of any other term,
covenant
or condition in whole or in part.
|
ARTICLE
6 - GENERAL
6.01
|
Further
Assurances
|
Each
of
the Vendor and the Purchaser shall from time to time execute and deliver
all
such further documents and instruments and do all acts and things as the
other
party may reasonably require to effectively carry out or better evidence
or
perfect the full intent and meaning of this Agreement.
6.02
|
Time
of the Essence
|
Time
shall be of the essence of this Agreement.
6.03
|
Benefit
of the Agreement
|
This
Agreement shall enure to the benefit of and be binding upon the respective
heirs, executors, administrators, successors and permitted assigns of the
parties hereto.
6.04
|
Entire
Agreement
|
Except
for the various collateral agreements entered into in connection with the
Arrangement, this Agreement constitutes the entire agreement between the
parties
hereto with respect to the subject matter hereof and cancels and supersedes
any
prior understandings and agreements between the parties hereto with respect
thereto. There are no representations,
-
9
-
warranties,
terms, conditions, undertakings or collateral agreements, express, implied
or
statutory, between the parties other than as expressly set forth in this
Agreement.
6.05
|
Amendments
and Waiver
|
No
modification of or amendment to this Agreement shall be valid or binding
unless
set forth in writing and duly executed by both of the parties hereto and
no
waiver of any breach of any term or provision of this Agreement shall be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided, shall be limited to the
specific breach waived.
6.06
|
Notices
|
Any
demand, notice or other communication to be given in connection with this
Agreement shall be given in writing and shall be given by personal delivery,
by
registered mail or by electronic means of communication addressed to the
recipient as follows:
To
the
Vendor:
0
Xxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax
No.: 000-000-0000
Email: xxxxxxxxx@xxxxxxxxxx.xxx
Attention: Director
of Finance
To
the
Purchaser:
0
Xxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax
No.: 000-000-0000
Email: xxxxxxxxx@xxxxxxxxxx.xxx
Attention: Director
of Finance
or
to
such other address, individual or electronic communication number as may
be
designated by notice given by either party to the other. Any demand, notice
or
other communication given by personal delivery shall be conclusively deemed
to
have been given on the day of actual delivery thereof and, if given by
registered mail, on the fourth Business Day following the deposit thereof
in the
mail and, if given by electronic communication, on the day of transmittal
thereof if given during the normal business hours of the recipient and on
the
Business Day during which such normal business hours next occur if not given
during such hours on any day. If the party giving any demand, notice or other
communication knows or ought reasonably to know of any difficulties with
the
postal system which might affect the delivery of mail, any such demand,
-
10
-
notice
or
other communication shall not be mailed but shall be given by personal delivery
or by electronic communication.
6.07
|
Governing
Law
|
This
Agreement is governed by and will be construed in accordance with the laws
of
the Province of Ontario and the laws of Canada applicable therein.
6.08
|
Counterparts
|
This
Agreement may be executed in any number of counterparts, each of which will
be
deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument.
6.09
|
Facsimiles
|
Delivery
of an executed signature page to this Agreement by any party by electronic
transmission will be as effective as delivery of a manually executed copy
of
this Agreement by such party.
[Remainder
of page left intentionally blank.]
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11
-
IN
WITNESS WHEREOF the parties have executed this Agreement.
4325231
CANADA INC.
|
|||
Per:
|
|||
Per:
|
|||
LORUS
THERAPEUTICS INC.
|
|||
Per:
|
|||
Per:
|
|||
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12
-
Schedule
A
Newco
Note 2
PROMISSORY
NOTE
FOR
VALUE
RECEIVED, the undersigned hereby promises to pay the sum of $• in lawful money
of Canada, without interest, to or to the order of 4325231 Canada Inc. on
demand.
All
payments hereunder will be made without days of grace, presentment, protest,
notice of dishonour or any other notice whatsoever, all of which are hereby
expressly waived by the maker and each endorser hereof.
The
principal amount hereof may at any time be repaid in full without notice or
bonus.
This
Promissory Note will be governed by and construed in accordance with the laws
of
the Province of Ontario and the federal laws of Canada applicable
therein.
DATED
as
of •, 2007.
LORUS
THERAPEUTICS INC.
|
||
Per:
|
||
Name:
|
||
Title:
|
Schedule
B
Assumed
Liabilities
•
|
Liabilities
in the aggregate amount of • relating to accounts
payable, accrued liabilities and transaction costs in connection
with the
arrangement of the Vendor’s business by way of plan of arrangement under
Section 192(3) of the Canada Business Corporations
Act.
|
SCHEDULE
H
XXXXXX
SHARE PURCHASE AGREEMENT
SHARE
PURCHASE AGREEMENT
BETWEEN
4325231
CANADA INC.
AND
LORUS
THERAPEUTICS INC.
MADE
AS OF
•,
2007
XxXxxxxx
Xxxxxxxx LLP
TABLE
OF CONTENTS
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT
ARTICLE
1 - INTERPRETATION
|
1
|
|
1.01
|
Definitions
|
1
|
1.02
|
Headings
|
2
|
1.03
|
Extended
Meanings
|
2
|
1.04
|
Statutory
References
|
3
|
1.05
|
Accounting
Principles
|
3
|
1.06
|
Currency
|
3
|
1.07
|
Schedules
|
3
|
ARTICLE
2 - PURCHASE
AND SALE
|
3
|
|
2.01
|
Shares
to be Sold and Purchased
|
3
|
2.02
|
Purchase
Price
|
3
|
2.03
|
Satisfaction
of Purchase Price
|
3
|
2.04
|
Closing
|
4
|
ARTICLE
3 - REPRESENTATIONS
AND WARRANTIES
|
4
|
|
3.01
|
Vendor’s
Representations and Warranties
|
4
|
3.02
|
Purchaser’s
Representations and Warranties
|
5
|
3.03
|
Survival
of Representations, Warranties and Covenants
|
5
|
ARTICLE
4 - COVENANTS
|
6
|
|
4.01
|
Cooperation
|
6
|
4.02
|
Cooperation
on Tax Matters
|
6
|
ARTICLE
5 - CONDITIONS
|
6
|
|
5.01
|
Conditions
for the Benefit of the Purchaser
|
6
|
5.02
|
Conditions
for the Benefit of the Vendor
|
7
|
ARTICLE
6 - GENERAL
|
8
|
|
6.01
|
Further
Assurances
|
8
|
6.02
|
Time
of the Essence
|
8
|
6.03
|
Benefit
of the Agreement
|
8
|
6.04
|
Entire
Agreement
|
9
|
6.05
|
Amendments
and Waiver
|
9
|
6.06
|
Notices
|
9
|
6.07
|
Governing
Law
|
10
|
6.08
|
Counterparts
|
10
|
6.09
|
Facsimiles
|
10
|
SHARE
PURCHASE AGREEMENT
THIS
AGREEMENT made as of •, 2007;
B
E T W E E N:
LORUS
THERAPEUTICS INC.,
a corporation incorporated under the laws of Canada (the “Purchaser”),
-
and -
4325231
CANADA INC.,
a corporation incorporated under the laws of Canada (the “Vendor”).
WHEREAS
the Vendor is the beneficial owner of the Shares;
AND
WHEREAS TEMIC is the registered owner of the Shares and has consented to the
sale of the Shares as contemplated herein;
AND
WHEREAS the Vendor desires to sell and the Purchaser desires to purchase the
Shares upon and subject to the terms and conditions hereinafter set
forth;
NOW
THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the
covenants and agreements herein contained the parties hereto agree as
follows:
ARTICLE
1 - INTERPRETATION
1.01
|
Definitions
|
In
this Agreement, unless something in the subject matter or context is
inconsistent therewith:
“Agreement”
means this share purchase agreement, including its recitals and schedules,
as
amended from time to time and all amendments made hereto by written agreement
between the Vendor and the Purchaser.
“Applicable
Law”
means
(i)
|
any
applicable domestic or foreign law including any statute, subordinate
legislation or treaty, and
|
(ii)
|
any
applicable guideline, directive, rule, standard, requirement, policy,
order, judgment, injunction, award or decree of a Governmental Authority
having the force of law.
|
“Business
Day”
means a day other than a Saturday, Sunday or statutory holiday in the Province
of Ontario.
“Charges”
means all liens, charges, encumbrances and/or rights of others.
“Closing
Date”
means •, 2007 or such other date as may be agreed to in writing between the
Vendor and the Purchaser.
“Corporation”
means XxXxxx Pharmaceuticals Inc., a corporation existing under the laws of
Ontario.
“Governmental
Authority”
means any domestic or foreign legislative, executive, judicial or administrative
body or person having or purporting to have jurisdiction in the relevant
circumstances.
“Newco
Note 3”
has the meaning set forth in Section 2.03.
“Purchase
Price”
has the meaning set forth in Section 2.02.
“Share
Pledge Agreement”
has the meaning set forth in Section 3.01(c).
“Shares”
means • preference shares and • common shares of the Corporation.
“Tax
Act”
means the Income Tax
Act
(Canada).
“TEMIC”
means The Xxxx Xxxxx Investment Corporation.
“Time
of Closing”
means • •.m. (Toronto Time) on the Closing Date.
1.02
|
Headings
|
The
division of this Agreement into Articles and Sections and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. The terms “this Agreement”,
“hereof”, “hereunder” and similar expressions refer to this Agreement and not to
any particular Article, Section or other portion hereof and include any
agreement supplemental hereto. Unless something in the subject matter or context
is inconsistent therewith, references herein to Articles and Sections are to
Articles and Sections of this Agreement.
1.03
|
Extended
Meanings
|
In
this Agreement words importing the singular number only include the plural
and
vice
versa,
words importing any gender include all genders and words importing persons
include individuals, corporations, limited and unlimited liability companies,
general and limited partnerships, associations, trusts, unincorporated
organizations, joint ventures and Governmental Authorities. The term “including”
means “including without limiting the generality of the foregoing”.
-
2 -
1.04
|
Statutory
References
|
In
this Agreement, unless something in the subject matter or context is
inconsistent therewith or unless otherwise herein provided, a reference to
any
statute is to that statute as now enacted or as the same may from time to time
be amended, re-enacted or replaced and includes any regulations made
thereunder.
1.05
|
Accounting
Principles
|
Wherever
in this Agreement reference is made to a calculation to be made or an action
to
be taken in accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting principles
from time to time approved by the Canadian Institute of Chartered Accountants,
or any successor institute, applicable as at the date on which such calculation
or action is made or taken or required to be made or taken.
1.06
|
Currency
|
All
references to currency herein are to lawful money of Canada.
1.07
|
Schedules
|
The
following is a Schedule to this Agreement:
Schedule
A - Newco Note 3.
ARTICLE
2 - PURCHASE
AND SALE
2.01
|
Shares
to be Sold and
Purchased
|
Upon
and subject to the terms and conditions hereof, the Vendor will sell the Shares
to the Purchaser and the Purchaser will purchase the Shares from the Vendor,
as
of the Time of Closing on the Closing Date.
2.02
|
Purchase
Price
|
The
purchase price payable to the Vendor for the Shares (such amount being
hereinafter referred to as the “Purchase
Price”)
will be $•, which amount the parties estimate to be the fair market value of the
Shares.
2.03
|
Satisfaction
of Purchase Price
|
The
Purchase Price will be satisfied in full
by the issuance by the Purchaser to the Vendor of a demand non-interest bearing
promissory note in the aggregate principal amount of $• (the “New
Lorus Note 3”),
substantially in the form of the promissory note attached hereto as Schedule
A.
-
3 -
2.04
|
Closing
|
The
sale and purchase of the Shares shall be completed at the Time of Closing at
the
offices of XxXxxxxx Xxxxxxxx XXX, Xxxxx 0000, Xxxxxxx Xxxxxxxx Xxxx Xxxxx,
Xxxxxxx-Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx.
ARTICLE
3 - REPRESENTATIONS
AND WARRANTIES
3.01
|
Vendor’s
Representations and
Warranties
|
The
Vendor hereby makes to the Purchaser the following representations and
warranties and acknowledges that the Purchaser is relying upon such
representations and warranties in connection with entering into this Agreement:
(a)
|
The
Corporation is a corporation duly incorporated, organized and subsisting
under the laws of Ontario with the corporate power to own its assets
and
to carry on its business.
|
(b)
|
The
authorized capital of the Corporation consists of (i) an unlimited
number
of common shares, and
(ii) an unlimited number of preferred
shares.
|
(c)
|
All
of the issued and outstanding Shares are beneficially owned by the
Vendor
and pledged to TEMIC pursuant to a share pledge agreement dated October
6,
2004 (the “Share
Pledge Agreement”).
|
(d)
|
The
Vendor has the power, authority and right to enter into and deliver
this
Agreement and to transfer the legal and beneficial title and ownership
of
the Shares to the Purchaser, subject to all existing Charges, including
the Share Pledge Agreement.
|
(e)
|
This
Agreement constitutes a valid and legally binding obligation of the
Vendor, enforceable against the Vendor in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization and
other
laws of general application limiting the enforcement of creditors’ rights
generally and to the fact that specific performance is an equitable
remedy
available only in the discretion of the
court.
|
(f)
|
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Vendor will result in
the
violation of:
|
(i)
|
any
of the provisions of the constating documents or by-laws of the Vendor
or
of the Corporation;
|
(ii)
|
any
agreement or other instrument to which the Vendor or the Corporation
is a
party or by which the Vendor or the Corporation is bound;
or
|
-
4 -
(iii)
|
any
Applicable Law in respect of which the Vendor or the Corporation
must
comply, except to the extent that such violation would not reasonably
be
expected to limit in any material manner the operations of the
Corporation’s business as they are presently
conducted.
|
(g)
|
The
Vendor is not a non-resident person within the meaning of section
116 of
the Tax Act.
|
3.02
|
Purchaser’s
Representations and
Warranties
|
The
Purchaser hereby makes to the Vendor the following representations and
warranties and acknowledges that the Vendor is relying upon such representations
and warranties in connection with entering into this Agreement:
(a)
|
The
Purchaser is a corporation duly incorporated, organized and subsisting
under the laws of Canada with the corporate power to own its assets
and to
carry on its business.
|
(b)
|
The
Purchaser has the power, authority and right to enter into and deliver
this Agreement and to complete the transactions contemplated to be
completed by the Purchaser
hereunder.
|
(c)
|
This
Agreement constitutes a valid and legally binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its
terms
subject to applicable bankruptcy, insolvency, reorganization and
other
laws of general application limiting the enforcement of creditors’ rights
generally and to the fact that specific performance is an equitable
remedy
available only in the discretion of the
court.
|
(d)
|
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Purchaser will result
in a
violation of:
|
(i)
|
any
of the provisions of the constating documents or by-laws of the
Purchaser;
|
(ii)
|
any
agreement or other instrument to which the Purchaser is a party or
by
which the Purchaser is bound; or
|
(iii)
|
any
Applicable Law.
|
3.03
|
Survival
of Representations, Warranties and
Covenants
|
(1)
|
The
respective representations and warranties of the Vendor and the Purchaser
contained in this Agreement shall survive the completion of the sale
and
purchase of the Shares herein provided for and, notwithstanding such
completion, will continue in full force and effect for a period of
two
years from the Closing Date.
|
-
5 -
(2)
|
The
respective covenants of the Vendor and the Purchaser contained in
this
Agreement shall survive the completion of the sale and purchase of
the
Shares herein provided for and, notwithstanding such completion,
shall
continue in full force and effect for the benefit of the Vendor or
the
Purchaser, as applicable, in accordance with the terms
thereof.
|
ARTICLE
4 - COVENANTS
4.01
|
Cooperation
|
Each
of the Purchaser and the Vendor shall use commercially reasonable efforts,
at
the expense of the Purchaser, to provide such information and assistance as
is
reasonably necessary to assist the Purchaser in obtaining all necessary
consents, approvals, conveyances, assurances, assignments or any other
documentation necessary or reasonably required by the Purchaser to transfer
all
of the Vendor’s right, title and interest in and to the Purchased Assets to the
Purchaser, subject to all existing Charges.
4.02
|
Cooperation
on Tax Matters
|
Each
of the Vendor and the Purchaser will, to the extent reasonably within such
party’s control, taking into account such party’s access to books and records,
furnish or cause to be furnished to each other, at the expense of the Purchaser,
as promptly as practicable, such information and assistance, and provide
additional information and explanations of any materials provided, relating
to
the Purchased Assets as is reasonably necessary for the filing of any tax
returns, for the preparation of any audit, and for the prosecution or defence
of
any Claim, suit or proceeding relating to any adjustment or proposed adjustment
with respect to taxes.
ARTICLE
5 - CONDITIONS
5.01
|
Conditions
for the Benefit of the
Purchaser
|
(1)
|
The
sale by the Vendor and the purchase by the Purchaser of the Shares
is
subject to the following conditions which are for the exclusive benefit
of
the Purchaser to be performed or complied with at or prior to the
Time of
Closing:
|
(a)
|
the
representations and warranties of the Vendor set forth in Section
3.01
will be true and correct at the Time of Closing with the same force
and
effect as if made at and as of such
time;
|
(b)
|
the
Vendor shall have performed or complied with all of the terms, covenants
and conditions of this Agreement to be performed or complied with
by the
Vendor at or prior to the Time of
Closing;
|
(c)
|
the
Purchaser shall be furnished with such certificates, affidavits or
statutory declarations of the Corporation and of the Vendor or of
officers
of the Corporation and of the Vendor as the Purchaser or the Purchaser’s
counsel may
|
-
6 -
|
reasonably
think necessary in order to establish that the terms, covenants
and
conditions contained in this Agreement to have been performed or
complied
with by the Vendor or by the Corporation, as the case may be, at
or prior
to the Time of Closing have been performed and complied with and
that the
representations and warranties of the Vendor herein given are true
and
correct at the Time of Closing;
|
(d)
|
there
will have been obtained from all appropriate Governmental Authorities
such
approvals or consents as are required to permit the change of ownership
of
the Shares contemplated hereby and to permit the business of the
Corporation to be carried on as now
conducted;
|
(e)
|
no
action or proceeding in Canada will be pending or threatened by any
person
to enjoin, restrict or prohibit
|
(i)
|
the
sale and purchase of the Shares contemplated hereby;
or
|
(ii)
|
the
right of the Corporation to conduct the business of the Corporation;
and
|
(f)
|
all
necessary steps and proceedings will have been taken to permit the
Shares
to be duly and regularly transferred to the
Purchaser.
|
(2)
|
In
case any term or covenant of the Vendor or condition to be performed
or
complied with for the benefit of the Purchaser at or prior to the
Time of
Closing shall not have been performed or complied with at or prior
to the
Time of Closing, the Purchaser may, without limiting any other right
that
the Purchaser may have, at its sole option,
either:
|
(a)
|
rescind
this Agreement by notice to the Vendor, and in such event the Purchaser
shall be released from all obligations hereunder;
or
|
(b)
|
waive
compliance with any such term, covenant or condition in whole or
in part
on such terms as may be agreed upon without prejudice to any of its
rights
of rescission in the event of non-performance of any other term,
covenant
or condition in whole or in part.
|
5.02
|
Conditions
for the Benefit of the
Vendor
|
(1)
|
The
sale by the Vendor and the purchase by the Purchaser of the Shares
is
subject to the following conditions which are for the exclusive benefit
of
the Vendor to be performed or complied with at or prior to the Time
of
Closing:
|
(a)
|
the
representations and warranties of the Purchaser set forth in Section
3.02
shall be true and correct at the Time of Closing with the same force
and
effect as if made at and as of such
time;
|
-
7 -
(b)
|
the
Purchaser shall have performed or complied with all of the terms,
covenants and conditions of this Agreement to be performed or complied
with by the Purchaser at or prior to the Time of
Closing;
|
(c)
|
the
Vendor shall be furnished with such certificates, affidavits or statutory
declarations of the Purchaser or of officers of the Purchaser as
the
Vendor or the Vendor’s counsel may reasonably think necessary in order to
establish that the terms, covenants and conditions contained in this
Agreement to have been performed or complied with by the Purchaser
at or
prior to the Time of Closing have been performed and complied with
and
that the representations and warranties of the Purchaser herein given
are
true and correct at the Time of Closing;
and
|
(d)
|
the
Purchaser will have delivered to the Vendor an original executed
copy of
Newco Note 3.
|
(2)
|
In
case any term or covenant of the Purchaser or condition to be performed
or
complied with for the benefit of the Vendor at or prior to the Time
of
Closing shall not have been performed or complied with at or prior
to the
Time of Closing, the Vendor may, without limiting any other right
that the
Vendor may have, at its sole option,
either:
|
(a)
|
rescind
this Agreement by notice to the Purchaser, and in such event the
Vendor
shall be released from all obligations hereunder;
or
|
(b)
|
waive
compliance with any such term, covenant or condition in whole or
in part
on such terms as may be agreed upon without prejudice to any of its
rights
of rescission in the event of non-performance of any other term,
covenant
or condition in whole or in part.
|
ARTICLE
6 - GENERAL
6.01
|
Further
Assurances
|
Each
of the Vendor and the Purchaser shall from time to time execute and deliver
all
such further documents and instruments and do all acts and things as the other
party may reasonably require to effectively carry out or better evidence or
perfect the full intent and meaning of this Agreement.
6.02
|
Time
of the Essence
|
Time
shall be of the essence of this Agreement.
6.03
|
Benefit
of the Agreement
|
This
Agreement shall enure to the benefit of and be binding upon the respective
heirs, executors, administrators, successors and permitted assigns of the
parties hereto.
-
8 -
6.04
|
Entire
Agreement
|
Except
for the various collateral agreements entered into in connection with the
Arrangement, this Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and cancels and supersedes
any
prior understandings and agreements between the parties hereto with respect
thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the parties other than as expressly set forth in this Agreement.
6.05
|
Amendments
and Waiver
|
No
modification of or amendment to this Agreement shall be valid or binding unless
set forth in writing and duly executed by both of the parties hereto and no
waiver of any breach of any term or provision of this Agreement shall be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided, shall be limited to the
specific breach waived.
6.06
|
Notices
|
Any
demand, notice or other communication to be given in connection with this
Agreement shall be given in writing and shall be given by personal delivery,
by
registered mail or by electronic means of communication addressed to the
recipient as follows:
To
the Vendor:
0
Xxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax
No.: 000-000-0000
Email: xxxxxxxxx@xxxxxxxxxx.xxx
Attention: Director
of Finance
To
the Purchaser:
0
Xxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax
No.: 000-000-0000
Email: xxxxxxxxx@xxxxxxxxxx.xxx
Attention: Director
of Finance
or
to such other address, individual or electronic communication number as may
be
designated by notice given by either party to the other. Any demand, notice
or
other communication given by personal delivery shall be conclusively deemed
to
have been given on the day of actual
-
9 -
delivery
thereof and, if given by registered mail, on the fourth Business Day following
the deposit thereof in the mail and, if given by electronic communication,
on
the day of transmittal thereof if given during the normal business hours of
the
recipient and on the Business Day during which such normal business hours next
occur if not given during such hours on any day. If the party giving any demand,
notice or other communication knows or ought reasonably to know of any
difficulties with the postal system which might affect the delivery of mail,
any
such demand, notice or other communication shall not be mailed but shall be
given by personal delivery or by electronic communication.
6.07
|
Governing
Law
|
This
Agreement is governed by and will be construed in accordance with the laws
of
the Province of Ontario and the laws of Canada applicable therein.
6.08
|
Counterparts
|
This
Agreement may be executed in any number of counterparts, each of which will
be
deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument.
6.09
|
Facsimiles
|
Delivery
of an executed signature page to this Agreement by any party by electronic
transmission will be as effective as delivery of a manually executed copy of
this Agreement by such party.
IN
WITNESS WHEREOF the parties have executed this Agreement.
4325231
CANADA INC.
|
||||
Per:
|
||||
Per:
|
||||
LORUS
THERAPEUTICS INC.
|
||||
Per:
|
||||
Per:
|
||||
-
10 -
Schedule
A
Newco
Note 3
PROMISSORY
NOTE
FOR
VALUE RECEIVED, the undersigned hereby promises to pay the sum of $• in lawful
money of Canada, without interest, to or to the order of 4325231 Canada Inc.
on
demand.
All
payments hereunder will be made without days of grace, presentment, protest,
notice of dishonour or any other notice whatsoever, all of which are hereby
expressly waived by the maker and each endorser hereof.
The
principal amount hereof may at any time be repaid in full without notice or
bonus.
This
Promissory Note will be governed by and construed in accordance with the laws
of
the Province of Ontario and the federal laws of Canada applicable
therein.
DATED
as of • , 2007.
LORUS
THERAPEUTICS INC.
|
||
Per:
|
||
Name:
|
||
Title:
|
SCHEDULE
I
PINNACLE
SHARE PURCHASE AGREEMENT
PINNACLE
SHARE PURCHASE AGREEMENT
BETWEEN
6707157
CANADA INC.
AND
LORUS
THERAPEUTICS INC.
MADE
AS OF
•,
2007
XxXxxxxx
Xxxxxxxx LLP
PINNACLE
SHARE PURCHASE AGREEMENT
TABLE OF CONTENTS
TABLE OF CONTENTS
ARTICLE
1 - INTERPRETATION
|
1
|
|
1.01
|
Definitions
|
1
|
1.02
|
Headings
|
6
|
1.03
|
Extended
Meanings
|
6
|
1.04
|
Statutory
References
|
6
|
1.05
|
Accounting
Principles
|
7
|
1.06
|
Currency
|
7
|
1.07
|
Schedules
|
7
|
ARTICLE
2 - SALE
AND PURCHASE OF SHARES AND RELATED MATTERS
|
7
|
|
2.01
|
Shares
to be Sold and Purchased
|
7
|
2.02
|
Purchase
Price
|
7
|
2.03
|
Payment
of Purchase Price
|
7
|
2.04
|
Closing
Adjustment
|
8
|
2.05
|
Excluded
Liabilities
|
9
|
2.06
|
Material
Assignments
|
9
|
ARTICLE
3 - REPRESENTATIONS
AND WARRANTIES
|
9
|
|
3.01
|
New
Lorus’s Representations and Warranties
|
9
|
3.02
|
Purchaser’s
Representations and Warranties
|
20
|
ARTICLE
4 - COVENANTS
|
21
|
|
4.01
|
Taxes
|
21
|
ARTICLE
5 - CONDITIONS
AND TERMINATION
|
21
|
|
5.01
|
Conditions
for the Benefit of the Purchaser
|
21
|
5.02
|
Conditions
for the Benefit of New Lorus
|
23
|
5.03
|
Waiver
of Condition
|
24
|
ARTICLE
6 - CLOSING
ARRANGEMENTS
|
25
|
|
6.01
|
Closing
|
25
|
6.02
|
Deliveries
and Confidentiality
|
25
|
ARTICLE
7 - INDEMNIFICATION
|
25
|
|
7.01
|
Survival
|
25
|
7.02
|
Indemnification
by New Lorus
|
26
|
7.03
|
Indemnification
by the Purchaser
|
27
|
7.04 | Third Party Indemnification | 28 |
7.05
|
Third
Party Indemnification - Tax Claims
|
29
|
7.06 | Exclusive Remedy | 30 |
7.07
|
After
Tax Basis
|
30
|
7.08
|
Adjustment
to Purchase Price
|
30
|
ARTICLE
8 - GENERAL
|
30
|
|
8.01
|
Further
Assurances
|
30
|
8.02
|
Time
of the Essence
|
31
|
8.03
|
Fees
and Commissions
|
31
|
8.04
|
Benefit
of the Agreement
|
31
|
8.05
|
Entire
Agreement
|
31
|
8.06
|
Amendments
and Waivers
|
31
|
8.07
|
Notices
|
31
|
8.08
|
Remedies
Cumulative
|
32
|
8.09
|
No
Third Party Beneficiaries
|
32
|
8.10
|
Governing
Law
|
33
|
8.11
|
Attornment
|
33
|
8.12
|
Counterparts
|
33
|
8.13
|
Facsimiles
|
33
|
-
ii -
PINNACLE
SHARE PURCHASE AGREEMENT
THIS
AGREEMENT is made as of •, 2007
BETWEEN
6707157
CANADA INC.,
a corporation incorporated under the laws of Canada (the “Purchaser”)
-
and -
LORUS
THERAPEUTICS INC.,
a corporation incorporated under the laws of Canada (“New
Lorus”)
WHEREAS
New Lorus is the beneficial and registered owner of the Shares;
AND
WHEREAS New Lorus desires to sell and the Purchaser desires to purchase the
Shares upon and subject to the terms and conditions set out in this
Agreement;
NOW
THEREFORE, in consideration of the covenants and agreements herein contained,
the parties agree as follows:
ARTICLE
1
- INTERPRETATION
1.01
|
Definitions
|
Unless
the context clearly indicates to the contrary, terms used in this Agreement,
including the recitals hereto, that are defined in the Arrangement Agreement
and
not otherwise defined herein have the meanings given to them in the Arrangement
Agreement. In addition, the following terms have the meanings set out
below:
“Access
and Tax Cooperation Agreement”
means the access to records and tax cooperation agreement dated the date hereof
between Old Lorus, New Lorus, GeneSense and XxXxxx, such agreement substantially
in the form attached hereto as Schedule 1.01-A.
“Affiliate”
has the meaning ascribed thereto in the Canada
Business Corporations Act.
“Agreement”
means this agreement, including its recitals and schedules, as amended from
time
to time.
“Arrangement
Agreement”
means the Arrangement Agreement dated as of May 1, 2007 between Old Lorus,
XxXxxx Pharmaceuticals Inc., GeneSense Technologies Inc., New Lorus, the
Purchaser and Pinnacle.
“Assets”
means all of the assets, Contracts, rights and the Excluded Subsidiary Shares
purchased and sold pursuant to the Transfer Transactions.
“Balance
Sheet”
means the balance sheet of Old Lorus as at the Balance Sheet Date.
-
1
-
“Balance
Sheet Date”
means May 31, 2006.
“Buyout
Amount”
means the buyout amount determined as at a specified date and calculated in
the
manner previously agreed in writing between the Purchaser and New Lorus.
“Certificate
of Arrangement”
means the certificate of arrangement giving effect to the Arrangement issued
pursuant to s. 192(7) of the Canada
Business Corporations Act.
“Claims”
means all losses, damages, expenses, liabilities (whether accrued, actual,
contingent, latent or otherwise), claims and demands of whatever nature or
kind
including all reasonable legal fees and disbursements.
“Closing
Buyout Amount”
has the meaning set out in Section 2.04(2).
“Closing
Buyout Statement”
has the meaning set out in Section 2.04(2).
“Contract”
means any agreement, incentive, contract, lease, trust agreement, license,
opinion, instrument or other commitment of any kind or nature whatsoever,
whether written or oral.
“CRA”
means the Canada Revenue Agency.
“Excess
Amount”
has the meaning set out in Section 7.02(2)(b)(iii).
“Environmental
Law” means
any Applicable Law relating to the environment including those pertaining
to:
(i)
|
reporting,
licensing, permitting, investigating, remediating and cleaning up
in
connection with any presence or Release, or the threat of the same,
of
Hazardous Substances, and
|
(ii)
|
the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, handling and the like of Hazardous Substances, including
those
pertaining to occupational health and
safety.
|
“Escrow
Agent”
means Equity Transfer and Trust Company.
“Escrow
Agreement”
means the escrow agreement dated the date hereof between the Purchaser, New
Lorus and the Escrow Agent.
“Excluded
Liabilities”
has the meaning set out in Section 2.05.
“Excluded
Subsidiary Shares”
means all of the GeneSense Shares and XxXxxx Shares purchased and sold pursuant
to the Subsidiary Share Purchase Agreements.
“Financial
Statements”
has the meaning set out in Section 3.01(3)(b).
-
2
-
“FMV
Amount”
means an amount equal the aggregate of the purchase prices of the Assets as
set
out in the Asset Transfer Agreements and the Subsidiary Share Purchase
Agreements, as may be adjusted in accordance with the terms
thereof.
“GST”
has the meaning set out in Section 3.01(12)(a)(xiii).
“Hazardous
Substance”
means any substance or material that is prohibited, controlled or regulated
by
any Governmental Authority pursuant to Environmental Laws including pollutants,
contaminants, dangerous goods or substances, toxic or hazardous substances
or
materials, wastes (including solid non-hazardous wastes and subject wastes),
petroleum and its derivatives and by-products and other hydrocarbons, all as
defined in or pursuant to any Environmental Law.
“Holdback
Amount”
means the amount of $600,000.
“Indemnification
Agreement”
means the indemnification agreement dated as of the date hereof between Old
Lorus and New Lorus.
“Intellectual
Property”
means intellectual property of any nature and kind including all domestic and
foreign trade-marks, business names, trade names, domain names, trading styles,
patents, trade secrets, Software, industrial designs and copyrights, whether
registered or unregistered, and all applications for registration thereof,
and
inventions, formulae, recipes, product formulations, processes and processing
methods, technology and techniques, and know-how, and any confidential
information, including any submissions to a regulatory authority, clinical
trial
results, any goodwill associated with trade-marks, business names, trade names,
domain names and the like and the waiver of any moral rights in any copyright.
“Inventories”
means all inventories of Old Lorus including all finished goods, work in
progress, raw materials and spare parts.
“knowledge”
and similar expressions when used in relation to New Lorus means the knowledge
of Xxxxxx X. Xxxxx, Xxxxxxxxx Xxxxxxxx or Xxxx Xxxxxxx in their capacities
as
(i) President and Chief Executive Officer, Director of Finance and Controller,
and acting Controller of
New Lorus, respectively, and (b) President and Chief Executive Officer, Director
of Finance and Controller, and acting Controller of Old Lorus, respectively,
prior to the Effective Time, in each case after reasonable enquiry and review
with the relevant directors, officers and employees of New Lorus and Old Lorus,
as applicable.
“Lands”
means any freehold or leasehold property and interests therein including all
rights of way, licences or rights of occupation, easements or other similar
rights of Old Lorus in connection with any such freehold or leasehold
property.
“Liabilities”
means, with respect to any person, any liability or obligation of such person
of
any kind, character or description, whether known or unknown, absolute or
contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, and whether or not the same is required to be accrued on
the
financial statements of such person.
-
3
-
“Lock-Up
Amount”
has the meaning set out in Section 2.02.
“Material
Assignments”
has the meaning set out in Section 2.06.
“New
Lorus Indemnified Parties”
has the meaning set out in Section 7.03(1).
“Objection
Notice”
has the meaning set out in Section 2.04(3).
“Old
Lorus”
means 4325231 Canada Inc., a corporation incorporated under the laws of
Canada.
“Permits”
means all permits, consents, waivers, licences, certificates, approvals,
authorizations, registrations, franchises, rights, privileges, quotas and
exemptions, or any item with a similar effect, issued or granted by any
person.
“Personal
Information”
means the type of information regulated by Privacy Laws and collected, used,
disclosed or retained by Old Lorus including information regarding Old Lorus’s
customers, suppliers, employees and agents, such as an individual’s name,
address, age, gender, identification number, income, family status, citizenship,
employment, assets, liabilities, source of funds, payment records, credit
information, personal references and health records.
“Pre-Closing
Buyout Amount”
has the meaning set out in Section 2.04(1).
“Privacy
Laws”
means all applicable federal, provincial, municipal or other laws governing
the
collection, use, disclosure and retention of Personal Information, including
the
Personal
Information Protection and Electronic Documents Act
(Canada).
“Privacy
Policies”
means all privacy, data protection and similar policies adopted or used by
Old
Lorus in respect of Personal Information, including any complaints
process.
“Purchase
Price”
has the meaning set out in Section 2.02.
“Purchaser
Indemnified Parties”
has the meaning set out in Section 7.02(1).
“Release”
means any release or discharge of any Hazardous Substance including any
discharge, spray, injection, inoculation, abandonment, deposit, spillage,
leakage, seepage, pouring, emission, emptying, throwing, dumping, placing,
exhausting, escape, xxxxx, migration, dispersal, dispensing or
disposal.
“Remedial
Action”
means any action that is required to achieve compliance with Environmental
Law
or to resolve a third party claim to: (i) clean up, remove, treat or in any
other way remediate Hazardous Substances in the environment; (ii) prevent any
Release or threatened Release of Hazardous Substances where such Release would
violate any Environmental Laws or result in Liability to the Purchaser; or
(iii)
perform remedial studies, investigations, restoration and post-remedial studies,
investigations and monitoring on, about or in connection with any of the
foregoing.
-
4
-
“Share
Purchase Closing Time”
means the time of completion of the sale and purchase of the Shares pursuant
to
this Agreement on the Effective Date.
“Shares”
means, collectively, the
Appropriate Number (as defined in the Plan of Arrangement) of the
outstanding voting
common shares of Old Lorus and all of the outstanding non-voting common shares
of Old Lorus.
“Software”
means all software relating to Old Lorus or any of its Subsidiaries including
all versions thereof, and all related documentation, manuals, source code and
object code, program files, data files, computer related data, field and data
definitions and relationships, data definition specifications, data models,
program and system logic, interfaces, program modules, routines, sub-routines,
algorithms, program architecture, design concepts, system designs, program
structure, sequence and organization, screen displays and report layouts, and
all other material related to such software.
“Special
Representations”
means, collectively, the representations and warranties of New Lorus set forth
in Sections 3.01(1) (other than subsections 3.01(1)(c) and 3.01(1)(d)),
3.01(2)(a), 3.01(3)(c), 3.01(4)(a), 3.01(4)(b), 3.01(4)(c), 3.01(5), 3.01(6),
3.01(7)(a), 3.01(7)(b), 3.01(7)(c), 3.01(7)(d), 3.01(9)(a), 3.01(10),
3.01(13)(e) and 3.01(13)(f).
“Subsidiary”
means, with respect to any person, any corporation or other person of which
securities or other interests having the power to elect a majority of that
corporation’s or other person’s board of directors or similar governing body, or
otherwise having the power to direct the business and policies of that
corporation or other person (other than securities or other interests having
such power only upon the happening of a contingency that has not occurred)
are
held by the referent person or one or more of its Subsidiaries; when used
without reference to a particular person, “Subsidiary” means a Subsidiary of Old
Lorus prior to the Effective Time.
“Tax
Act”
means the Income Tax
Act
(Canada), as amended.
“Taxes”
means all federal, provincial, territorial, county, municipal, local or foreign
taxes, duties, imposts, levies, assessments, tariffs and other charges imposed,
assessed or collected by a Governmental Authority including, (i) any gross
income, net income, gross receipts, business, royalty, capital, capital gains,
goods and services, value added, severance, stamp, franchise, occupation,
premium, capital stock, sales and use, real property, land transfer, personal
property, ad valorem, transfer, licence, profits, windfall profits,
environmental, payroll, employment, employer health, pension plan, anti-dumping,
countervail, excise, severance, stamp, occupation, or premium tax, (ii) all
withholdings on amounts paid to or by the relevant person, (iii) all employment
insurance premiums, Canada, Quebec and any other pension plan contributions
or
premiums, (iv) any fine, penalty, interest, or addition to tax, (v) any tax
imposed, assessed, or collected or payable pursuant to any tax-sharing agreement
or any other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee, and (vi) any Liability for any
of
the foregoing as a transferee, successor, guarantor, or by contract or by
operation of law.
-
5
-
“Tax
Returns”
means all returns, reports, declarations, statements, bills, schedules, forms
or
written information of, or in respect of, Taxes that are, or are required to
be,
filed with or supplied to any Taxation Authority.
“Taxation
Authority”
means any domestic or foreign government, agency or authority that is entitled
to impose Taxes or to administer any applicable Tax legislation.
“Transfer
Transactions”
means, collectively, the transactions contemplated by the Asset Transfer
Agreements and the Subsidiary Share Purchase Agreements.
1.02
|
Headings
|
The
division of this Agreement into Articles and Sections and the insertion of
a
table of contents and headings are for convenience of reference only and do
not
affect the construction or interpretation of this Agreement. The terms “hereof”,
“hereunder” and similar expressions refer to this Agreement and not to any
particular Article, Section or other portion hereof. Unless something in the
subject matter or context is inconsistent therewith, references herein to
Articles, Sections and Schedules are to Articles and Sections of and Schedules
to this Agreement.
1.03
|
Extended
Meanings
|
In
this Agreement words importing the singular number only include the plural
and
vice
versa,
words importing any gender include all genders and words importing persons
include individuals, corporations, limited and unlimited liability companies,
general and limited partnerships, associations, trusts, unincorporated
organizations, joint ventures and Governmental Authorities. The term “including”
means “including without limiting the generality of the foregoing” and the term
“third party” means any person other than New Lorus and the
Purchaser.
1.04
|
Statutory
References
|
In
this Agreement, unless something in the subject matter or context is
inconsistent therewith or unless otherwise herein provided, a reference to
any
statute is to that statute as now enacted or as the same may from time to time
be amended, re-enacted or replaced and includes any regulations made
thereunder.
1.05
|
Accounting
Principles
|
Wherever
in this Agreement reference is made to a calculation to be made or an action
to
be taken in accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting principles
from time to time approved by the Canadian Institute of Chartered Accountants,
or any successor institute, applicable as at the date on which such calculation
or action is made or taken or required to be made or taken.
-
6
-
1.06
|
Currency
|
All
references to
currency herein are to lawful money of Canada.
1.07
|
Schedules
|
The
following are the
Schedules to this Agreement:
Schedule
1.01-A
|
-
|
Access
and Tax Cooperation Agreement
|
Schedule
3.01(1)(d)
|
-
|
Share
Conditions
|
Schedule
3.01(12)(a)
|
-
|
Taxes
|
Schedule
3.01(13)(b)
|
-
|
Suits
or Proceedings
|
Schedule
5.01(g)
|
-
|
Forms
of Release
|
Schedule
5.01(j)
|
-
|
Payout
Lenders
|
ARTICLE
2
- SALE AND PURCHASE
OF SHARES AND RELATED MATTERS
2.01
|
Shares
to be Sold and
Purchased
|
Upon
and subject to
the terms and conditions hereof, New Lorus will sell the Shares to the Purchaser
and the Purchaser will purchase the Shares from New Lorus, as of the Share
Purchase Closing Time.
2.02
|
Purchase
Price
|
The
purchase price payable to New Lorus for each Share (the “Purchase
Price”)
will be equal to $0.0040775156; provided that, in no event will the aggregate
amount payable by the Purchaser under this Agreement and to all of the Lock-Up
Holders pursuant to Section 3.02(24) of the Plan of Arrangement exceed
$8,510,000, and to the extent that such aggregate amount as calculated in
accordance with the foregoing exceeds $8,510,000, the Purchase Price for each
Share payable at the Share Purchase Closing Time will be reduced such that
such
aggregate amount is $8,510,000. Following the Share Purchase Closing Time,
the
Purchase Price will be subject to adjustment pursuant to Section
2.04.
2.03
|
Payment
of Purchase Price
|
(1) The
aggregate Purchase Price will be payable at the Share Purchase Closing Time
as
follows:
(a)
|
the
wire transfer of an amount equal to the aggregate Purchase Price,
less the
Holdback Amount, in immediately available funds to a Canadian dollar
account specified by New Lorus; and
|
-
7
-
(b)
|
the
wire transfer of the Holdback Amount in immediately available funds
to an
interest-bearing account specified by the Escrow Agent to be held
and
disbursed pursuant to the terms and conditions of the Escrow
Agreement.
|
(2) The
Holdback Amount will be withheld from the Purchase Price and will be held as
security for and a partial, but not exclusive, source of satisfaction of New
Lorus’s indemnification obligations under this Agreement until the first
anniversary of the Closing Date, all in accordance with the terms and
conditions
of the Escrow Agreement.
2.04
|
Closing
Adjustment
|
(1) The
aggregate Purchase Price has been determined on the basis of a Buyout Amount
of
$8,510,000 as at January 31, 2007 (the “Pre-Closing
Buyout Amount”).
(2) On
or before the date that is 90
days after the Closing Date, New Lorus will prepare and deliver to the Purchaser
an unaudited statement (the “Closing
Buyout Statement”)
setting out the calculation of the Buyout Amount as at the Closing Date (the
“Closing
Buyout Amount”).
If requested by the Purchaser, New Lorus will, subject to Section 6.02(1),
permit the Purchaser and its auditors and other representatives to review the
working papers and other documentation used or prepared in connection with
the
preparation of, or that otherwise form the basis of, the Closing Buyout
Statement.
(3) In
the event that the Purchaser objects to any item on the Closing Buyout
Statement, the Purchaser will so advise New Lorus by delivery of a written
notice (the “Objection
Notice”)
within 20 Business Days after the receipt by the Purchaser of the Closing Buyout
Statement. The Objection Notice will set out the reasons for each of the
Purchaser’s objections as well as each amount in dispute and reasonable details
of the calculation of each such amount in dispute. If the parties cannot reach
agreement on the Closing Buyout Statement within 10 Business Days after the
receipt of such Objection Notice, the dispute will be referred for determination
by arbitration to a senior audit partner (chosen by the managing partner of
such
office) at the Vancouver office of an audit or accounting firm mutually
acceptable to the parties, acting reasonably. If the parties do not reach and
agreement within seven Business Days following receipt by the New Lorus of
the
Objection Notice, the parties will seek appointment of such firm by a court
of
competent jurisdiction in Ontario. The Purchaser and New Lorus will provide
such
senior audit partner with all documentation as he or she may reasonably request
in order to make an accurate determination of the quantum of the Closing Buyout
Amount. The determination by such arbitrator will be made within 20 Business
Days of such referral and will be final and binding on the Purchaser and New
Lorus. The costs of the arbitrator will be borne by the party losing the
majority of the amount at issue in the arbitration.
(4) If
the Closing Buyout Amount, as determined by the parties or the arbitrator,
as
the case may be, exceeds the Pre-Closing Buyout Amount, the Purchaser will
pay
the amount of such difference, up to a maximum of $270,000, to New Lorus by
wire
transfer of immediately available funds to a Canadian dollar account specified
by New Lorus within five Business Days after the determination and the Purchase
Price will be adjusted accordingly. If the Closing
-
8
-
Buyout
Amount as so determined is less than the Pre-Closing Buyout Amount, New Lorus
will pay the amount of such difference to the Purchaser by wire transfer of
immediately available funds to a Canadian dollar account specified by the
Purchaser within five Business Days after the determination and the Purchase
Price will be adjusted accordingly.
2.05
|
Excluded
Liabilities
|
New
Lorus acknowledges and agrees that none of the Purchaser or any of its
Affiliates will assume or have any obligation to discharge, perform or fulfil
any Liability of (i) Old Lorus arising in respect of periods prior to, at or
after the Effective Time from any circumstance, condition, event or fact
existing prior to or at the Effective Time, or (ii) New Lorus, in each case,
as
a consequence of any of the transactions contemplated by this Agreement, the
Arrangement Agreement, the Plan of Arrangement, the Asset Transfer Agreements,
the Share Purchase Agreements or any agreement ancillary thereto (collectively,
the “Excluded
Liabilities”),
and New Lorus and GeneSense will assume, perform and fulfil the Excluded
Liabilities and will fully indemnify and save harmless Old Lorus therefrom,
all
upon and subject to the terms and conditions of this Agreement and the
Indemnification Agreement.
2.06
|
Material
Assignments
|
New
Lorus or GeneSense, as applicable, will obtain a duly executed assignment,
assumption and novation agreement, in a form mutually acceptable to Old Lorus
and New Lorus, acting reasonably, with respect to each of the Material Contracts
(collectively, the “Material
Assignments”).
ARTICLE
3
- REPRESENTATIONS AND WARRANTIES
3.01
|
New
Lorus’s Representations and
Warranties
|
New
Lorus represents and warrants to the Purchaser that:
(1) Corporate
(a)
|
Old
Lorus is a corporation duly incorporated, organized and subsisting
under
the laws of Canada with the corporate power to own its assets and
to carry
on its business as currently conducted and has made all material
filings
under all applicable corporate, securities and taxation laws and
any other
Applicable Laws.
|
(b)
|
New
Lorus is a corporation duly incorporated, organized and subsisting
under
the laws of Canada with the corporate power to own its assets and
to carry
on its business as currently
conducted.
|
(c)
|
The
authorized capital of Old Lorus consists of an unlimited number of
voting
common shares, of which 21,127,828 have been validly issued and are
outstanding as fully paid and non-assessable, and an unlimited number
of
non-
|
-
9
-
|
voting
common shares, of which 2,078,872,172 have been validly issued
and are
outstanding as fully paid and
non-assessable.
|
(d)
|
The
rights, privileges, restrictions and conditions attached to the voting
common shares and to the non-voting common shares of Old Lorus are
as set
out in Schedule 3.01(1)(d).
|
(e)
|
New
Lorus is the beneficial and registered owner of the Shares free and
clear
of all liens, charges, encumbrances and any other rights of
others.
|
(f)
|
New
Lorus has the power, authority and right to enter into and deliver
this
Agreement and to transfer the legal and beneficial title and ownership
of
the Shares to the Purchaser free and clear of all liens, charges,
encumbrances and any other rights of
others.
|
(g)
|
This
Agreement constitutes a valid and legally binding obligation of New
Lorus,
enforceable against New Lorus in accordance with its terms subject
to
general equitable principles, applicable bankruptcy, insolvency,
reorganization and other laws of general application limiting the
enforcement of creditors’ rights generally and to the fact that specific
performance is an equitable remedy available only in the discretion
of the
court and insofar as indemnity and contribution provisions may be
limited
by Applicable Laws.
|
(h)
|
Save
and except for the transactions contemplated by this Agreement or
the
Arrangement, there is no contract, option or any other right of another
binding upon or which at any time in the future may become binding
upon:
|
(i)
|
New
Lorus to sell, transfer, assign, pledge, charge, mortgage or in any
other
way dispose of or encumber any of the
Shares;
|
(ii)
|
Old
Lorus to allot or issue any of the unissued shares of Old Lorus or
to
create any additional class of shares;
or
|
(iii)
|
Old
Lorus to sell, transfer, assign, pledge, mortgage or in any other
way
dispose of or encumber any of the assets of Old
Lorus.
|
(i)
|
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by New Lorus or by Old Lorus
will
result in the violation of:
|
(i)
|
any
of the provisions of the constating documents or by-laws of New Lorus
or
of Old Lorus;
|
(ii)
|
any
agreement or other instrument to which New Lorus or Old Lorus is
a party
or by which New Lorus or Old Lorus is bound;
or
|
-
10
-
(iii)
|
any
Applicable Law.
|
(2) Securities
(a)
|
Old
Lorus is a reporting issuer or the equivalent under the applicable
Securities Laws of British Columbia, Alberta, Saskatchewan, Manitoba,
Ontario, Quebec, New Brunswick, Nova Scotia, Xxxxxx Xxxxxx Island
and
Newfoundland, a foreign private issuer under applicable Securities
Laws of
the United States and, in each case, is not in default in any material
respect of any applicable requirement of such Securities Laws. The
outstanding shares of Old Lorus are listed and posted for trading
on the
TSX.
|
(b)
|
No
securities commission or similar regulatory authority or stock exchange
in
Canada or the United States has issued any order that is currently
outstanding preventing or suspending trading in any securities of
Old
Lorus and, to New Lorus’s knowledge, no such proceeding is pending,
contemplated or threatened.
|
(c)
|
Old
Lorus is in material compliance with all provisions of the Securities
Laws
that are applicable to it and Old Lorus has made all material filings
required under applicable Securities Laws with the applicable securities
regulatory authorities and all such filings and information and statements
contained therein were true, correct and complete in all material
respects
and did not contain any misrepresentation as of the date of such
information or statement.
|
(3) Financial
(a)
|
The
books and records of Old Lorus are true and correct and present fairly
and
disclose in all material respects the financial position of Old Lorus
and
all material financial transactions of Old Lorus have been accurately
recorded in such books and records and, to the extent required, such
books
and records have been prepared in accordance with GAAP consistently
applied during the periods
involved.
|
(b)
|
The
audited financial statements of Old Lorus, consisting of the Balance
Sheet
and statements of income, retained earnings and cash flows for the
period
ended on the Balance Sheet Date, together with the report of KPMG
LLP,
chartered accountants, thereon and the notes thereto (collectively,
the
“Financial
Statements”),
a copy of which has been delivered to the
Purchaser:
|
(i)
|
are
in accordance with the books and accounts of Old Lorus as at the
Balance
Sheet Date; and
|
(ii)
|
are
true and correct and present fairly the financial position of Old
Lorus as
at the Balance Sheet Date and the results of operations and cash
flows of
Old Lorus for the periods covered thereby, all in accordance with
|
-
11
-
|
GAAP
consistently applied except as may be otherwise specified in such
Financial Statements.
|
(c)
|
Save
and except for the agreements contemplated by the Arrangement and
any
agreement that could not be assigned by Old Lorus to New Lorus or
GeneSense and is being held by Old Lorus as trustee pursuant to the
terms
of an Asset Transfer Agreement, Old Lorus has no Liabilities and,
to the
knowledge of New Lorus, no facts, circumstances or events exist that
may
give rise to any Liabilities
of Old Lorus.
|
(d)
|
Save
and except for the transactions contemplated by the Arrangement Agreement
or as otherwise publicly disclosed in accordance with applicable
Securities Laws, since the Balance Sheet Date the business of Old
Lorus
has been carried on in its usual and ordinary course and Old Lorus
has not
entered into any transaction out of the usual and ordinary course
of
business.
|
(e)
|
Save
and except for the transactions contemplated by the Arrangement Agreement
or as otherwise publicly disclosed in accordance with applicable
Securities Laws, since the Balance Sheet Date there has been no Material
Adverse Change.
|
(f)
|
No
current or former director, officer, shareholder or employee of New
Lorus
or Old Lorus or any other person is indebted to Old
Lorus.
|
(4) Assets
(a)
|
Save
and except for the cash required to fund the purchase of the Old
Lorus
Voting Shares pursuant to section 3.01(24) of
the Plan of Arrangement, Old Lorus does not own or have any right,
title
or interest in or to any assets of any kind or nature whatsoever
(other
than as trustee for assets that have not as of the Effective Date
been
transferred pursuant to the Transfer Transactions), including those
assets
shown or reflected on the Balance Sheet and including any Lands,
Intellectual Property and Inventories,
and any and all assets have been assigned or otherwise transferred
or sold
to New Lorus or its Affiliates.
|
(b)
|
There
are no outstanding orders, notices or similar requirements relating
to Old
Lorus issued by any Governmental Authority and there are no matters
under
discussion between Old Lorus or any of its representatives and any
Governmental Authority relating to orders, notices or similar
requirements.
|
(c)
|
Save
and except for the transactions contemplated by the Arrangement,
no
dividends have been declared or paid on or in respect of the shares
of Old
Lorus and no other distribution on any of its securities or shares
has
been declared or made by Old Lorus since the Balance Sheet Date and
all
dividends that to the date hereof have been declared or paid by Old
Lorus
have been duly and validly declared and
paid.
|
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12
-
(d)
|
Each
Asset was transferred directly or indirectly to New Lorus at a value
of
not less than its fair market value, such value, in the aggregate,
being
equal to the FMV Amount, and, since November 30, 2006, there has
been no
change in the business, assets, Liabilities, operations, results
of
operations, condition (financial or otherwise), results or prospects
of
Old Lorus where such change has had or would reasonably be expected
to
have a material effect on the value of any
Asset.
|
(5) Contracts
and Commitments
(a)
|
Save
and except for the agreements contemplated by the Arrangement and
any
agreement that could not be assigned by Old Lorus to New Lorus or
GeneSense and is being held by Old Lorus as trustee pursuant to the
terms
of an Asset Transfer Agreements, Old Lorus is not a party to or bound
by
any Contract.
|
(b)
|
Save
and except for the indemnification provisions contained in the agreements
contemplated by the Arrangement or in any agreement that could not
be
assigned by Old Lorus to New Lorus or GeneSense and is being held
by Old
Lorus as trustee pursuant to the terms of an Asset Transfer Agreement,
Old
Lorus is not a party to or bound by any guarantee, indemnification,
surety
or similar obligation.
|
(c)
|
Save
and except for the agreements contemplated by the Arrangement and
any
agreement that could not be assigned by Old Lorus to New Lorus or
GeneSense and is being held by Old Lorus as trustee pursuant to the
terms
of an Asset Transfer Agreement, Old Lorus is not a party to any lease
or
agreement in the nature of a lease for real property, whether as
lessor or
lessee.
|
(d)
|
Save
and except for the agreements contemplated by the Arrangement and
any
agreement that could not be assigned by Old Lorus to New Lorus or
GeneSense and is being held by Old Lorus as trustee pursuant to the
terms
of an Asset Transfer Agreement, Old Lorus does not have any Subsidiaries
or any Contract to acquire any securities of any entity and, Old
Lorus
does not have any Contract to acquire or lease any real property
or
assets.
|
(6) Intellectual
Property
(a)
|
Save
and except for the agreements contemplated by the Arrangement and
any
agreement that could not be assigned by Old Lorus to New Lorus or
GeneSense and is being held by Old Lorus as trustee pursuant to the
terms
of an Asset Transfer Agreement, Old Lorus does not hold any right,
title
or interest in or to any Intellectual Property.
Any and all Intellectual Property has been assigned
|
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13
-
|
and
such assignments have been duly filed with the relevant Intellectual
Property office, health regulatory authority or the
like.
|
(b)
|
Save
and except for the agreements contemplated by the Arrangement and
any
agreement that could not be assigned by Old Lorus to New Lorus or
GeneSense and is being held by Old Lorus as trustee pursuant to the
terms
of an Asset Transfer Agreement, Old Lorus is not a party to or bound
by
any Contract to pay any royalty or other fee to use any Intellectual
Property.
|
(7) Employees
(a)
|
Old
Lorus has no employees, contractors or consultants
whatsoever.
|
(b)
|
Old
Lorus is not a party to or bound by any Contract to pay any management
or
consulting fee.
|
(c)
|
Old
Lorus is not bound by or a party to any collective bargaining
agreement.
|
(d)
|
No
trade union, council of trade unions, employee bargaining agency
or
affiliated bargaining agent:
|
(i)
|
holds
bargaining rights with respect to any employees of Old Lorus by way
of
certification, interim certification, voluntary recognition, designation
or successor rights;
|
(ii)
|
has
applied to be certified as the bargaining agent of any employees
of Old
Lorus; or
|
(iii)
|
has
applied to have Old Lorus declared a related employer or successor
employer pursuant to applicable labour
legislation.
|
(e)
|
Since
October 29, 1999, Old Lorus employed all employees of Old Lorus in
compliance in all material respects, with all applicable Tax, health,
labour and employment laws, rules, regulations, notices, and
orders.
|
(f)
|
Since
October 29, 1999, Old Lorus is and has been in compliance in all
material
respects with all provisions of the Employment
Standards Act (Ontario)
and the Occupational
Health and Safety Act (Ontario)
and regulations made pursuant thereto and there are no outstanding
claims,
charges or orders thereunder.
|
(g)
|
Since
October 29, 1999, Old Lorus is and has been in compliance in all
material
respects with applicable workers’ compensation laws and regulations made
pursuant thereto and there are no outstanding assessments, levies
or
penalties thereunder.
|
-
14
-
(8) Privacy
Laws
The
collection, use and retention of the Personal Information by Old Lorus prior
to
the Share Purchase Closing Time, the disclosure or transfer of the Personal
Information by Old Lorus to any third parties prior to the Share Purchase
Closing Time and transfer of the Personal Information by Old Lorus to the
Purchaser as part of the Purchaser’s due diligence review of Old Lorus, its
Subsidiaries and their respective records and as contemplated by this Agreement
or any ancillary agreement complied in all material respects with all Privacy
Laws and is consistent with Old Lorus’s own Privacy Policies
in effect prior to the Share Purchase Closing Time.
(9) Benefit
Plans
(a)
|
Old
Lorus does not have any Benefit
Plans.
|
(b)
|
None
of the execution, delivery or performance of this Agreement, nor
the
consummation of any of the transactions contemplated by the Arrangement
Agreement, will result in any bonus, golden parachute, severance
or other
payment or obligation to any current or former employee or director
of Old
Lorus or result in any acceleration of the time of payment or vesting
of
any such benefit.
|
(10) Realty
Old
Lorus does not have any Lands.
(11) Environmental
(a)
|
Prior
to the Share Purchase Closing Time, the business of Old Lorus, as
carried
on by Old Lorus and its predecessors in title, and its assets were
in
compliance in all material respects with Environmental Laws and there
are
no facts known after due inquiry by Old Lorus that could give rise
to a
notice of material non-compliance with any Environmental
Law.
|
(b)
|
Neither
Old Lorus nor, to the best of the knowledge of New Lorus, any of
Old
Lorus’s predecessors in title has used any of the Lands of Old Lorus, or
permitted them to be used, to generate, manufacture, refine, treat,
transport, store, handle, dispose, transfer, produce or process Hazardous
Substances except in compliance with all Environmental Laws. None
of the
Lands has been used for or been designated as a waste disposal
site.
|
(c)
|
Old
Lorus has not been convicted of an offence or been subjected to any
judgment, injunction or other proceeding or been fined or otherwise
sentenced for non-compliance with any Environmental Laws, and it
has not
settled any prosecution or other proceeding short of conviction in
connection therewith.
|
-
15
-
(d)
|
Old
Lorus has not obtained or commissioned and is not in the possession
or
control of any analyses or monitoring data for soil, groundwater
and
surface water or any report pertaining to any environmental assessments
or
audits relating to Old Lorus or the
Lands.
|
(e)
|
Since
October 29, 1999, Old Lorus, and, to the knowledge of New Lorus,
Old
Lorus’s predecessors in title, maintained all applicable environmental
and
operating documents and records in the manner and for the time periods
required by Environmental Laws and did not conduct nor was Old Lorus
required to conduct, an environmental audit of the Lands. For the
purposes
of this provision, an environmental audit includes any evaluation,
assessment or study performed at the request of or on behalf of a
Governmental Authority.
|
(f)
|
There
are no outstanding or, to the knowledge of New Lorus, threatened
writs,
injunctions, decrees, orders, judgements, actions, suits, claims,
governmental information requests or proceedings against Old Lorus
relating to non-compliance with or Liability under any Environmental
Laws.
|
(12) Taxes
(a)
|
Except
as disclosed in writing to the Purchaser prior to the execution of
this
Agreement:
|
(i)
|
Old
Lorus has filed all Tax Returns, including any elections and designations
required by or referred to in any such Tax Return, that were required
to
be filed by it with any Taxation Authority prior to the date hereof.
All
Tax Returns filed by Old Lorus are accurate and complete in all respects
and there has not been any material change to any balances or tax
accounts
of Old Lorus as reported in the Tax
Returns;
|
(ii)
|
Old
Lorus has withheld any Taxes that are required by Applicable Law
to be
withheld and has paid on a timely basis, the full amount of any Taxes
that
have been or will be withheld, to the applicable Taxation
Authority;
|
(iii)
|
Old
Lorus has paid all Taxes, including any amount due on or before the
Effective Date, including instalments or prepayments of Taxes, that
are
required to have been paid to any Taxation Authority pursuant to
Applicable Law, and no deficiency with respect to the payment of
any Taxes
or Tax instalments has been asserted against it by any Taxation Authority.
Old Lorus has not incurred any Liability, whether actual or contingent,
for Taxes or engaged in any transaction or event that would result
in any
Liability, whether actual or contingent, for Taxes or realized any
income
or gain for Tax purposes otherwise than in the usual and ordinary
course
of its business. Other than Taxes provided for in the Balance Sheet,
Old
Lorus has no Liability or obligation in respect of any
|
-
16
-
|
Taxes
for any Taxable periods ending on or before the Effective Date,
and where
any Taxable period ends or is deemed to end on or immediately prior
to the
Effective Date, no actual or accrued Liability or obligation for
Taxes in
respect of any time or event prior to the Effective Date. There
are no
liens, charges, encumbrances or any rights of others on any of
the assets
of Old Lorus that arose in connection with any failure (or alleged
failure) to pay any Tax when
due;
|
(iv)
|
except
as disclosed to the Purchaser or Pinnacle in writing, the income
Tax
Liability of Old Lorus has been assessed by the relevant Taxation
Authority in respect of the Tax years of Old Lorus ending before
the date
hereof;
|
(v)
|
Old
Lorus has no outstanding assessments or reassessments for Taxes,
and New
Lorus has no knowledge of any threatened or potential assessment,
reassessments or other proceedings, negotiations or investigations
in
respect of Taxes, against Old
Lorus;
|
(vi)
|
Old
Lorus is not a party to any agreement, waiver or arrangement with
any
Taxation Authority that relates to any extension of time with respect
to
the filing of any Tax Return, any payment of Taxes or any
assessment;
|
(vii)
|
other
than elections disclosed to the Purchaser or Pinnacle in writing,
except
as described in the Asset Transfer Agreements or the Subsidiary Share
Purchase Agreements, Old Lorus has not made any elections or given
any
waivers in respect of Taxes pursuant to Applicable Law;
|
(viii)
|
the
adjusted cost base of the common shares of GeneSense held by Old
Lorus is
$9,006,000;
|
(ix)
|
no
facts, circumstances or events exist or have existed that have resulted
in
or may result in the application of any of sections 79 to 80.04 of
the Tax
Act to Old Lorus;
|
(x)
|
except
for the transactions contemplated by the Arrangement, no facts,
circumstances or events exist or have existed that have resulted
in or may
result in control of Old Lorus, for the purposes of the Tax Act,
having
been acquired at any time by any person or group of
persons;
|
(xi)
|
Old
Lorus is not subject to Liability for Taxes of any other person.
Old Lorus
has not acquired property from any person in circumstances where
Old Lorus
did or could become liable for any Taxes of such person. The value
of the
consideration paid or received by Old Lorus for the acquisition,
sale,
transfer or provision of property (including intangibles) or the
provision
of services (including financial transactions) from or to a
|
-
17
-
|
person
with whom Old Lorus was not dealing at arm’s length within the meaning of
the Tax Act was equal to the estimated fair market value of such
property
acquired, provided or sold or services purchased or provided. Old
Lorus
has not entered into any agreement with, or provided any undertaking
to,
any person pursuant to which it has assumed Liability for the payment
of
income Taxes owing by such
person;
|
(xii)
|
Old
Lorus has never been required to file any Tax Return with, and has
never
been liable to pay any Taxes to, any Taxation Authority outside Canada.
No
claim has ever been made by a Taxation Authority in a jurisdiction
where
Old Lorus does not file Tax Returns that it is or may be subject
to the
imposition of any Tax by that
jurisdiction;
|
(xiii)
|
Old
Lorus is duly registered with the CRA under the Excise
Tax Act (Canada)
for purposes of the goods and services tax (“GST”).
All input tax credits claimed by Old Lorus or any of its Subsidiaries
for
GST purposes were calculated in accordance with Applicable Law. Old
Lorus
has complied with all registration, reporting, payment, collection
and
remittance requirements in respect of GST and provincial sales tax
or
harmonized tax legislation;
|
(xiv)
|
Old
Lorus has not claimed any reserves for purposes of the Tax Act (or
analogous provincial or similar provisions) for the most recent Tax
year
ending prior to the date hereof;
|
(xv)
|
except
for the transactions contemplated by the Arrangement, Old Lorus has
not
made any payment, nor is obligated to make any payment, and is not
a party
to any agreement under which it could be obligated to make any payment,
that may not be deductible by virtue of section 67 or 78 of the Tax
Act or
any analogous provincial or similar
provision;
|
(xvi)
|
records
or documents that meet the requirements of paragraphs 247(4)(a) to
(c) of
the Tax Act have been made and obtained by Old Lorus with respect
to all
material transactions between Old Lorus and any non-resident person
with
whom Old Lorus was not dealing at arm’s length within the meaning of the
Tax Act, during a taxation year commencing after 1998 and ending
on or
before the Effective Date; and
|
(xvii)
|
except
for Taxes withheld and remitted in the ordinary course of Old Lorus’s
business pursuant to applicable employment laws, which Taxes have
been
withheld and remitted as required by Applicable Law, Old Lorus is
not
subject to any requirement to withhold or remit Taxes on behalf of
any
other person.
|
-
18
-
(b)
|
New
Lorus is not a non-resident of Canada or a partnership other than
a
Canadian Partnership within the meaning of section 116 of the Tax
Act.
|
(13) General
(a)
|
To
the knowledge of New Lorus, based solely on a review of information
concerning Old Lorus publicly disclosed on SEDAR as at •, 2007
[Note
to draft: Insert a date that is not more than three Business Days
prior to
the Effective Date],
the Lock-Up Holders (together with any person acting jointly or in
concert
with the Lock-Up Holders) do not beneficially own, or exercise control
or
direction over, in the aggregate, more than 25% of the then issued
and
outstanding common shares of Old
Lorus.
|
(b)
|
There
are no investigations, inquiries, demands, claims, actions, suits
or
proceedings (whether or not purportedly on behalf of Old
Lorus):
|
(i)
|
pending
or, to New Lorus’s knowledge, threatened against or adversely affecting,
or that could adversely affect, Old Lorus or any of its assets;
or
|
(ii)
|
before
or by any Governmental Authority,
|
except
such actions, suits or proceedings as are disclosed in Schedule
3.01(13)(a).
(c)
|
Since
October 29, 1999, Old Lorus did not conduct its business in any
jurisdiction other than the Province of
Ontario.
|
(d)
|
Since
October 29, 1999, Old Lorus has conducted the business of Old Lorus
in
compliance in all material respects with all Applicable Laws, has
not been
in material breach of any such Applicable Laws and has been duly
licensed,
registered or qualified in the Province of Ontario and all municipalities
thereof in which Old Lorus has carried on its business to enable
it to be
carried on as conducted on and prior to the Effective Date, and all
such
licences, registrations and qualifications are valid and subsisting
and in
good standing and none of the same contains any term, provision,
condition
or limitation that has or may have a Material Adverse
Effect.
|
(e)
|
Old
Lorus has no Permits.
|
(f)
|
Old
Lorus has no insurance policies.
|
(g)
|
Other
than in connection with the transactions contemplated by this Agreement
and as disclosed to the Purchaser in writing prior to the execution
of
this Agreement, to the knowledge of New Lorus, there are no shareholders
agreements, voting trusts, escrow agreements or similar agreements
among
the shareholders relating to Old Lorus or the Shares or other securities
of Old Lorus that will survive the completion of the
Arrangement.
|
-
19
-
(h)
|
The
information and statements contained in the Information Circular
relating
to Old Lorus or New Lorus or the business, operations, results of
operations, assets, capitalization, financial condition, rights,
Liabilities or prospects of Old Lorus or New Lorus, whether on a
prospective or pro-forma basis, are true, correct and complete in
all
material respects and do not contain any
misrepresentation.
|
(i)
|
Except
for the representations and warranties contained in this Agreement
or in
any other agreement or instrument contemplated hereby or by the
Arrangement Agreement, New Lorus makes no other express or implied
representation or warranty with respect to any matters not specifically
represented herein.
|
3.02
|
Purchaser’s
Representations and
Warranties
|
The
Purchaser represents and warrants to New Lorus that:
(a)
|
The
Purchaser is a corporation duly incorporated, organized and subsisting
under the laws of Canada.
|
(b)
|
The
Purchaser has good and sufficient power, authority and right to enter
into
and deliver this Agreement and to complete the transactions to be
completed by the Purchaser contemplated
hereunder.
|
(c)
|
This
Agreement constitutes a valid and legally binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its
terms
subject to applicable bankruptcy, insolvency, reorganization and
other
laws of general application limiting the enforcement of creditors’ rights
generally and to the fact that specific performance is an equitable
remedy
available only in the discretion of the
court.
|
(d)
|
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Purchaser will result
in a
violation of:
|
(i)
|
any
of the provisions of the constating documents or by-laws of the
Purchaser;
|
(ii)
|
any
agreement or other instrument to which the Purchaser is a party or
by
which the Purchaser is bound; or
|
(iii)
|
any
Applicable Law.
|
(e)
|
The
Purchaser is a Canadian within the meaning of the
Investment Canada Act
(Canada).
|
-
20
-
(f)
|
The
Pinnacle Information is true, correct and complete in all material
respects and does not contain any
misrepresentation.
|
(g)
|
Except
for the representations and warranties contained in this Agreement
or in
any other agreement or instrument contemplated hereby or by the
Arrangement Agreement, Purchaser makes no other express or implied
representation or warranty with respect to any matters not specifically
represented herein.
|
ARTICLE
4
- COVENANTS
4.01
|
Taxes
|
The
Purchaser does not assume and will not be liable for any Taxes that may be
or
become payable by New Lorus including any Taxes resulting from or arising as
a
consequence of the sale by New Lorus to the Purchaser of the Shares herein
contemplated, and New Lorus will indemnify and save harmless the Purchaser
and
the directors, officers, employees, agents, successors and assigns of the
Purchaser from and against all such Taxes.
ARTICLE
5
- CONDITIONS
AND TERMINATION
5.01
|
Conditions
for the Benefit of the
Purchaser
|
The
sale by New Lorus and the purchase by the Purchaser of the Shares is subject
to
the following conditions, which are for the exclusive benefit of the Purchaser
and which are to be performed or complied with at or prior to the Share Purchase
Closing Time:
(a)
|
New
Lorus will have performed or complied with all of the obligations
and
covenants and conditions of this Agreement to be performed or complied
with by New Lorus at or prior to the Share Purchase Closing
Time;
|
(b)
|
the
Purchaser will be furnished with such certificates or other instruments
of
Old Lorus and of New Lorus or of officers of Old Lorus and of New
Lorus as
the Purchaser or the Purchaser’s counsel may reasonably think necessary in
order to establish that the terms, covenants and conditions contained
in
this Agreement to have been performed or complied with by New Lorus
at or
prior to the Share Purchase Closing Time have been performed or complied
with;
|
(c)
|
there
will have been obtained from all appropriate Governmental Authorities such
approvals or consents as are required to permit the change of ownership
of
the Shares contemplated hereby;
|
(d)
|
no
action or proceeding will be pending or threatened by any person
to
enjoin, restrict or prohibit the sale and purchase of the Shares
contemplated hereby;
|
(e)
|
all
directors and officers of Old Lorus specified by the Purchaser will
resign
effective as of the Share Purchase Closing Time or upon the replacement
of
|
-
21
-
|
such
of those directors with such persons as may be designated by the
Purchaser
prior to the Share Purchase Closing Time, as
applicable;
|
(f)
|
each
of the employees of Old Lorus will have been offered (with a reasonable
opportunity for consideration) and will have accepted individual
offers of
employment with New Lorus effective as of the Effective Time on terms
and
conditions substantially similar in the aggregate as the terms and
conditions of the employment of such employees with Old Lorus in
effect
immediately prior to the Effective Time (including with respect to
benefits);
|
(g)
|
New
Lorus and all directors and officers of Old Lorus will release Old
Lorus
from any and all possible Claims against Old Lorus arising from any
act,
matter or thing arising at or prior to the Effective Time, such release
to
be substantially in the form attached hereto as Schedule
5.01(g);
|
(h)
|
all
necessary steps and proceedings will have been taken to permit the
Shares
to be duly and regularly transferred to and registered in the name
of the
Purchaser;
|
(i)
|
each
of the Material Assignments will have been obtained, copies of which
will
have been delivered to the
Purchaser;
|
(j)
|
New
Lorus will have delivered payout letters from each lender identified
in
Schedule 5.01(j)
in form satisfactory to the Purchaser, acting
reasonably;
|
(k)
|
New
Lorus will have delivered to the Purchaser a favourable opinion of
New
Lorus’s counsel in a form satisfactory to the Purchaser and the
Purchaser’s counsel, each acting
reasonably;
|
(l)
|
each
of the Asset Transfer Agreements and the Subsidiary Share Purchase
Agreements will have been duly executed and delivered by each of
the
parties thereto and the Transfer Transactions will have been completed
in
accordance with the terms thereof;
|
(m)
|
the
Escrow Agreement will have been duly executed and delivered by each
of the
parties thereto;
|
(n)
|
the
Access and Tax Cooperation Agreement will have been duly executed
and
delivered by each of the parties
thereto;
|
(o)
|
all
of the conditions precedent set forth in Article 11 of the Arrangement
Agreement will have been satisfied or
waived;
|
(p)
|
the
Arrangement will have been approved by the shareholders of Old Lorus
in
the manner contemplated by the Arrangement
Agreement;
|
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22
-
(q)
|
each
of the transactions contemplated by the Arrangement that are necessary
or
required to occur and become effective prior to or contemporaneously
with
the transactions that are the subject of this Agreement will have
been
duly completed;
|
(r)
|
New
Lorus will have delivered to the Purchaser the Certificate of Arrangement;
and
|
(s)
|
the
form and legality of all matters incidental to the sale by New Lorus
and
the purchase by the Purchaser of the Shares will be subject to the
approval of the Purchaser’s counsel, acting
reasonably.
|
5.02
|
Conditions
for the Benefit of New
Lorus
|
The
sale by New Lorus and the purchase by the Purchaser of the Shares is subject
to
the following conditions, which are for the exclusive benefit of New Lorus
and
which are to be performed or complied with at or prior to the Share Purchase
Closing Time:
(a)
|
the
Purchaser will have performed or complied with all of the obligations
and
covenants and conditions of this Agreement to be performed or complied
with by the Purchaser at or prior to the Share Purchase Closing
Time;
|
(b)
|
New
Lorus will be furnished with such certificates or other instruments
of the
Purchaser or of officers of the Purchaser as New Lorus or New Lorus’s
counsel may reasonably think necessary in order to establish that
the
obligations and covenants contained in this Agreement to have been
performed or complied with by the Purchaser at or prior to the Share
Purchase Closing Time have been performed or complied
with;
|
(c)
|
the
Escrow Agreement will have been duly executed and delivered by each
of the
parties thereto;
|
(d)
|
the
Access and Tax Cooperation Agreement will have been duly executed
and
delivered by each of the parties
thereto;
|
(e)
|
all
of the conditions precedent set forth in Article 11 of the Arrangement
Agreement will have been satisfied or
waived;
|
(f)
|
no
action or proceeding will be pending or threatened by any person
to
enjoin, restrict or prohibit the sale and purchase of the Shares
contemplated hereby;
|
(g)
|
all
necessary steps and proceedings will have been taken to permit the
Shares
to be duly and regularly transferred to and registered in the name
of the
Purchaser;
|
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23
-
(h)
|
all
necessary steps and proceedings will have been taken to permit and
cause
the Assets to be duly and regularly transferred from Old Lorus to
New
Lorus or a Subsidiary thereof;
|
(i)
|
each
of the transactions contemplated by the Arrangement that are necessary
or
required to occur and become effective prior to or contemporaneously
with
the transactions that are the subject of this Agreement will have
been
duly completed;
|
(j)
|
the
form and legality of all matters incidental to the sale by New Lorus
and
the purchase by the Purchaser of the Shares will be subject to the
approval of New Lorus’s counsel, acting reasonably;
|
(k)
|
the
Arrangement will have been approved by the shareholders of Old Lorus
in
the manner contemplated by the Arrangement Agreement;
|
(l)
|
the
Certificate of Arrangement will have been obtained;
|
(m)
|
there
will have been obtained from all appropriate Governmental Authorities
such
approvals or consents as are required to permit the change of ownership
of
the Shares contemplated hereby;
|
(n)
|
each
of the Material Assignments will have been obtained, copies of which
will
have been delivered to the Purchaser;
and
|
(o)
|
each
of the Asset Transfer Agreements and the Subsidiary Share Purchase
Agreements will have been duly executed and delivered by each of
the
parties thereto and the Transfer Transactions will have been completed
in
accordance with the terms thereof.
|
5.03
|
Waiver
of Condition
|
New
Lorus, in the case of a condition set out in Section 5.02 (other than the
condition set forth in Section 5.02(e)), and the Purchaser, in the case of
a
condition set out in Section 5.01 (other than the condition set forth in Section
5.01(o)), will have the exclusive right to waive the performance or compliance
of such condition in whole or in part and on such terms as may be agreed upon
without prejudice to any of its rights in the event of non-performance of or
non-compliance with any other condition in whole or in part; provided that
New
Lorus will not be entitled to waive the condition set forth in Section 5.02(e)
and the Purchaser will not be permitted to waive the condition set forth in
Section 5.01(o). Any such waiver will not constitute a waiver of any other
conditions in favour of the waiving party.
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24
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ARTICLE
6
- CLOSING ARRANGEMENTS
6.01
|
Closing
|
The
sale and purchase of the Shares will be completed at the Share Purchase Closing
Time at the offices of XxXxxxxx Xxxxxxxx LLP, Suite 4700, 00 Xxxxxxxxxx
Xxxxxx Xxxx, Xxxxxxx Xxxxxxxx Xxxx Xxxxx, Xxxxxxx, XX, X0X 0X0.
6.02
|
Confidentiality
|
(1) From
and after the Share Purchase Closing Time, the Purchaser will and, if
applicable, will use commercially reasonable efforts to cause its agents and
representatives to, not disclose to anyone or use for any purpose, other than
the purposes contemplated by this Agreement, including for the purposes of
Section 2.04(2), any confidential information concerning New Lorus obtained
by
the Purchaser pursuant hereto, and will hold all such information in the
strictest confidence,
unless: (i) the information is now or hereafter publicly disclosed other than
as
a result of breach of this provision; (ii) the information was in the possession
of the disclosing party prior to the disclosure by the disclosing party; (iii)
the information is hereafter disclosed to the disclosing party by a third party
having no obligation of confidentiality with regard to the information; (iv)
the
information is independently generated by the disclosing party without the
use
and not as a consequence of the disclosure by the other party; (v) the
information is required to be disclosed by Applicable Law; or (vi) the
information is disclosed in connection with a Claim pursuant to Section 7.02.
(2) From
and after the Share Purchase Closing Time, New Lorus will and, if applicable,
will use commercially reasonable efforts to cause its agents and representatives
to, not disclose to anyone or use for any purpose, other than the purposes
contemplated by this Agreement, any confidential information concerning Old
Lorus, and will hold all such information in the strictest confidence unless:
(i) the information is now or hereafter publicly disclosed other than as a
result of breach of this provision; (ii) the information was in the possession
of the disclosing party prior to the disclosure by the disclosing party; (iii)
the information is hereafter disclosed to the disclosing party by a third party
having no obligation of confidentiality with regard to the information; (iv)
the
information is independently generated by the disclosing party without the
use
and not as a consequence of the disclosure by the other party; (v) the
information is required to be disclosed by Applicable Law; or (vi) the
information is disclosed in connection with a Claim pursuant to Section
7.02.
ARTICLE
7
- INDEMNIFICATION
7.01
|
Survival
|
All
covenants, representations and warranties of each party contained in this
Agreement will survive the Closing and will continue in full force and effect,
subject to the provisions of this Article 7.
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25
-
7.02
|
Indemnification
by New Lorus
|
(1) Subject
to the provisions of this Article 7, New Lorus will indemnify and save harmless
the Purchaser and the directors, officers, employees, successors and assigns
of
the Purchaser (collectively, the “Purchaser
Indemnified Parties”)
from and against:
(a)
|
all
Claims directly or indirectly resulting from any breach of any covenant
of
New Lorus contained in this Agreement or from any inaccuracy or
misrepresentation in any representation or warranty set forth in
Section
3.01;
and
|
(b)
|
all
Claims directly or indirectly resulting from any Taxes owing or which
may
become owing by Old Lorus in respect of any period ending prior to,
at or
including the Effective Time,
other than (i) any such Claims directly or indirectly resulting from
the
transfer of property contemplated by Section 3.01(26) of the Plan
of
Arrangement and (ii) any such Claims directly or indirectly resulting
from
any breach by Old Lorus of its obligations under section 3(e) of
the
Access and Tax Cooperation
Agreement.
|
(2) Notwithstanding
any of the other provisions of this Agreement, New Lorus will not be liable
to
any Purchaser Indemnified Party in respect of any Claim directly or indirectly
resulting from:
(a)
|
any
inaccuracy or misrepresentation in any representation or warranty
set
forth in Section 3.01 (other than the representations and warranties
set
forth in Sections 3.01(4)(d), 3.01(11) or 3.01(12)) unless a Claim
with
respect thereto is made within three years after the Closing
Date;
|
(b)
|
subject
to Section 7.02(4), any inaccuracy or misrepresentation in any
representation or warranty set forth in Section
3.01(4)(d):
|
(i)
|
unless
a Claim with respect thereto is made within four years after the
date on
which Old Lorus receives a notice of original assessment under the
Tax Act
or applicable provincial Tax legislation assessing liability for
Taxes
under applicable Tax legislation in respect of the first taxation
period
of Old Lorus ending after the Closing
Date;
|
(ii)
|
unless
a Claim with respect thereto is (A) based on information that was
within
the knowledge of New Lorus and not disclosed in writing to the Purchaser
or Pinnacle prior to the Share Purchase Closing Time or (B) is based
on
information that New Lorus ought reasonably to have known but was
not
disclosed in writing to the Purchaser or Pinnacle prior to the Share
Purchase Closing Time; and
|
(iii)
|
unless
the aggregate fair market value of the Assets as at the Effective
Date
exceeds the FMV Amount by 10% or more (such excess amount
|
-
26
-
|
being
referred to herein as the “Excess
Amount”),
in which case New Lorus will only be liable to a Purchaser Indemnified
Party in respect of Claims arising as a result of the Excess Amount
and
then only at a rate of $0.074 for every dollar of such
Claims;
|
(c)
|
any
inaccuracy or misrepresentation in any representation or warranty
set
forth in Section 3.01(11) unless a Claim with respect thereto is
made
within six years after the Closing Date;
|
(d)
|
any
inaccuracy or misrepresentation in any representation or warranty
set
forth in Section 3.01(12) unless a Claim with respect thereto is
made
prior to the date that is 90 days after the expiration of the period,
if
any, during which an assessment, reassessment or other form of recognized
document assessing liability for Taxes under applicable Tax legislation
in
respect of any taxation period to which such representations and
warranties extend could be issued under such tax legislation to Old
Lorus
or its Subsidiaries; or
|
(e)
|
any
inaccuracy or misrepresentation in any representation or warranty
set
forth in Section 3.01 in excess of the Purchase Price (and for the
purposes of this Section
7.02(2)(e), all Claims (as determined by a non-appealable decision
of a
court of competent jurisdiction or pursuant to a binding settlement
between the parties) by the Purchaser Indemnified Parties will be
aggregated with all Claims and demands by the Purchaser or any other
Indemnified Party pursuant to Section 13.1 of the Arrangement
Agreement);
|
other
than, in all cases, any Claim attributable to an inaccuracy or misrepresentation
pertaining to a Special Representation or fraud.
(3) Any
representation or warranty or indemnified item that is the subject of a Claim
that is asserted prior to the applicable expiration date of such representation
or warranty or indemnified item will survive with respect to such Claim or
any
dispute related thereto until the final resolution thereof pursuant to this
Agreement.
(4) In
the event that any payment is required to be made by New Lorus to any Purchaser
Indemnified Party in respect of any Claim directly or indirectly resulting
from
any inaccuracy or misrepresentation in the representation and warranty set
forth
in Section 3.01(4)(d), such payment will be made immediately upon such amount
becoming due and payable or, at New Lorus’s option, upon written notice to the
Purchaser prior to the first such instalment, in 12 equal consecutive monthly
instalments beginning on the first day of the month immediately following the
date on which such amount first became due and payable and bearing interest
on
any unpaid amount at the then prevailing prime rate per annum quoted by the
Royal Bank of Canada plus 2%.
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27
-
7.03
|
Indemnification
by the Purchaser
|
(1) Subject
to the provisions of this Article 7, the Purchaser will indemnify collectively
and save harmless New Lorus and the directors, officers and employees of New
Lorus (collectively, the “New
Lorus Indemnified Parties”)
from and against
all Claims incurred by New Lorus directly or indirectly resulting from any
breach of any covenant of the Purchaser contained in this Agreement or from
any
inaccuracy or misrepresentation in any representation or warranty set forth
in
Section 3.02.
(2) Notwithstanding
any of the other provisions of this Agreement, the Purchaser will not be liable
to any New Lorus Indemnified Party in respect of
any inaccuracy or misrepresentation in any representation or warranty set forth
in Section 3.02 unless
such Claim with respect thereto is made within three years after the Closing
Date.
7.04
|
Third
Party Indemnification
|
Promptly
after the assertion by
any third party of any claim, demand or notice thereof (a “Third
Party Proceeding”)
against any person entitled to indemnification under this Agreement (the
“Indemnitee”)
that results or may result in the incurrence by such Indemnitee of any Claims
for which such Indemnitee would be entitled to indemnification pursuant to
this
Agreement, unless the Claim involves Taxes in which case the provisions of
Section 7.05 will apply, such Indemnitee will promptly notify the party from
whom such indemnification is or may be sought (the “Indemnitor”)
of such Third Party Proceeding. Such notice will also specify with reasonable
detail (to the extent the information is reasonably available) the factual
basis
for the Third Party Proceeding, the amount claimed by the third party, or if
such amount is not then determinable, a reasonable estimate of the likely amount
of the claim by the Third Party. The failure to promptly provide such notice
will not relieve the Indemnitor of any obligation to indemnify the Indemnitee,
except to the extent such failure prejudices the Indemnitor. Thereupon, the
Indemnitor will have the right, upon written notice (the “Defence
Notice”)
to the Indemnitee within 30 days after receipt by the Indemnitor of notice
of
the Third Party Proceeding (or sooner if such Third Party Proceeding so
requires), to conduct, at its own expense, the defence against the Third Party
Proceeding in its own name or, if necessary, in the name of the Indemnitee
provided that: (a) the Indemnitor acknowledges and agrees in the Defence Notice
that as between the Indemnitor and the Indemnitee, it is liable to pay for
all
Claims arising from or relating to such Third Party Proceeding and (b) the
Indemnitor provides to the Indemnitee adequate security (approved by the
Purchaser acting reasonably) from time to time in respect of such Claims. The
Defence Notice will specify the counsel the Indemnitor will appoint to defend
such Third Party Proceeding (the “Defence
Counsel”),
and the Indemnitee will have the right to approve the Defence Counsel, which
approval will not be unreasonably withheld. Any Indemnified Party will have
the
right to employ separate counsel in any Third Party Proceeding and/or to
participate in the defence thereof, but the fees and expenses of such counsel
will not be included as part of any Claims incurred by the Indemnified Party
unless (i) the Indemnitor failed to give the Defence Notice, including the
acknowledgement and agreement to be set out therein within the prescribed
period, (ii) such Indemnified Party has received an opinion of counsel,
reasonably acceptable to the Indemnitor, to the effect that the interests of
the
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28
-
Indemnified
Party and the Indemnitor with respect to the Third Party Proceeding are
sufficiently adverse to prohibit the representation by the same counsel of
both
parties under applicable ethical rules, or (iii) the employment of such counsel
at the expense of the Indemnitor has been specifically authorized by the
Indemnitor. The party conducting the defence of any Third Party Proceeding
will
keep the other party apprised of all significant developments and will not
enter
into any settlement, compromise or consent to judgment with respect to such
Third Party Proceeding unless the Indemnitor and the Indemnitee consent, which
consent will not be unreasonably withheld.
7.05
|
Third
Party Indemnification - Tax
Claims
|
(1) If
any Third Party Proceeding relating to Taxes is brought against an Indemnitee
and it gives notice to the Indemnitor of the commencement of the Third Party
Proceeding, the Indemnitee will have the sole and exclusive right of carriage
of
such Third Party Proceeding through counsel of its choosing. The Indemnitor
will
be entitled to participate in the Third Party Proceeding as described herein,
provided that the Indemnitor acknowledges its obligation to indemnify the
Indemnitee in accordance with the terms contained in Article 7 (including
expenses of counsel and other expenses of the Third Party Proceeding) and it
reimburses the Indemnitee for any amount paid to any Governmental Authority
in
order to pursue a contest of the Third Party Proceeding. The Indemnitor will
have the right to employ, at its own expense, separate counsel, such counsel
to
be reasonably satisfactory to the Indemnitee, in any such suit and participate
in its defence. Such participation will be strictly limited to being kept
informed of the status of the Third Party Proceeding by counsel to the
Indemnitee, to reviewing any proposed written communications and other documents
to be submitted to the relevant governmental authority or filed with a court
in
respect of the Third Party Proceeding and to receiving copies of any
correspondence received from any governmental authority relating to such Third
Party Proceeding, except that no compromise or settlement of any Third Party
Proceeding or claims relating to Taxes may be made by the Indemnitee without
the
Indemnitor’s consent, which consent may not be unreasonably
withheld.
(2) For
greater certainty, any Third Party Proceeding or claim relating to Taxes
resulting or arising from any amendment, made or filed without the consent
of
the Indemnitor, after the Effective Date to the Tax Returns under Section
3.01(12)(a)(i) will not qualify for indemnity or be the subject of any indemnity
claim under Article 7.
(3) Notwithstanding
Section 7.04, the Indemnitor may, at its option, direct the Indemnitee to settle
or abandon any Third Party Proceeding or Claim relating to Taxes for which
it is
obligated to indemnify the Indemnitee provided that it acknowledges its
liability for the Third Party Proceeding or Claim (including expenses of counsel
and other expenses of the Third Party Proceeding) and pays to the Indemnitee
the
Taxes owing under such Third Party Proceeding or Claim.
-
29
-
7.06
|
Exclusive
Remedy
|
From
and after the completion of the sale and purchase of Shares herein contemplated,
except in the case of a breach of Section 6.02(1) or (2), the rights of
indemnity set forth in this Article 7 are the sole and exclusive remedies of
each party in respect of any inaccuracy or misrepresentation in any
representation or warranty, or breach of covenant or other obligation by another
party under this Agreement. Accordingly, the parties waive, from and after
the
Closing, any and all rights, remedies and claims that one party may have against
another party, whether at law, under any statute or in equity (including claims
for contribution or other rights of recovery arising under any Environmental
Law, claims for breach of contract, breach of representation and warranty,
negligent representation and all claims for breach of duty), or otherwise,
directly or indirectly, relating to the provisions of this Agreement or the
transaction of the sale and purchase of the Shares contemplated by this
Agreement other than equitable remedies in the case of a breach of Section
6.02(2), as expressly provided for in this Article 7 and other than those
arising with respect to any fraud. This Article 7 will remain in full force
and
effect in all circumstances and will not be terminated by any breach
(fundamental, negligent or otherwise) by any party of its representations,
warranties, covenants or other obligations under this Agreement or under any
Closing document or by any termination or rescission of this Agreement by any
party. The parties acknowledge and agree that nothing contained in this Section
7.06 will any manner limit the remedies, if any, of any of the parties under
any
other agreement to which they are a party.
7.07
|
After
Tax Basis
|
In
determining the amount of any Claim under this Article 7, such Claim will be
increased (or decreased) to take into account any net Tax cost (or net current
or future Tax benefit) incurred or enjoyed by the Indemnitee as a result of
the
matter giving rise to such Claim and the receipt of an indemnity payment
hereunder. For greater certainty, any net Tax cost will include any further
cost
resulting from such increased payment.
7.08
|
Adjustment
to Purchase Price
|
All
amounts payable
by New Lorus to a Purchaser Indemnified Party pursuant to Article 7 will be
deemed to be a decrease to the Purchase Price. All amounts payable by the
Purchaser to a New Lorus Indemnified Party pursuant to Article 7 will be deemed
to be an increase to the Purchase Price.
ARTICLE
8
- GENERAL
8.01
|
Further
Assurances
|
Each
of New Lorus and the Purchaser will from time to time execute and deliver all
such further documents and instruments and do all acts and things as the other
party may reasonably require to effectively carry out or better evidence or
perfect the full intent and meaning of this Agreement.
-
30
-
8.02
|
Time
of the Essence
|
Time
is of the essence of
this Agreement.
8.03
|
Fees
and Commissions
|
Each
of New Lorus and the Purchaser will pay its respective legal and accounting
costs and expenses incurred in connection with the preparation, execution and
delivery of this Agreement and all documents and instruments executed pursuant
to this Agreement and any other costs and expenses whatsoever and howsoever
incurred and will indemnify and save harmless the other from and against any
Claim for any broker’s, finder’s or placement fee or commission alleged to have
been incurred as a result of any action by it in connection with the
transactions under this Agreement.
8.04
|
Benefit
of the Agreement
|
This
Agreement will enure to the benefit of and be binding upon the respective heirs,
executors, administrators, other legal representatives, successors and permitted
assigns of the parties hereto.
8.05
|
Entire
Agreement
|
Except
for the agreement
contemplated in the definition of “Buyout Amount” in Section 1.01, this
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto.
8.06
|
Amendments
and Waivers
|
No
amendment to this Agreement will be valid or binding unless set forth in writing
and duly executed by both of the parties hereto. No waiver of any breach of
any
provision of this Agreement will be effective or binding unless made in writing
and signed by the party purporting to give the same and, unless otherwise
provided, will be limited to the specific breach waived.
8.07
|
Notices
|
Any
demand, notice or other communication to be given in connection with this
Agreement must be given in writing and will be given by personal delivery,
by
registered mail or by electronic means of communication addressed to the
recipient as follows:
-
31
-
To
New Lorus:
Lorus
Therapeutics Inc.
0 Xxxxxxxx Xxxx
Xxxxxxx, XX X0X 0X0
0 Xxxxxxxx Xxxx
Xxxxxxx, XX X0X 0X0
Fax
No.: 416.798.2200
Attention: Director
of Finance
To
the Purchaser:
6707157
Canada Inc.
c/o Pinnacle International Lands, Inc.
Suite 000 - 000 Xxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
c/o Pinnacle International Lands, Inc.
Suite 000 - 000 Xxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Fax
No.: 604.688.7749
Attention: Vice
President Finance
or
to such other street address, individual or electronic communication number
or
address as may be designated by notice given by either party to the other.
Any
demand, notice or other communication given by personal delivery will be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by registered mail, on the fifth Business Day following the
deposit thereof in the mail and, if given by electronic communication, on the
day of transmittal thereof if given during the normal business hours of the
recipient and on the Business Day during which such normal business hours next
occur if not given during such hours on any day. If the party giving any demand,
notice or other communication knows or ought reasonably to know of any
difficulties with the postal system that might affect the delivery of mail,
any
such demand, notice or other communication may not be mailed but must be given
by personal delivery or by electronic communication.
8.08
|
Remedies
Cumulative
|
The
right and remedies of the parties under this Agreement are cumulative and are
in
addition to, and not in substitution for, any other rights and remedies
available at law or in equity or otherwise. No single or partial exercise by
a
party of any right or remedy precludes or otherwise affects the exercise of
any
other right or remedy to which that party may be entitled.
8.09
|
No
Third Party
Beneficiaries
|
Except
as provided in Section 8.04, this Agreement is solely for the benefit
of:
(a)
|
New
Lorus, and its successors and permitted assigns, with respect to
the
obligations of the Purchaser under this Agreement;
and
|
-
32
-
(b)
|
the
Purchaser, and its successors and permitted assigns, with respect
to the
obligations of New Lorus under this
Agreement;
|
and
this Agreement will not be deemed to confer upon or give to any other person
any
remedy, Claim, Liability, reimbursement, cause of action or other right. New
Lorus appoints the Purchaser as the trustee for the Purchaser’s directors,
officers, employees and agents with respect to the covenants and indemnification
of New Lorus in favour of such persons as specified in this Agreement and the
Purchaser accepts such appointment. The Purchaser appoints New Lorus as the
trustee for New Lorus’s directors, officers, employees and agents with respect
to the covenants and indemnification of the Purchaser in favour of such persons
specified in this Agreement and New Lorus accepts such appointment.
8.10
|
Governing
Law
|
This
Agreement is
governed by and will be construed in accordance with the laws of the Province
of
Ontario and the laws of Canada applicable therein.
8.11
|
Attornment
|
For
the purpose of all legal proceedings this Agreement will be deemed to have
been
performed in the Province of Ontario and the courts of the Province of Ontario
will have jurisdiction to entertain any action arising under this Agreement.
New
Lorus and the Purchaser each attorns to the jurisdiction of the courts of the
Province of Ontario.
8.12
|
Counterparts
|
This
Agreement may be
executed in any number of counterparts, each of which will be deemed to be
an
original and all of which taken together will be deemed to constitute one and
the same instrument.
8.13
|
Facsimiles
|
Delivery
of an executed
signature page to this Agreement by any party by electronic transmission will
be
as effective as delivery of a manually executed copy of this Agreement by such
party.
[The
remainder of this page has been intentionally left blank.]
-
33
-
IN
WITNESS WHEREOF
the parties have executed this Agreement.
6707157
CANADA INC.
|
|||
Per:
|
|||
Xxxxxxx
Xx Xxxxxx
|
|||
President
|
|||
LORUS
THERAPEUTICS INC.
|
|||
Per:
|
|||
Per:
|
|||
-
34
-
SCHEDULE
1.01-A
Form
of Access and Tax Cooperation Agreement
[attached]
ACCESS
TO RECORDS AND TAX COOPERATION AGREEMENT
THIS
AGREEMENT is made as of •, 2007.
BETWEEN:
4325231
CANADA INC.,
a corporation incorporated under the laws of Canada (“Old
Lorus”)
-
and -
LORUS
THERAPEUTICS INC.,
a corporation incorporated under the laws of Canada (“New
Lorus”)
-
and -
XXXXXX
PHARMACEUTICALS INC.,
a corporation incorporated under the laws of the Province of Ontario
(“XxXxxx”)
-
and -
GENESENSE
TECHNOLOGIES INC.,
a corporation incorporated under the laws of Canada (“GeneSense”)
WHEREAS
Old Lorus, New Lorus
and certain others have entered into the Arrangement Agreement, pursuant
to
which Old Lorus agreed to reorganize its business by way of a plan of
arrangement pursuant to section 192 of the Canada
Business Corporations Act
in accordance with the terms set forth therein;
AND
WHEREAS pursuant to the Arrangement, all of the Assets have been transferred
to
New Lorus, GeneSense or XxXxxx (collectively, the “New
Lorus Parties”
and individually a “New
Lorus Party”)
pursuant to the Transfer Transactions;
AND
WHEREAS in connection with the Arrangement, Old Lorus will change its name
to
4325231 Canada Inc., and New Lorus will change its name to Lorus Therapeutics
Inc.;
AND
WHEREAS it is a condition of the Share Purchase Agreement (the “Share
Purchase Agreement”)
dated as of the date hereof between the Purchaser and New Lorus that the
parties
hereto enter into this Agreement in order to set forth the terms of the
relationship between Old Lorus and each New Lorus Party with respect to Old
Lorus’s access to the Books and Records, with respect to New Lorus’s access to
the Minute Books and with respect to the cooperation of the parties hereto
following completion of the transactions contemplated by the
Arrangement;
NOW
THEREFORE in consideration of the premises and the respective covenants and
agreements contained herein and other good and valuable consideration (the
receipt of which is hereby acknowledged), the parties hereto covenant and
agree
as follows:
1. INTERPRETATION
1.1 Defined
Terms
Unless
the context clearly indicates to the contrary, terms used in this Agreement,
including the recitals hereto, that are defined in the Share Purchase Agreement
and not otherwise defined herein will have the meanings herein as in the
Share
Purchase Agreement.
1.2 Extended
Meanings
In
this Agreement words importing the singular number only include the plural
and
vice versa, words importing any gender include all genders and words importing
persons include individuals, corporations, limited and unlimited liability
companies, general and limited partnerships, associations, trusts,
unincorporated organizations, joint ventures and Governmental Authorities.
The
term “including” means “including without limiting the generality of the
foregoing”.
1.3 Section
References and Headings
The
division of this Agreement into Articles, Sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and will
not
affect in any way the meaning or interpretation of this Agreement.
1.4 Date
for any Action
In
the event that any date by or on which any action is required or permitted
to be
taken hereunder by any of the parties hereto is not a Business Day in the
place
where the action is required or permitted to be taken, such action will be
required or permitted to be taken by or on the next succeeding day that is
a
Business Day.
2. ACCESS
TO BOOKS AND RECORDS
2.1 Access
to Books and Records of New Lorus Parties
(a) From
the date of this Agreement until the expiration of the Term or the earlier
termination of this Agreement pursuant to Section 4, each New Lorus Party
will,
subject to Applicable Law, provide or make available, or cause to be provided
or
made available, to Old Lorus and its affiliates and each of their authorized
representatives, including accountants, consultants and legal counsel
(collectively, the “Old
Lorus Representatives”),
reasonable access to and the right to copy, at Old Lorus’s expense, the books
and records of each New Lorus Party and any other information relating to
the
business, operations or financial affairs of each New Lorus Party reasonably
required by Old Lorus or the Old Lorus Representatives relating to periods
prior
to or including the Effective Date (collectively, the “Books
and Records”)
in order to:
(i)
|
review
any Tax Return with respect to Old Lorus for any Tax year or period
ending
on or prior to or including the Effective Date (each, a “Subject
Tax Return”);
|
-
2
-
(ii)
|
prepare
a Tax Return with respect to Old Lorus for any Tax year or period
which
includes the Effective Date (each, an “Effective
Date Return”);
|
(iii)
|
respond
to or address any inquiry from a Governmental Authority, Taxation
Authority or quasi-governmental authority with respect to any period
ending on or prior to or including the Effective Date;
|
(iv)
|
respond
to or address any matter regarding Old Lorus, GeneSense or XxXxxx
or any
of their affiliates with respect to any period ending on or prior
to or
including the Effective Date; or
|
(v)
|
respond
to, address or conduct any proceeding relating to any Claim in
accordance
with the terms of the Indemnification
Agreement.
|
(b) In
the event that Old Lorus sells all or any portion of its business or assets,
each New Lorus Party will grant to the purchased business or the purchaser
of
such business or assets, the same access to the Books and Records as provided
to
Old Lorus under this Agreement on the same terms as set out in this Agreement,
provided that such purchased business or purchaser enters into a confidentiality
agreement with each New Lorus Party on terms and conditions reasonably
satisfactory to each New Lorus Party; provided
that
such purchased business or purchaser is not a competitor of any New Lorus
Party.
(c) Each
New Lorus Party agrees that, for a period of seven years following the Effective
Date, or such longer period as may be required by any Applicable Law (the
“Retention
Period”),
Taxation Authority or Governmental Authority, it will not destroy or otherwise
dispose of, or acquiesce in the destruction or disposal of, any of the Books
and
Records. Each New Lorus Party will use commercially reasonable efforts to
retain
and preserve all such Books and Records and will not destroy or otherwise
dispose of, or acquiesce in the destruction or disposal of such Books and
Records during the Retention Period without first offering to deliver to
Old
Lorus, at Old Lorus’s expense, custody of such Books and Records.
(d) Old
Lorus will, and will cause the Old Lorus Representatives to, use any information
obtained pursuant to this Agreement solely for the purposes described in
this
Agreement and, if requested, will enter into a confidentiality agreement
with
each New Lorus Party on terms and conditions reasonably satisfactory to each
New
Lorus Party to protect the confidentiality of such information.
2.2 Access
to Minute Books
(a) Subject
to Section 2.2(e) hereof, from and after the date of this Agreement, Old
Lorus
will, subject to Applicable Law, provide or make available, or cause to be
provided or made available, to New Lorus and its affiliates and each of their
authorized representatives, including accountants, consultants and legal
counsel
(collectively, the “New
Lorus Representatives”),
reasonable access to and the right to copy, at New Lorus’s expense, the
corporate minute books (the “Minute
Books”)
relating to each New Lorus Party reasonably required by a New Lorus Party
or the
New Lorus Representatives relating to periods prior to or including the
Effective Date.
-
3
-
(b) Subject
to Section 2.2(e) hereof , in the event that New Lorus sells all or any portion
of its business or assets, Old Lorus will grant to the purchased business
or the
purchaser of such business or assets, the same access to the Minute Books
as
provided to New Lorus under this Agreement on the same terms as set out in
this
Agreement, provided that such purchased business or purchaser enters into
a
confidentiality agreement with Old Lorus on terms and conditions reasonably
satisfactory to Old Lorus.
(c) Subject
to Section 2.2(e) hereof, Old Lorus agrees that it will use commercially
reasonable efforts to retain and preserve the Minute Books and will not destroy
or otherwise dispose of, or acquiesce in the destruction or disposal of such
Minute Books.
(d) New
Lorus will, and will cause the New Lorus Representatives to, use any information
obtained pursuant to this Agreement solely for the purposes described in
this
Agreement and, if requested, will enter into a confidentiality agreement
with
Old Lorus Party on terms and conditions reasonably satisfactory to Old Lorus
to
protect the confidentiality of such information.
(e) Notwithstanding
any other provision of this Agreement, Old Lorus will be relieved of its
covenants and obligations under Section 2.2 of this Agreement if it delivers
or
causes to be delivered to New Lorus or, as applicable, the purchased business
or
purchaser described in Section 2.2(b) hereof, copies of the Minute Books
in a
form reasonably acceptable to New Lorus or, as applicable, such purchased
business or purchaser.
(a) Each
Subject Tax Return will be prepared and filed on a timely basis by New Lorus,
subject to the prior review, comment and approval by Old Lorus and its
representatives and professional advisors as provided herein, not to be
unreasonably withheld or delayed. New Lorus will prepare and deliver to Old
Lorus a draft of each Subject Tax Return, together with copies of all working
papers and other documentation used or prepared in connection with the
preparation of, or that otherwise form the basis of, such Subject Tax Return.
Old Lorus and its representatives and professional advisors will have at
least
10 Business Days to review, comment on and approve each Subject Tax Return,
which approval must not be unreasonably withheld or delayed. Such Tax Returns
will be prepared on a basis consistent with prior practice, except where
otherwise required under Applicable Law, and each New Lorus Party and Old
Lorus
will cooperate with one another to prepare and effect such filings on a timely
basis in the manner contemplated by this Agreement, taking into account the
reasonable comments of Old Lorus, if any. New Lorus or the applicable New
Lorus
Party will, for and on behalf of Old Lorus, timely remit any Taxes shown
as
owing on any such Tax Returns.
Each New Lorus Party agrees to indemnify and hold harmless Old Lorus and
its
affiliates against any Claim arising in connection with the preparation and
filing of any Subject Tax Return and for any Taxes shown as owing on any
such
Tax Return, except any Claim arising as a result of a breach by Old Lorus
of
Section 3(e) of this Agreement.
(b) New
Lorus will prepare, and provide Old Lorus access to, within 90 days of the
Effective Date, copies of all working papers and other documentation relating
to
the operations and activities of Old Lorus up to and including the Effective
Date (the “Current
Year Information”)
used or prepared in connection with the preparation of, or that otherwise
form
the basis of, an Effective Date Tax Return. Old Lorus and the Old Lorus
Representatives
-
4
-
will
have 30 Business Days following the receipt of the Current Year Information
to
review, comment on and approve the Current Year Information, which approval
must
not be unreasonably withheld or delayed. If Old Lorus does not approve the
Current Year Information within the aforementioned 30 Business Day period,
it
will be deemed to have approved the Current Year Information. New Lorus will
prepare Effective Date Tax Returns consistent with prior practice, except
where
otherwise required under Applicable Law, and each New Lorus Party and Old
Lorus
will cooperate with one another to prepare and effect such filings on a timely
basis in the manner contemplated by this Agreement, taking into account the
reasonable comments of Old Lorus, if any.
(c) Old
Lorus and New Lorus will provide written notice to one another, as applicable,
of any inquiries made by, discussions with or representations or submissions
proposed to be made to any Taxation Authority to the extent that the subject
matter thereof relates to any Subject Tax Return or Effective Date Tax Return,
any Tax year or period ending on or prior to or including the Effective Date,
or
any representation, covenant or obligation of any New Lorus Party hereunder
or
under the Share Purchase Agreement that could reasonably be expected to give
rise to a right of indemnity hereunder or under the Share Purchase Agreement.
Old Lorus and each New Lorus Party, as applicable, will forthwith advise
the
other parties hereto of the substance of any such inquiries, discussions,
representations or submissions and provide each party hereto with copies
of any
written communications from any Taxation Authority relating thereto. Each
of the
parties hereto will provide the other parties with a reasonable opportunity
to
comment on any such representations or submissions and to attend any meeting
with any such Taxation Authority with respect to such matters.
(d) Each
New Lorus Party will use commercially reasonable efforts to take reasonable
steps, including obtaining any certificate or other document from or effect
any
filing with any Taxation Authority, as may be considered desirable to mitigate,
reduce or eliminate any Taxes that could be imposed on Old Lorus, provided
that
a New Lorus Party will not be required to expend more than nominal amounts
of
money to effect same, unless the reasonable costs of doing so are reimbursed
by
Old Lorus.
(e) Each
of New Lorus and Old Lorus covenants that it will not take any action after
the
Effective Time, make any election or deemed election or make or change any
Tax
election, amend any Tax Return or take any position on any Tax Return that
results in any increased Tax Liability or reduction of any deduction, credit,
loss carry-over or tax pool of Old Lorus in respect of any period ending
on or
before, or which includes, the Effective Date.
4. TERM;
TERMINATION
The
term of this Agreement will commence on the date hereof and will terminate
on
the date on which the parties no longer have any obligations hereunder;
provided
that
Sections 2.1(d) and 2.2(d) will survive termination or expiry of this Agreement
and remain in full force and effect.
-
5
-
5. GENERAL
PROVISIONS
5.1 Further
Assurances
Each
of the parties hereto will from time to time execute and deliver all such
further documents and instruments, including Tax filings, Tax Returns and
other
documents and instruments, and do all acts and things as the other party
may
reasonably require to effectively carry out or better evidence or perfect
the
full intent and meaning of this Agreement.
5.2 Assignment
No
party hereto may assign its rights and obligations under this Agreement,
in
whole or in part, whether by operation of law or otherwise, without the prior
written consent of the other parties hereto, and any such assignment contrary
to
the terms hereof will be null and void and of no force and effect.
5.3 Entire
Agreement; Amendments
and Waiver
Except
for the various collateral agreements entered into in connection with the
Arrangement, this Agreement constitutes the entire agreement between the
parties
hereto with respect to the subject matter hereof and cancels and supersedes
any
prior understandings and agreements between the parties hereto with respect
thereto. No amendment to this Agreement will be valid or binding unless set
forth in writing and duly executed by all of the parties hereto. No waiver
of
any breach of any provision of this Agreement will be effective or binding
unless made in writing and signed by the party purporting to give the same
and,
unless otherwise provided, will be limited to the specific breach
waived.
5.4 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.
5.5 Severability
If
any part of any provision of this Agreement will be invalid or unenforceable
in
any respect, such part will be ineffective to the extent of such invalidity
or
unenforceability only, without in any way affecting the validity and
enforceability of the remaining parts of such provision or the remaining
provisions of this Agreement.
5.6 Benefit
of Agreement;
Successors and Assigns
This
Agreement will enure to the benefit of and be binding upon the respective
heirs,
executors, administrators, other legal representatives, successors and permitted
assigns of the parties hereto.
-
6
-
5.7 Counterparts;
Facsimile Signatures
This
Agreement may be executed in any number of counterparts, each of which will
be
deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument. Delivery of an executed signature
page
to this Agreement by any party by electronic transmission will be as effective
as delivery of a manually executed copy of this Agreement by such
party.
[The
remainder of this page has been intentionally left blank]
-
7
-
IN
WITNESS WHEREOF
the parties have executed this Agreement.
4325231
CANADA INC.
|
|||
by:
|
|||
Name:
Xxxxxxx Xx Xxxxxx
|
|||
Title:
President
|
|||
LORUS
THERAPEUTICS INC.
|
|||
by:
|
|||
Name: | |||
Title: | |||
XXXXXX PHARMACEUTICALS INC. | |||
by: | |||
Name: | |||
Title: | |||
GENESENSE
TECHNOLOGIES INC.
|
|||
by: | |||
Name: | |||
Title: | |||
-
8
-
SCHEDULE
3.01(1)(d)
Share
Conditions
•
[Note
to draft: To be inserted in final agreement.]
SCHEDULE
3.01(12)(a)
Taxes
•
[Note
to draft: To be inserted in final agreement.]
SCHEDULE
3.01(12)(b)
Suits
or Proceedings
•
[Note
to draft: To be inserted in final agreement.]
SCHEDULE
5.01(g)
Forms
Of Release
[attached]
RELEASE
RELEASE
WHEREAS
Lorus Therapeutics Inc. ("New Lorus") has agreed to sell and 6707157 Canada
Inc.
(the "Purchaser") has agreed to purchase the Appropriate Number of voting
common
shares and all of the non-voting common shares of 4325231 Canada Inc. (the
"Corporation")
pursuant to the terms of a share purchase agreement (the "Share Purchase
Agreement") made on or about the date hereof between the Purchaser and New
Lorus
and, as a condition
of the closing of the transactions contemplated by the Share Purchase Agreement,
each officer
and director, on the one hand, and the Corporation, on the other hand, is
required to deliver
this mutual release in favour of the other in respect of Claims arising from
any
act, matter or
thing
arising at or prior to the Effective Time;
AND
WHEREAS • [insert
name of
officer/director]
(the
"Officer") is an [officer
and/or
director] of
the
Corporation;
AND
WHEREAS terms used in this Release that are defined in the Share Purchase
Agreement
will have the same meanings herein as in the Share Purchase
Agreement;
NOW
THEREFORE THIS RELEASE WITNESSES that in consideration of (i) the closing
of the transactions contemplated by the Share Purchase Agreement, (ii) the
payment to the
Officer of the sum of $1 of lawful money of Canada by the Corporation (the
receipt and sufficiency
of which are hereby acknowledged) and (iii) the payment to the Corporation
of
the sum
of $1
of lawful money of Canada by the Officer (the receipt and sufficiency of
which
are hereby
acknowledged):
(a)
|
the
Officer hereby releases and forever discharges the Corporation
from any
and all Claims which the Officer as an [officer
and/or director] of
the Corporation or otherwise ever had, now has or may hereafter
have for
or by reason of or in any way
arising out of any cause, matter or thing whatsoever existing at
or prior
to the Effective Time and, in particular, without in any way limiting
the
generality of the foregoing,
for or by reason of or in any way arising out of any claims for
money
advanced,
salary, wages, retirement or pension allowances, director's fees,
bonus,
expenses, participation in profits, earnings or other remuneration
whether
authorized
or provided for by by-law, resolution, contract or otherwise;
and
|
(b)
|
the
Corporation releases and forever discharges the Officer from any
and all
Claims
which the Corporation ever had, now has or may hereafter have for
or by
any reason of or in any way arising out of any cause, matter or
thing
whatsoever done
or omitted to be done by the Corporation existing at or prior to
the
Effective Time,
except for matters arising in circumstances in which the Corporation
would
not
have been permitted under the Canada
Business Corporations Act to
indemnify the Officer in respect
thereof.
|
For
the
said consideration (i) the Officer agrees that it shall not make any Claim
or
take any proceedings with respect to any matter released and discharged in
this
Release which may
result
in
any Claim arising against the Corporation for contribution or indemnity or
other
relief and (ii) the Corporation agrees that it shall not make any Claim or
take
any proceedings with respect to any matter released and discharged in this
Release which may result in any Claim arising against the Officer for
contribution or indemnity or other relief.
The
Officer hereby declares that it has had the opportunity to seek independent
legal advice
with respect to this Release, and each of the Officer and the Corporation
hereby
declare that
it
has read and fully understands this Release.
This
Release shall be governed by and construed in accordance with the laws of
the
Province
of Ontario.
This
Release shall enure to the benefit of and be binding upon the heirs and legal
personal representatives
of the Officer and the successors and assigns of the Corporation,
respectively.
IN
WITNESS WHEREOF the Officer and the Corporation have executed this
Release
this___________
of _________________ ,
2007.
4325231
CANADA INC.
|
||
By:
|
|
|
SIGNED,
SEALED AND DELIVERED
|
) | |
in
the presence of:
|
) | |
) | ||
) | ||
Witness
|
) |
Signature
|
Print
name
|
[Form
of
release for New Lorus]
RELEASE
WHEREAS
Lorus Therapeutics Inc. (formerly 6650309 Canada Inc.) ( "New Lorus") has
agreed
to sell and 6707157 Canada Inc. (the "Purchaser") has agreed to purchase
the
Appropriate Number
of
voting common shares and all of the non-voting common shares of 4325231 Canada
Inc. (the "Corporation") pursuant to the terms of a share purchase agreement
(the "Share Purchase
Agreement") made on or about the date hereof between the Purchaser and New
Lorus
and, as a condition of the closing of the transactions contemplated by the
Share
Purchase Agreement, New Lorus has agreed to release the Corporation from
all
Claims against the Corporation arising from any act, matter or thing arising
at
or prior to the Effective Time;
AND
WHEREAS terms used in this Release that are defined in the Share Purchase
Agreement
will have the same meanings herein as in the Share Purchase
Agreement;
NOW
THEREFORE THIS RELEASE WITNESSES that in consideration of the closing
of
the
transactions contemplated by the Share Purchase Agreement and the payment
to New
Lorus of the sum of $1 of lawful money of Canada by the Corporation (the
receipt
and sufficiency
of which are hereby acknowledged), New Lorus:
(a)
|
hereby
releases and forever discharges the Corporation from any and all
possible
Claims
which New Lorus as a shareholder or creditor of the Corporation
or
otherwise
ever had, now has or may hereafter have for or by reason of or
in any
way
arising out of any cause, matter or thing whatsoever existing at
or prior
to the Effective Time and, in particular, without in any way limiting
the
generality of the foregoing,
for or by reason of or in any way arising out of any claims for
money
advanced, whether authorized or provided for by by-law, resolution,
contract or otherwise,
save and except for matters arising under the Arrangement Agreement;
and
|
(b)
|
agrees
that New Lorus will not make any Claim or take any proceedings
with
respect
to any matter released and discharged in this Release which may
result in
any Claim arising against the Corporation for contribution or indemnity
or
other relief.
|
This
Release shall be governed by and construed in accordance with the laws of
the
Province
of Ontario.
This
Release shall enure to the benefit of your successors and assigns and shall
be
binding
upon the successors and assigns of New Lorus.
[the
remainder of this page has been intentionally left blank]
IN
WITNESS WHEREOF New Lorus has executed this Release this____________day
of
_________________,
2007
LORUS
THERAPEUTICS INC.
|
|
Per:
|
|
Name:
|
|
Title:
|
SCHEDULE
5.01(j)
Payout
Lenders
•
[Note
to draft: To be inserted in final agreement.]
|
||
|
|
|
|
|
SCHEDULE
J
INDEMNIFICATION
AGREEMENT
INDEMNIFICATION
AGREEMENT
BETWEEN
4325231
CANADA INC.
AND
LORUS
THERAPEUTICS INC.
AND
XXXXXX
PHARMACEUTICALS INC.
AND
GENESENSE
TECHNOLOGIES INC.
MADE
AS OF
•,
2007
XxXxxxxx
Xxxxxxxx LLP
INDEMNIFICATION
AGREEMENT
THIS
AGREEMENT
is made as of •, 2007.
BETWEEN:
4325231
CANADA INC.,
a corporation incorporated under the laws of Canada (“Old
Lorus”)
-
and -
LORUS
THERAPEUTICS INC.,
a corporation incorporated under the laws of Canada (“New
Lorus”)
-
and -
XXXXXX
PHARMACEUTICALS INC.,
a corporation incorporated under the laws of the Province of Ontario
(“XxXxxx”)
-
and -
GENESENSE
TECHNOLOGIES INC.,
a corporation incorporated under the laws of Canada (“GeneSense”)
WHEREAS
Old Lorus, New Lorus
and certain others have entered into the Arrangement Agreement, pursuant
to
which Old Lorus agreed to reorganize its business (the “Arrangement”)
by way of a plan of arrangement pursuant to section 192 of the Canada
Business Corporations Act
in accordance with the terms set forth therein;
AND
WHEREAS
pursuant to the Arrangement, all of the Assets have been transferred to a
Lorus
Party pursuant to the Transfer Transactions;
AND
WHEREAS
in connection with the Arrangement, Old Lorus will change its name to its
incorporation number, 4325231 Canada Inc., and New Lorus will change its
name to
Lorus Therapeutics Inc.;
AND
WHEREAS
without limiting any of the provisions of this Agreement and subject to the
terms and conditions set forth herein, the Lorus Parties have agreed to
indemnify the Indemnified Parties from and against all Losses incurred by
any of
the Indemnified Parties which arise out of any matter or thing occurring
(a)
prior to, at or after the Effective Time and directly or indirectly relating
to
any of the Assets or the conduct of the business of Old Lorus or any Lorus
Party
prior to the Effective Time (b) prior to, at or after the Effective Time
as a
result of any and all interests, rights, Liabilities and other matters relating
to the Assets, and (c) prior to or at the Effective Time and directly or
indirectly relating to any of the activities of Old Lorus or the
Arrangement;
NOW
THEREFORE in
consideration of the premises and the respective covenants and agreements
contained herein and other good and valuable consideration (the receipt of
which
is hereby acknowledged), the parties hereto covenant and agree as
follows:
SECTION 1
INTERPRETATION
1.1
|
Definitions
|
In
this Agreement, including the recitals hereto, unless there is something
in the
subject matter or context inconsistent therewith, the following terms will
have
the following meanings, respectively:
1.1.1
|
“Agreement”
means this Indemnification
Agreement;
|
1.1.2
|
“Arrangement”
has the meaning ascribed thereto in the recitals of this
Agreement.
|
1.1.3
|
“Arrangement
Agreement”
means the arrangement agreement dated as of May 1, 2007 between
Old Lorus,
NuChem, GeneSense, New Lorus, Pinnacle International Lands, Inc.
and
6707157 Canada Inc.;
|
1.1.4
|
“Assets”
means, collectively, the assets and the Subsidiary Shares transferred,
directly or indirectly, by Old Lorus to the Lorus Parties, as applicable,
pursuant to the Transfer Transactions (including any assets held
in trust
by Old Lorus for a Lorus Party);
|
1.1.5
|
“Authorized
Authority”
means, in relation to any Claim, any (i) federal, provincial,
municipal or local governmental body (whether administrative, legislative,
executive or otherwise), both domestic and foreign, (ii) court,
agency, authority, commission, instrumentality, regulatory body
or other
entity exercising executive, legislative, judicial, taxing, regulation
or
administrative powers or functions of or pertaining to government,
(iii) court, arbitrator, commission or body exercising judicial,
quasi-judicial, administrative or similar functions, and (iv) other
body or entity created under the authority of or otherwise subject
to the
jurisdiction of any of the foregoing, including securities exchanges,
in
each case having jurisdiction over such
Claim;
|
1.1.6
|
“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;
|
1.1.7
|
“Canadian
Securities Regulatory Authorities”
has the meaning ascribed to such term in National Instrument 14-101
-
Definitions, of the Canadian Securities Administrators, as such
instrument
may be amended or supplemented from time to time, or any similar
instrument, rule or regulation hereafter adopted by any of the
Canadian
Securities Regulatory Authorities having substantially the same
effect as
such instrument;
|
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2
-
1.1.8
|
“Claims”
means any claim, demand, action, suit, arbitration, mediation,
proceeding,
investigation or regulatory inquiry with respect to any given matter
for
which an Indemnified Party is entitled to be indemnified
hereunder;
|
1.1.9
|
“Claim
Notice”
has the meaning ascribed thereto in
Section 4.1.1;
|
1.1.10
|
“Confidential
Information”
has the meaning ascribed thereto in
Section 7.1;
|
1.1.11
|
“Counsel”
means legal counsel representing a Party hereunder with respect
to any
Claim;
|
1.1.12
|
“Damage
Recoveries”
has the meaning ascribed thereto in
Section 2.2;
|
1.1.13
|
“Demand”
has the meaning ascribed thereto in
Section 2.3.1;
|
1.1.14
|
“Determination
Date”
means the day upon which a Final Determination
occurs;
|
1.1.15
|
“Effective
Date”
means the date of execution of this
Agreement;
|
1.1.16
|
“Effective Time”
means 12:01 a.m. (Toronto time) on the Effective
Date;
|
1.1.17
|
“Final
Determination”
means, with respect to any Claim, the point in time when such Claim
has
been finally resolved for all purposes, which will be deemed to
occur upon
the happening of the earlier of the following
events:
|
(i)
|
a
binding Settlement Agreement being reached among all parties to
the Claim
and the filing of all applicable discontinuances and fully executed
releases in form and content acceptable to New Lorus and the Indemnified
Parties, acting reasonably and without undue delay, delivered amongst
such
parties as appropriate, and the satisfaction by or on behalf of
New Lorus
of any obligations it may have pertaining to such agreement or
agreements;
and
|
(ii)
|
the
final resolution of each of the actions comprising the Claim by
the
Authorized Authority, including the completion of any appeal proceedings
relating to a Judgment or the expiry of all applicable appeal periods,
if
any, and the satisfaction by or on behalf of New Lorus of any obligations
it may have pertaining to such
Claim;
|
1.1.18
|
“GeneSense”
means GeneSense Technologies Inc., a corporation existing under
the laws
of Canada;
|
1.1.19
|
“Governmental
Authority”
means any federal, provincial, territorial, state, local or foreign
government or any department, agency, board, tribunal (judicial,
quasi-judicial, administrative, quasi-administrative or arbitral)
or
authority thereof or other political subdivision thereof and any
Person
exercising executive, legislative, judicial, regulatory or administrative
|
-
3
-
|
“functions
of, or pertaining thereto or the operation thereof, including
the Canadian
Securities Regulatory Authorities (or any successor to any of
them), the
United States Securities and Exchange Commission (or any successor
entity), the Toronto Stock Exchange and the American Stock
Exchange;
|
1.1.20
|
“Indemnified
Parties”
means Old Lorus and each of its directors, officers and employees
in
respect of any matter for which an Indemnified Party is entitled
to be
indemnified hereunder and “Indemnified
Party”
means any one of the Indemnified
Parties;
|
1.1.21
|
“Indemnity”
means the indemnity given by New Lorus as set forth in this
Agreement;
|
1.1.22
|
“Judgment”
means an order, decree, assessment or other form of decision of
an
Authorized Authority which is in effect and has not been appealed
or, if
appealed, the effect of the order has not been stayed pending the
outcome
of such appeal;
|
1.1.23
|
“Legal
Expenses”
means all reasonable legal fees, disbursements, court or hearing
costs and
related expenses, disbursements or costs pertaining to the assessment
or
conduct of a Claim, including costs associated with preliminary
or
interlocutory proceedings, hearings, interrogations, discoveries,
trials,
appeals, negotiations, settlements and
comprises;
|
1.1.24
|
“Liabilities”
means, with respect to any Person, any liability, commitment or
obligation
of such Person of any kind, character or description, whether known
or
unknown, absolute or contingent, accrued or unaccrued, disputed
or
undisputed, liquidated or unliquidated, secured or unsecured, joint
or
several, due or to become due, vested or unvested, and whether
or not the
same is required to be accrued on the financial statements of such
Person;
|
1.1.25
|
“Lorus
Parties”
means, collectively, New Lorus, XxXxxx and GeneSense and “Lorus
Party”
means any of them;
|
1.1.26
|
“Losses”
means all damages, losses, expenses (including fines and penalties),
third
party costs and Legal Expenses which are suffered, sustained, paid
or
incurred in relation to any Claim or
Liability;
|
1.1.27
|
“Nominee”
means any nominee which New Lorus appoints to perform the duties
and
responsibilities of New Lorus hereunder, if any such nominee is
so
appointed;
|
1.1.28
|
“XxXxxx”
means XxXxxx Pharmaceuticals Inc., a corporation existing under
the laws
of the Province of Ontario;
|
1.1.29
|
“Parties”
means, collectively, Old Lorus and New
Lorus;
|
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4
-
1.1.30
|
“Person”
includes any individual, firm, partnership, joint venture, limited
liability company, unlimited liability company, association, trust,
trustee, executor, administrator, legal personal representative,
estate,
group, body corporate, corporation, unincorporated association
or
organization, Governmental Authority, syndicate or other entity,
whether
or not having legal status;
|
1.1.31
|
“Power”
has the meaning ascribed thereto in Section 3.1.1;
|
1.1.32
|
“Settlement
Agreement”
means any agreement entered into by a Party which requires or will
require
an Indemnified Party (i) to pay any amounts to, or for the benefit
of, any
other party to proceedings relating to Claims, or (ii) to otherwise
incur
Losses;
|
1.1.33
|
“Solvency
Event”
means the occurrence of one or more of the following
events:
|
(i)
|
if
a decree or order of a court of competent jurisdiction is entered
adjudging a Lorus Party a bankrupt or insolvent or approving as
properly
filed a petition seeking the winding-up of a Lorus Party under
the
Companies’
Creditors Arrangement Act
(Canada), the Bankruptcy
and Insolvency Act
(Canada) or the Winding
Up Act
(Canada) or any other bankruptcy, insolvency or analogous laws
or issuing
sequestration or process of execution against, or against any substantial
part of the assets of a Lorus Party or ordering the winding up
or
liquidation of its affairs, and any such decree or order continues
unstayed and in effect for a period of 10 days;
or
|
(ii)
|
if
a Lorus Party becomes insolvent, makes any assignment in bankruptcy
or
makes any other assignment for the benefit of creditors, makes
any
proposal under the Bankruptcy
and Insolvency Act
(Canada) or any comparable law, seeks relief under the Companies’
Creditors Arrangement Act
(Canada), the Winding
Up Act (Canada)
or any other bankruptcy, insolvency or analogous law, is adjudged
bankrupt, files a petition or proposal to take advantage of any
act of
insolvency, consents to or acquiesces in the appointment of a trustee,
receiver, receiver and manager, interim receiver, custodian, sequestrator
or other Person with similar powers of itself or of all or any
substantial
portion of its assets, or files a petition or otherwise commences
any
proceeding seeking any reorganization, arrangement, composition
or
readjustment under any applicable bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting creditors’ rights or
consents to, or acquiesces in, the filing of such a petition;
|
1.1.34
|
“Subsidiary
Shares”
means, collectively, all of the shares in the capital of (a) GeneSense
and
(b) XxXxxx transferred, directly or indirectly, by Old Lorus to
New Lorus
pursuant to a Transfer Transaction;
|
-
5
-
1.1.35
|
“Tax”
means all federal, provincial, territorial, state, county, municipal,
local or foreign taxes, duties, imposts, levies, assessments, tariffs
and
other charges imposed, assessed or collected by a Governmental
Authority,
including any gross income, net income, gross receipts, business,
royalty,
capital, capital gains, goods and services, value added, severance,
stamp,
franchise, occupation, premium, capital stock, sales and use, real
property, land transfer, personal property, ad
valorem,
transfer, license, profits, windfall profits, environmental, payroll,
employment, employer health, pension plan, excise, severance, stamp,
occupation, or premium tax, all withholdings on amounts paid to
or by the
Vendor, all employment insurance premiums, Canada, Ontario and
any other
pension plan contributions or premiums;
and
|
1.1.36
|
“Transfer
Transactions”
means, collectively, the transactions contemplated by (a) the asset
transfer agreement dated the date hereof between Old Lorus and
GeneSense
in connection with, among other things, certain assets of Old Lorus,
(b)
the asset transfer agreement dated the date hereof between GeneSense
and
New Lorus in connection with, among other things, certain patent
assets of
GeneSense, (c) the asset transfer agreement dated the date hereof
between
Old Lorus and GeneSense in connection with, among other things,
the
Virulizun patent assets and small molecule technology of Old Lorus,
(d)
the asset transfer agreement dated the date hereof between Old
Lorus and
GeneSense in connection with, among other things, the prepaid expenses
and
receivables of Old Lorus, (e) the share purchase agreement dated
the date
hereof between Old Lorus and New Lorus with respect to the shares
of
GeneSense, and (f) the share purchase agreement dated the date
hereof
between Old Lorus and New Lorus with respect to the shares of
XxXxxx.
|
1.2
|
Extended
Meanings
|
In
this Agreement words importing the singular number only include the plural
and
vice versa, words importing any gender include all genders and words importing
persons include individuals, corporations, limited and unlimited liability
companies, general and limited partnerships, associations, trusts,
unincorporated organizations, joint ventures and Governmental Authorities.
The
term “including” means “including without limiting the generality of the
foregoing”.
1.3
|
Interpretation
|
The
division of this Agreement into Articles, Sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and will
not
affect in any way the meaning or interpretation of this Agreement. The Parties
acknowledge that their respective legal counsel have reviewed and participated
in settling the terms of this Agreement, and the Parties hereby agree that
any
rule of construction to the effect that any ambiguity is to be resolved against
the drafting Party will not be applicable in the interpretation of this
Agreement.
-
6
-
1.4
|
Article
References
|
Unless
the contrary intention appears, references in this Agreement to an Article,
Section, subsection, paragraph or Schedule by number or letter or both refer
to
the specified Article, Section, subsection, paragraph or Schedule, respectively,
bearing that designation in this Agreement.
1.5
|
Date
for any Action
|
In
the event that any date by or on which any action is required or permitted
to be
taken hereunder by any of the Parties is not a Business Day in the place
where
the action is required or permitted to be taken, such action will be required
to
be taken by or on the next succeeding day which is a Business Day.
1.6
|
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.
SECTION 2
INDEMNITY
2.1
|
Covenant
to Indemnify
|
On
and subject to the terms and conditions hereof, the Lorus Parties hereby
jointly
and severally covenant and agree that:
2.1.1
|
each
Lorus Party has acquired the Assets in accordance with the terms
of the
Transfer Transactions, on an “as is, where is” basis and subject to any
and all liens, encumbrances, agreements, commitments, rights of
others and
Liabilities pertaining thereto howsoever and whensoever
arising;
|
2.1.2
|
as
of the Effective Time, the Lorus Parties will, on a joint and several
basis, assume and be liable for all Liabilities of Old Lorus for,
and
indemnify, defend and save harmless the Indemnified Parties from
and
against all Losses suffered, sustained, paid or incurred by any
of the
Indemnified Parties, howsoever or by whomsoever caused which arise
out of,
any matter or thing occurring (a) prior to, at or after the Effective
Time
and directly or indirectly relating
to any of the Assets (including Losses for income, sales, excise
and other
Taxes arising in connection with the transfer of any Asset from
Old Lorus,
XxXxxx or GeneSense to any Lorus Party) or the conduct of the business
of
Old Lorus or any Lorus Party prior to the Effective Time, (b) prior
to, at
or after the Effective Time as a direct or indirect result of any
and all
interests, rights, obligations, indemnities, guarantees (whether
financial
or for performance), Liabilities and agreements of any kind whatsoever
and
whether matured or not, direct or indirect, contingent or absolute,
held
or provided by,
|
-
7
-
|
or
by which, Old Lorus or any Lorus Party is or was, prior to the
Effective
Time, bound relating to the Assets, including any guarantees,
sureties,
indemnities, letters of credit or any other obligations that
are created,
whether by law or contract or any other way howsoever, and whether
as a
party or as agent, guarantor, surety or indemnitor or otherwise,
provided
that the foregoing will not extend to any guarantees, sureties,
indemnities, letters of credit or other Liabilities of Old Lorus
given, or
relating to events occurring, after the Effective Time, and (c)
prior to
or at the Effective Time and directly or indirectly relating
to any of the
activities of Old Lorus, any Lorus Party, including the activities
of any
director, officer, employee or other representative of Old Lorus,
or the
Arrangement, including any payments, obligations or Liabilities
directly
or indirectly relating to any exercise of the Dissent Rights
(as defined
in the Arrangement Agreement) or similar rights in connection
with the
Arrangement, except:
|
(i)
|
in
respect of Tax for any taxation year in any way caused by, arising
directly or indirectly or in any manner whatsoever from any event,
or fact
occurring after the Effective Time, but for greater certainty excluding
any Taxes payable as a result of the
Arrangement;
|
(ii)
|
in
respect of Tax where, after the Effective Time, Old Lorus has waived
in
writing any time limitation, statutory or otherwise for any taxation
period ending prior to the Effective Time;
or
|
(iii)
|
in
respect of Tax where, after the Effective Time, Old Lorus requests
or
knowingly initiates a review, ruling or opinion of any matter or
takes any
other action that affects the tax position of Old Lorus for any
taxation
period ending prior to the Effective
Time;
|
2.1.3
|
a
Lorus Party will not be entitled to exercise and each Lorus Party
hereby
waives any rights or remedies such Lorus Party may now or in the
future
have against any of the Indemnified Parties in respect of Liabilities
assumed hereunder, including the right to name any of the Indemnified
Parties as a third party to any action commenced by any third party
against such Lorus Party; and
|
2.1.4
|
without
limiting the generality of any agreement referred to in the definition
of
“Transfer Transactions” or any conveyance or other document entered into
in connection therewith, each Lorus Party will see to the timely
performance of all obligations relating to the Assets transferred
to such
Lorus Party which, in the absence of this Agreement, would be the
responsibility of Old Lorus. The Lorus Parties will be liable,
on a joint
and several basis, to Old Lorus for and will, in addition, indemnify
Old
Lorus from and against, all Losses suffered, sustained, paid or
incurred
by Old Lorus should a Lorus Party fail in the timely performance
of such
obligations.
|
-
8
-
2.2
|
Costs
and Damages
|
If,
following a Final Determination, the parties to Claims made by them and
applicable to any matter for which Indemnified Parties are entitled to be
indemnified hereunder, other than any of the Indemnified Parties, are
unsuccessful in whole or in part with respect of such Claims such that damages
and costs (“Damage
Recoveries”)
are awarded to any of the Indemnified Parties, New Lorus will, provided that
it
is not then in default of its obligations hereunder relating to such Claims,
be
entitled to receive, and such Indemnified Parties will forthwith upon receipt
thereof pay, or direct the payment by the payor of, all such Damage Recoveries
to New Lorus, provided that the Indemnified Parties will be entitled to retain
such amounts as may be necessary to compensate for the Taxes paid by any
of the
Indemnified Parties, if any, resulting from the receipt by it of such Damage
Recoveries or to satisfy other Losses suffered, sustained, paid or incurred
by
any of the Indemnified Parties pursuant to Claims if not already paid for
by New
Lorus.
2.3
|
Payments
under Indemnity
|
2.3.1
|
Subject
to the terms and conditions hereof
and upon any of the Indemnified Parties sustaining, paying, incurring
or
suffering any Loss for which such Indemnified Parties are entitled
to be
indemnified hereunder, each of such Indemnified Parties may provide
a
demand for payment to any or all of the Lorus Parties (a “Demand”),
which Demand will specify such Loss sustained, paid, incurred or
suffered
or to be incurred or suffered by the Indemnified Party and will
be
accompanied by copies of any relevant Judgments, documents, invoices
or
instruments (along with reasonable evidence of such payment or
the
requirement for payment substantiating the amount and nature of
the Loss
incurred or to be incurred).
|
2.3.2
|
Subject
to the terms and conditions hereof, the Lorus Parties will make
the
required payment or relieve the Indemnified Parties of the obligation
to
incur or suffer the relevant Loss within (i) 30 days after receipt of
a Demand, or (ii) within such lesser period as may be required
in
connection with a Judgment.
|
2.4
|
Termination
of Power
|
2.4.1
|
Subject
to Section 2.4.2, an Indemnified Party may, upon written notice
given to
New Lorus, terminate the Power if (i) any Lorus Party has defaulted
in the
payment of a proper Demand on the basis contemplated in Section 2.3
without full and complete remedy of such default within 30 days of
receipt of written notice of such default, or (ii) Old Lorus shall
have
determined, in its sole discretion, that New Lorus shall not have
conducted the proceedings relating to any Claim in a competent,
timely or
professional manner.
|
-
9
-
2.4.2
|
It
will be a condition precedent to the right of the Indemnified Parties
to
elect to terminate the Power under this Section 2.4, that the
Indemnified Parties will have unequivocally undertaken in writing
to
thereafter assume and conduct proceedings relating to any Claim
in a
competent and professional manner. Notwithstanding any such termination
of
the Power, the Indemnity will continue to apply, including the
obligation
to indemnify for all Losses, provided
however:
|
(i)
|
New
Lorus will be entitled to access to all written information relating
to
any such Claim on the same basis as the right granted to the Indemnified
Parties pursuant to Section 3.7.1 and will have the right to monitor
and
be informed of (each on a without prejudice basis) all material
steps and
proceedings relating to any Claim on the same basis as the right
granted
to the Indemnified Parties pursuant to Section 3.7.2;
and
|
(ii)
|
the
Indemnified Parties may not, without the prior written consent
of New
Lorus, acting reasonably and without delay, settle any Claim or
consent to
entry of a Judgment with respect thereto which imposes any indemnification
obligations upon New Lorus.
|
2.4.3
|
In
the event that the Indemnified Parties elect to terminate the Power
other
than pursuant to the terms of this section 2.4, the Indemnified
Parties
will not be entitled any longer to indemnification pursuant to
the terms
of this Agreement.
|
2.5
|
Payment
of Interest on Unpaid
Amounts
|
Any
amount owed to an Indemnified Party by a Lorus Party hereunder remaining
unpaid
will bear interest calculated daily and compounded monthly from the day such
amount was due until the day such amount was paid, at the rate of 1% per
annum above the annual rate of interest designated by the main branch in
Toronto
of Royal Bank of Canada as its reference rate for Canadian dollar commercial
loans made in Canada and which is announced by such bank as its prime
rate.
SECTION 3
POWER
OF ATTORNEY
3.1
|
Granting
of Power
|
3.1.1
|
On
and subject to the terms and conditions hereof, each of the Indemnified
Parties, hereby irrevocably appoints New Lorus and New Lorus’s Nominee (if
so appointed by New Lorus), as its sole and exclusive attorney
and agent,
such parties to be entitled to act independently or jointly, for
any and
all purposes associated with all Claims with full and absolute
power
(herein the “Power”)
to negotiate, settle, compromise, litigate or otherwise deal with
the same
in New Lorus’s absolute and unfettered discretion through to a Final
Determination, which Power will, without limiting the generality
of the
foregoing, include the following:
|
(i)
|
the
right to retain or confirm the retention of
Counsel;
|
-
10
-
(ii)
|
subject
to section 3.3.3(i), the right to instruct Counsel from time to
time as
may be necessary or prudent;
|
(iii)
|
the
power to settle or compromise a Claim, but only if such settlement
or
compromise (A) includes an unconditional release of such Indemnified
Party
from all Liability on such Claim and (B) does not include a statement
as
to or an admission of fault, culpability or a failure to act by
or on
behalf of any Indemnified Party;
|
(iv)
|
subject
to clause (iii) of this Section 3.1.1, the power and authority
to direct
all Authorized Authority proceedings on behalf of the Indemnified
Parties
and make all decisions pertaining
thereto;
|
(v)
|
subject
to Section 3.4.2, the power to commence and conduct in the name
of the
Indemnified Parties any counterclaims or claim over against third
Persons
in respect of or related to any Claim and the subject matter
thereof;
and
|
(vi)
|
to
pay on behalf of the Indemnified Parties, any amounts required
to effect
or assist in ultimately effecting a Final
Determination.
|
3.1.2
|
Subject
to Sections 2.4, 3.3 and 3.4, the Power will be irrevocable by
the
Indemnified Parties until a Final Determination has occurred, but
may be
exercised by New Lorus or New Lorus’s Nominee through any individuals
designated by New Lorus or New Lorus’s Nominee for that purpose from time
to time, which individuals and New Lorus’s Nominee may, subject to the
provisions hereof, be changed by New Lorus or on its behalf at
the sole
discretion of New Lorus. New Lorus will, within a reasonable time,
notify
the Indemnified Parties in writing as to appointments or changes
in New
Lorus’s Nominee or the designated individuals of New Lorus or New Lorus’s
Nominees, if any, who will be authorized to exercise the Power
on behalf
of New Lorus.
|
3.2
|
Acceptance
of Appointment
|
By
its execution hereof, New Lorus hereby accepts, on behalf of itself and its
Nominee, if any, its appointment or their respective appointments as attorney
for and on behalf of the Indemnified Parties on the basis set forth
herein.
3.3
|
Conduct
of Claims and Precondition of
Power
|
3.3.1
|
New
Lorus will, within 15 days of receiving a Claim Notice, or such
shorter
period as may be appropriate in the circumstances to avoid any
prejudice
or increased potential for Losses, in respect of any Claim, give
notice in
writing to the applicable Indemnified Party
that:
|
-
11
-
(i)
|
New
Lorus has irrevocably and unconditionally confirmed that the entirety
of
such Claim is one for which the Indemnified Party is entitled to
be fully
indemnified under the terms of this
Agreement;
|
(ii)
|
New
Lorus is unable, without further inquiry, to determine whether
such Claim
is one for which the Indemnified Party is entitled to be indemnified,
in
whole or in part, under the terms of this
Agreement;
|
(iii)
|
the
Claim is one for which the Indemnified Party is not entitled to
indemnification under the terms of this Agreement;
or
|
(iv)
|
the
Claim is one for which the Indemnified Party is only entitled to
indemnification, in part, under the terms of this
Agreement.
|
3.3.2
|
It
will be a precondition to the continuance and exercise of the Power,
or
any part thereof, in respect of any Claim, that (i) New Lorus will
have
irrevocably and unconditionally confirmed, within such 15 day period,
that
the entirety of such Claim is one for which the Indemnified Party
is
entitled to be fully indemnified under the terms of this Agreement,
and
(ii) a Solvency Event shall not have
occurred.
|
3.3.3
|
In
the event that New Lorus gives notice under Section 3.3.1(ii),
until such
time that New Lorus is able to determine whether or not the entirety
of
the Claim is one for which the Indemnified Party is entitled to
be fully
indemnified under the terms of this Agreement, the Indemnified
Party will
be possessed of the power to negotiate, settle, compromise, litigate
or
otherwise deal with such Claim, provided however
that:
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(i)
|
the
Indemnified Party and New Lorus will mutually agree in writing
upon the
retention of Counsel, unless the Indemnified Party has received
an opinion
of counsel to the effect that the interests of the Indemnified
Party and
New Lorus with respect to such Claim are sufficiently adverse to
prohibit
the representation by the same counsel of both parties under applicable
ethical rules, in which event the Indemnified Party will have the
unilateral right to employ separate Counsel and the fees and expenses
of
such Counsel will be included as part of any Losses incurred, sustained
and suffered by such Indemnified
Party;
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(ii)
|
the
Indemnified Party will not, without New Lorus’s prior written consent
(such consent not to be unreasonably withheld or delayed), settle,
compromise, consent to the entry of any Judgment in or otherwise
seek to
terminate such Claim;
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(iii)
|
the
Indemnified Party will provide, on a timely basis, New Lorus with
(A)
access to all information relating to such Claim and the status
thereof;
and (B) copies of reports and other correspondence it receives
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12
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from
Counsel on the status of such Claim and the results of any settlement
discussions that have occurred or are
scheduled;
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(iv)
|
the
Indemnified Party will consult with New Lorus on strategic decisions
relating to such Claim; and
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(v)
|
should
it wish to do so, New Lorus will be entitled to monitor at its
own expense
the conduct of such Claim with a view to being informed as to all
material
aspects thereof, including the Indemnified Party’s strategy and its
estimates of liability exposure and relevant
timing.
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Notwithstanding
the foregoing but subject to Section 2.4, this Section 3.3 and Section 3.4,
New
Lorus reserves the right, at any time, to exercise the Power by providing
an
irrevocable and unconditional confirmation that the Claim is one for which
the
Indemnified Party is entitled to be fully indemnified under the terms of
this
Agreement, in which event the Indemnified Party will take all commercially
reasonable steps to transition the Claim to New Lorus in a manner that will
not
prejudice such Claim or New Lorus’s ability to defend such Claim.
3.3.4
|
In
the event that New Lorus gives notice, at any time, that a Claim
is one
for which an Indemnified Party is not entitled to indemnification
under
this Agreement, the Indemnified Party will, without prejudice to
any other
rights or remedies of the Indemnified Party in respect of such
Claim or in
respect of a Lorus Party hereunder, have full and absolute power
to
negotiate, settle, compromise, litigate or otherwise deal with
the Claim
in the Indemnified Party’s absolute and unfettered discretion through to a
Final Determination, which powers will include those powers enumerated
in
Section 3.1.1.
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3.3.5
|
In
the event that New Lorus gives notice, at any time, that a Claim
is one
for which an Indemnified Party is entitled, under the terms of
this
Agreement, to indemnification, in part, and
the Indemnified Party agrees that it is only entitled to indemnification
in part,
the Parties hereby agree to use commercially reasonable efforts
to,
depending upon the
nature of the Claim, either (i) conduct a joint defence in respect
of the
Claim, or (ii) bifurcate the Claim, in which event New Lorus would
exercise the Power only in respect of that part of the Claim that
is
subject to indemnification.
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3.4
|
Limitation
on Power
|
Neither
the Power nor any other provision of this Agreement will:
3.4.1
|
obligate
an Indemnified Party to incur, pay, suffer or sustain any Losses
which it
would not be entitled to recover from New Lorus pursuant to Section
2.1
and only if such amounts would be recoverable in full by the Indemnified
Party from New Lorus, or if such obligation does or may reasonably
be
expected to exceed such amounts, New Lorus will have provided to
the
Indemnified Party reasonable assurances as to payment of such excess
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amounts
by documentation in form and substance satisfactory to the Indemnified
Party, acting reasonably, and will have received prior written
consent of
the Indemnified Party, such consent not to be unreasonably withheld
or
delayed, prior to exercising the Power;
or
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3.4.2
|
entitle
or permit New Lorus to commence or conduct in the name of Indemnified
Parties any counter claims or claims pursuant to Section 3.1.1(v),
unless
such claims relate specifically to the subject matter of the Claim,
without the prior written consent of the Indemnified Parties, such
consent
not to be unreasonably withheld or
delayed.
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3.5
|
Contract
Directly
|
During
the currency of the Power, New Lorus will contract directly for the services
of
Counsel, experts or other necessary or desirable Persons (as determined by
New
Lorus, subject to Section 3.6, in its sole and absolute discretion) for any
and all purposes associated with the Claims and New Lorus further agrees
that it
will not retain any such Persons unless it will have confirmed to these Persons,
with a copy to the Indemnified Parties, that such Persons will have recourse
solely to New Lorus and will have no Claims for compensation, costs or otherwise
against any of the Indemnified Parties.
3.6
|
Diligence
|
New
Lorus covenants to exercise its powers hereunder in a competent and professional
manner.
3.7
|
Access
to Information and Participation by the Indemnified
Parties
|
3.7.1
|
The
Indemnified Parties will be entitled to access to all material
or relevant
written information relating to any Claim and the status thereof.
New
Lorus agrees to provide, on a timely basis, the Indemnified Parties,
with
copies of reports it receives from Counsel or New Lorus’s Nominee on the
status of any Claim and the results of, or strategy relating to
any Claim
or any settlement discussions that have occurred or are scheduled.
Notwithstanding the foregoing, if the Indemnified Parties breach,
in any
material respect, the provisions of Section 7, then, without limiting
any other rights or remedies New Lorus may have against the Indemnified
Parties or other Persons breaching such obligations, the rights
provided
for in this Section 3.7.1 will be
suspended.
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3.7.2
|
Should
it wish to do so, an Indemnified Party will, in addition to Section
3.7.1,
be entitled to monitor at its own expense the conduct of any Claim
with a
view to being informed as to all material aspects thereof, including
New
Lorus’s strategy and its estimates of New Lorus’s exposure and relevant
timing.
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3.7.3
|
New
Lorus will forthwith notify the Indemnified Party upon becoming
aware of
any Losses which are embodied in or arise as a result of or pursuant
to
any Judgment or Settlement
Agreement.
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SECTION 4
OBLIGATIONS
OF INDEMNIFIED PARTIES
4.1
|
Specific
Obligations
|
As
and from the Effective Date to and including a Determination Date, the
Indemnified Parties hereby covenant and agree with New Lorus to:
4.1.1
|
promptly
provide New Lorus with written notice of any outstanding, pending
or
threatened Claim which the Indemnified Parties become aware of
(a
“Claim
Notice”);
provided that the failure to promptly provide such notice will
not relieve
New Lorus or any obligation to indemnify such Indemnified Party,
except to
the extent such failure prejudices New
Lorus;
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4.1.2
|
in
relation to any identified Claim for which New Lorus is exercising
the
Power pursuant to Section 3.1 and in accordance with the terms
of this
Agreement, take such commercially reasonable action as New Lorus
may
request and take no action that has the effect of prejudicing such
Claim
or New Lorus’s ability to defend such Claim, except where such Indemnified
Party is permitted by the terms hereof to act in a contrary
manner;
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4.1.3
|
comply
in all material respects with the provisions of this Agreement
and with
the reasonable written instructions given by New Lorus, its Nominee,
or
Counsel in relation to any of the Powers granted to New Lorus pursuant
to
Section 3.1. Such written requests will be given to the Indemnified
Parties detailing the requested action. The Indemnified Parties
will in
all cases be afforded a reasonable period in which to comply with
the
request having due regard to the terms here of and to applicable
prescription periods or offers which expire within a specified
time in
respect of which New Lorus has provided the Indemnified Parties
with as
much notice as is reasonably practicable in the circumstances;
and
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4.1.4
|
provide
to New Lorus and its authorized representatives access at all reasonable
times to, and the right to photocopy, the files and records of
the
Indemnified Parties pertaining or relating to any Claims, or the
subject
matter thereof.
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SECTION 5
COOPERATION
5.1
|
Cooperation
|
5.1.1
|
Subject
to Section 3.4.1 and Section 3.1.1(iii), in connection with the
negotiation of any Settlement Agreement and any documents contemplated
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thereunder,
the Indemnified Parties will cooperate on a commercially reasonable
basis
with New Lorus and execute and deliver the same in accordance
with the
reasonable requests and requirements of New Lorus with respect
thereto;
provided that, if, in the sole discretion of an Indemnified Party,
a
Settlement Agreement obligates such Indemnified Party to incur
any Losses
for which they are not indemnified, such Indemnified Party will
not be
required to sign the Settlement Agreement and will not, on that
basis, be
in breach of their obligations under this Section
5.1.
|
5.1.2
|
The
obligations of the Indemnified Parties under Section 5.1.1 will
be
applicable only when New Lorus is exercising the Power in accordance
with
Section 3.1.
|
SECTION 6
REPRESENTATIONS
AND WARRANTIES
6.1
|
Representations
and Warranties
|
Each
of the Parties represents and warrants to each other as of the date hereof
that:
6.1.1
|
it
is duly incorporated and validly subsisting under the laws of its
incorporating jurisdiction and has the corporate power and authority
and
the legal right to enter into this Agreement and fully complete
and
perform its obligations hereunder;
|
6.1.2
|
this
Agreement has been duly and properly executed and delivered by
it and
constitutes legal, valid and binding obligations of it enforceable
against
it in accordance with its terms; and
|
6.1.3
|
it
has the requisite power, capacity and authority to enter into this
Agreement.
|
SECTION 7
CONFIDENTIALITY
OBLIGATIONS
7.1
|
Confidentiality
Obligations
|
All
documents, information, discussions and disclosures made hereunder or pursuant
hereto (the “Confidential
Information”)
will at all times be held in the strictest confidence by each of the Parties,
will not be used for any purpose whatsoever other than those specifically
relating to this Agreement and Claims and will not be disclosed for any purpose
whatsoever to any third Person, including the other parties to Claims adverse
in
interest to an Indemnified Party, or its Counsel, provided, however, that
such
restrictions on disclosure will not apply if:
7.1.1
|
the
disclosure of the Confidential Information is required by applicable
law;
|
7.1.2
|
the
Confidential information is or becomes publicly available other
than
through a breach of the provisions hereof by any Person to whom
disclosure
is made in accordance herewith; or
|
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16
-
7.1.3
|
the
written consent of the Parties is given prior to any such use or
disclosure being made.
|
SECTION 8
GENERAL
8.1
|
Breach
by Indemnified Party
|
A
breach by an Indemnified Party of any of the terms and provisions of this
Agreement or a default on the part of an Indemnified Party in the performance
of
its obligations hereunder will not in any way reduce or discharge any Lorus
Party from any obligations that it may have to indemnify the Indemnified
Parties
in respect of a Claim nor will it terminate this Agreement or the obligations
of
any Lorus Party hereunder, provided however that the Indemnity will not apply
to
any Losses incurred as a direct result of such breach or default.
8.2
|
Notices
|
Any
notice, request, consent, waiver, direction or other communication required
or
permitted to be given under this Agreement will be in writing and may be
given
by delivering same or sending same by facsimile transmission or by delivery
addressed to the Party to which the notice is to be given at its address
for
service herein or to such other address as may be indicated in writing from
time
to time. Any such notice, request, consent, waiver, direction or other
communication will, if delivered, be presumed to
have been given and received on the day on which it was delivered to the
address
provided herein (if that day is a Business Day, and if it is not, then on
the
next succeeding Business Day), and if sent by facsimile transmission will
be
deemed to have been given and received at the time of receipt unless actually
received after 4:00 p.m. at the point of delivery, in which case it will be
deemed to have been given and received on the next Business Day.
8.2.1
|
If
to Old Lorus prior to the Effective
Time:
|
0
Xxxxxxxx Xxxx
Xxxxxxx,
XX X0X 0X0
Attention: Director
of Finance
Fax: (000)
000-0000
8.2.2
If
to Old Lorus after the Effective Time
c/o
Pinnacle International Realty Group, Inc.
Xxxxx
000 - 000 Xxxxx Xxxxxx
Xxxxxxxxx,
XX X0X 0X0
Attention: Vice
President Finance
Fax: (000)
000-0000
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17
-
8.2.3
If
to New Lorus:
0
Xxxxxxxx Xxxx
Xxxxxxx,
XX X0X 0X0
Attention: Director
of Finance
Fax: (000)
000-0000
8.3
|
Time
of Essence
|
Time
will be of the essence in this Agreement.
8.4
|
Entire
Agreement
|
Except
for the various collateral agreements entered into in connection with the
Arrangement, this Agreement constitutes the entire agreement between the
Parties
and cancels and supersedes all prior agreements (including the letter agreement
dated April 4, 2006) and understandings between the Parties with respect
to the
subject matter hereof.
8.5
|
Assignment
|
Except
as expressly permitted by the terms hereof, neither this Agreement nor any
of
the rights, interests or obligations hereunder will be assigned by any Party
without the prior written consent of the other Party.
8.6
|
Binding
Effect
|
This
Agreement will be binding upon and will enure to the benefit of the parties
hereto and their respective successors and permitted assigns.
8.7
|
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 are reasonably required in order to fully perform and carry out the terms
and
intent hereof.
8.8
|
Severability
|
If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of law or public policy, all other conditions
and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon
such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will 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 transactions contemplated
hereby are fulfilled to the extent possible.
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8.9
|
Counterpart
Execution
|
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.
[The
remainder of this page has been intentionally left blank.]
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19
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IN
WITNESS WHEREOF
the parties have executed this Agreement.
4325231
CANADA INC.
|
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by:
|
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Name:
|
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Title:
|
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LORUS
THERAPEUTICS INC.
|
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by:
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Name: | |||
Title: | |||
XXXXXX PHARMACEUTICALS INC. | |||
by: | |||
Name: | |||
Title: | |||
GENESENSE TECHNOLOGIES INC.
|
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by: | |||
Name: | |||
Title: | |||