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
|
B-l
|
|
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 NuChem Share Purchase Agreement
|
H-l
|
|
SCHEDULE
I Pinnacle Share Purchase Agreement
|
1-1
|
|
SCHEDULE
J Indemnification Agreement
|
J-l
|
(a)
|
|
If
to Pinnacle or
Investor
|
Suite
300
911 Homer Street Vancouver, BC V6B 2W6 |
Attention:
President
Fax: (604)
688-7749
|
(b)
|
if
to Old Lorus,
NuChem,
GeneSense
or
New Lorus :
|
2
Meridian Road
Toronto,
ON M9W 4Z7
Attention: Director
of Finance
Fax: (416)
798-2200
|
16.2
|
Fees
and Expenses
|
PINNACLE
INTERNATIONAL LANDS, INC.
|
LORUS
THERAPEUTICS INC.
|
|||
Per:
|
“Michael
De Cotiis”
|
Per:
|
“Aiping
Young”
|
|
Name:
|
Michael
De Cotiis
|
Name:
|
Aiping
Young
|
|
Title:
|
President
|
Title:
|
President
and Chief Executive Officer
|
|
GENESENSE
TECHNOLOGIES INC.
|
NUCHEM
PHARMACEUTICALS INC.
|
|||
Per:
|
“Aiping
Young”
|
Per:
|
“Aiping
Young”
|
|
Name:
|
Aiping
Young
|
Name:
|
Aiping
Young
|
|
Title:
|
Director
|
Title:
|
Director
|
|
6650309
CANADA INC.
|
6707157
CANADA INC.
|
|||
Per:
|
“Aiping
Young”
|
Per:
|
“Michael
De Cotiis”
|
|
Name:
|
Aiping
Young
|
Name:
|
Michael
De Cotiis
|
|
Title:
|
President
and Chief Executive Officer
|
Title:
|
President
|
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
|
Schedule A |
-
|
Purchased
Assets; and
|
Schedule 2.03 |
-
|
New
Lorus Note 1.
|
7.09
|
Facsimiles
|
GENESENSE
TECHNOLOGIES INC.
|
||||
Per:
|
||||
Per:
|
||||
LORUS
THERAPEUTICS INC.
|
||||
Per:
|
||||
Per:
|
||||
LORUS
THERAPEUTICS INC.
|
||
Per:
|
||
Name:
|
||
Title:
|
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
|
GENESENSE
TECHNOLOGIES INC.
|
|||
Per:
|
|||
Per:
|
|||
4325231
CANADA INC.
|
|||
Per:
|
|||
Per:
|
|||
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
|
1.01
|
Definitions
|
(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.
|
(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
NuChem 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.
|
1.02
|
Headings
|
1.03
|
Extended
Meanings
|
1.04
|
Statutory
References
|
1.05
|
Accounting
Principles
|
1.06
|
Currency
|
1.07
|
Schedules
|
2.01
|
Assets
to be Sold and
Purchased
|
2.02
|
Purchase
Price
|
(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,
|
2.03
|
Purchase
Price Allocation
|
2.04
|
Payment
of Purchase Price
|
2.05
|
Closing
Adjustment
|
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.
|
3.01
|
Vendor’s
Representations and
Warranties
|
(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.
|
3.02
|
Purchaser’s
Representations and
Warranties
|
(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
|
|
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.
|
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
|
4.04
|
Cooperation
on Tax Matters
|
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.
|
(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;
|
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:
|
(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;
|
6.01
|
Closing
|
6.02
|
Examination
of Records and Assets
|
7.01
|
Further
Assurances
|
7.02
|
Time
of the Essence
|
7.03
|
Benefit
of the Agreement
|
7.04
|
Entire
Agreement
|
7.05
|
Amendments
and Waivers
|
7.06
|
Notices
|
7.07
|
Governing
Law
|
7.08
|
Counterparts
|
7.09
|
Facsimiles
|
GENESENSE
TECHNOLOGIES INC.
|
||||
Per:
|
||||
Per:
|
||||
4325231
CANADA INC.
|
||||
Per:
|
||||
Per:
|
||||
•
|
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.
|
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
|
$•
|
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
|
1.01
|
Definitions
|
(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.
|
1.02
|
Headings
|
1.03
|
Extended
Meanings
|
1.04
|
Statutory
References
|
1.05
|
Accounting
Principles
|
1.06
|
Currency
|
1.07
|
Schedules
|
2.01
|
Assets
to be Sold and
Purchased
|
2.02
|
Purchase
Price
|
2.03
|
Payment
of Purchase Price
|
2.04
|
Closing
Adjustment
|
3.01
|
Vendor’s
Representations and
Warranties
|
(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.
|
3.02
|
Purchaser’s
Representations and
Warranties
|
(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 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.
|
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
|
Cooperation
|
4.04
|
Cooperation
on Tax Matters
|
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.
|
(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;
|
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:
|
(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;
|
6.01
|
Closing
|
6.02
|
Examination
of Records and Assets
|
7.01
|
Further
Assurances
|
7.02
|
Time
of the Essence
|
7.03
|
Benefit
of the Agreement
|
7.04
|
Entire
Agreement
|
7.05
|
Amendments
and Waivers
|
7.06
|
Notices
|
7.07
|
Governing
Law
|
7.08
|
Counterparts
|
7.09
|
Facsimiles
|
GENESENSE
TECHNOLOGIES INC.
|
||||
Per:
|
||||
Per:
|
||||
4325231
CANADA INC.
|
||||
Per:
|
||||
Per:
|
||||
•
|
$•
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.
|
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 |
1.01
|
Definitions
|
(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.
|
1.02
|
Headings
|
1.03
|
Extended
Meanings
|
1.04
|
Statutory
References
|
1.05
|
Accounting
Principles
|
1.06
|
Currency
|
1.07
|
Schedules
|
2.01
|
Shares
to be Sold and
Purchased
|
2.02
|
Purchase
Price
|
2.03
|
Satisfaction
of Purchase Price
|
(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
|
2.05
|
Closing
Adjustment
|
3.01
|
Vendor’s
Representations and
Warranties
|
(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.
|
3.02
|
Purchaser’s
Representations and
Warranties
|
(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.
|
4.01
|
Cooperation
|
4.02
|
Cooperation
on Tax Matters
|
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;
|
(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
|
|
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.
|
6.01
|
Further
Assurances
|
6.02
|
Time
of the Essence
|
6.03
|
Benefit
of the Agreement
|
6.04
|
Entire
Agreement
|
6.05
|
Amendments
and Waiver
|
6.06
|
Notices
|
6.07
|
Governing
Law
|
6.08
|
Counterparts
|
6.09
|
Facsimiles
|
4325231
CANADA INC.
|
|||
Per:
|
|||
Per:
|
|||
LORUS
THERAPEUTICS INC.
|
|||
Per:
|
|||
Per:
|
|||
LORUS
THERAPEUTICS INC.
|
||
Per:
|
||
Name:
|
||
Title:
|
•
|
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.
|
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
|
1.01
|
Definitions
|
(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.
|
1.02
|
Headings
|
1.03
|
Extended
Meanings
|
1.04
|
Statutory
References
|
1.05
|
Accounting
Principles
|
1.06
|
Currency
|
1.07
|
Schedules
|
2.01
|
Shares
to be Sold and
Purchased
|
2.02
|
Purchase
Price
|
2.03
|
Satisfaction
of Purchase Price
|
2.04
|
Closing
|
3.01
|
Vendor’s
Representations and
Warranties
|
(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
|
(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
|
(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.
|
4.01
|
Cooperation
|
4.02
|
Cooperation
on Tax Matters
|
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;
|
(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 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.
|
6.01
|
Further
Assurances
|
6.02
|
Time
of the Essence
|
6.03
|
Benefit
of the Agreement
|
6.04
|
Entire
Agreement
|
6.05
|
Amendments
and Waiver
|
6.06
|
Notices
|
6.07
|
Governing
Law
|
6.08
|
Counterparts
|
6.09
|
Facsimiles
|
4325231
CANADA INC.
|
||||
Per:
|
||||
Per:
|
||||
LORUS
THERAPEUTICS INC.
|
||||
Per:
|
||||
Per:
|
||||
LORUS
THERAPEUTICS INC.
|
||
Per:
|
||
Name:
|
||
Title:
|
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
|
1.01
|
Definitions
|
(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.
|
1.02
|
Headings
|
1.03
|
Extended
Meanings
|
1.04
|
Statutory
References
|
1.05
|
Accounting
Principles
|
1.06
|
Currency
|
1.07
|
Schedules
|
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
|
2.01
|
Shares
to be Sold and
Purchased
|
2.02
|
Purchase
Price
|
2.03
|
Payment
of Purchase Price
|
(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
|
(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.
|
2.04
|
Closing
Adjustment
|
2.05
|
Excluded
Liabilities
|
2.06
|
Material
Assignments
|
3.01
|
New
Lorus’s Representations and
Warranties
|
(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-
|
|
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
|
(iii)
|
any
Applicable Law.
|
(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, Prince Edward 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.
|
(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
|
|
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.
|
(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.
|
(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.
|
(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.
|
(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
|
|
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.
|
(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.
|
(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.
|
(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.
|
(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.
|
(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
|
|
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
|
|
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.
|
(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.
|
(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,
|
(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.
|
(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
|
(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).
|
(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.
|
4.01
|
Taxes
|
5.01
|
Conditions
for the Benefit of the
Purchaser
|
(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
|
|
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;
|
(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
|
(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;
|
(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
|
6.01
|
Closing
|
6.02
|
Confidentiality
|
7.01
|
Survival
|
7.02
|
Indemnification
by New Lorus
|
(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.
|
(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
|
|
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);
|
7.03
|
Indemnification
by the Purchaser
|
7.04
|
Third
Party Indemnification
|
7.05
|
Third
Party Indemnification - Tax
Claims
|
7.06
|
Exclusive
Remedy
|
7.07
|
After
Tax Basis
|
7.08
|
Adjustment
to Purchase Price
|
8.01
|
Further
Assurances
|
8.02
|
Time
of the Essence
|
8.03
|
Fees
and Commissions
|
8.04
|
Benefit
of the Agreement
|
8.05
|
Entire
Agreement
|
8.06
|
Amendments
and Waivers
|
8.07
|
Notices
|
8.08
|
Remedies
Cumulative
|
8.09
|
No
Third Party
Beneficiaries
|
(a)
|
New
Lorus, and its successors and permitted assigns, with respect to
the
obligations of the Purchaser under this Agreement;
and
|
(b)
|
the
Purchaser, and its successors and permitted assigns, with respect
to the
obligations of New Lorus under this
Agreement;
|
8.10
|
Governing
Law
|
8.11
|
Attornment
|
8.12
|
Counterparts
|
8.13
|
Facsimiles
|
6707157
CANADA INC.
|
|||
Per:
|
|||
Michael
De Cotiis
|
|||
President
|
|||
LORUS
THERAPEUTICS INC.
|
|||
Per:
|
|||
Per:
|
|||
(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”);
|
(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 NuChem
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.
|
4325231
CANADA INC.
|
|||
by:
|
|||
Name:
Michael De Cotiis
|
|||
Title:
President
|
|||
LORUS
THERAPEUTICS INC.
|
|||
by:
|
|||
Name: | |||
Title: | |||
NUCHEM PHARMACEUTICALS INC. | |||
by: | |||
Name: | |||
Title: | |||
GENESENSE
TECHNOLOGIES INC.
|
|||
by: | |||
Name: | |||
Title: | |||
(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.
|
4325231
CANADA INC.
|
||
By:
|
|
|
SIGNED,
SEALED AND DELIVERED
|
) | |
in
the presence of:
|
) | |
) | ||
) | ||
Witness
|
) |
Signature
|
Print
name
|
(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.
|
LORUS
THERAPEUTICS INC.
|
|
Per:
|
|
Name:
|
|
Title:
|
|
||
|
|
|
|
|
1.1
|
Definitions
|
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;
|
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
|
|
“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, NuChem 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
|
“NuChem”
means NuChem Pharmaceuticals Inc., a corporation existing under
the laws
of the Province of Ontario;
|
1.1.29
|
“Parties”
means, collectively, Old Lorus and New
Lorus;
|
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) NuChem transferred, directly or indirectly, by Old Lorus to
New Lorus
pursuant to a Transfer Transaction;
|
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
NuChem.
|
1.2
|
Extended
Meanings
|
1.3
|
Interpretation
|
1.4
|
Article
References
|
1.5
|
Date
for any Action
|
1.6
|
Governing
Law
|
2.1
|
Covenant
to Indemnify
|
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,
NuChem 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,
|
|
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.
|
2.2
|
Costs
and Damages
|
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.
|
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
|
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;
|
(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
|
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:
|
(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:
|
(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;
|
(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;
|
(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
|
|
from
Counsel on the status of such Claim and the results of any settlement
discussions that have occurred or are
scheduled;
|
(iv)
|
the
Indemnified Party will consult with New Lorus on strategic decisions
relating to such Claim; and
|
(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.
|
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.
|
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.
|
3.4
|
Limitation
on Power
|
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
|
|
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
|
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.
|
3.5
|
Contract
Directly
|
3.6
|
Diligence
|
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.
|
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.
|
4.1
|
Specific
Obligations
|
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;
|
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;
|
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
|
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.
|
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
|
|
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.
|
6.1
|
Representations
and Warranties
|
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.
|
7.1
|
Confidentiality
Obligations
|
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
|
7.1.3
|
the
written consent of the Parties is given prior to any such use or
disclosure being made.
|
8.1
|
Breach
by Indemnified Party
|
8.2
|
Notices
|
8.2.1
|
If
to Old Lorus prior to the Effective
Time:
|
8.3
|
Time
of Essence
|
8.4
|
Entire
Agreement
|
8.5
|
Assignment
|
8.6
|
Binding
Effect
|
8.7
|
Further
Assurances
|
8.8
|
Severability
|
8.9
|
Counterpart
Execution
|
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: | |||
NUCHEM PHARMACEUTICALS INC. | |||
by: | |||
Name: | |||
Title: | |||
GENESENSE TECHNOLOGIES INC.
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by: | |||
Name: | |||
Title: | |||