A.	The authorized capital of Company consists of an unlimited number of common shares, of which 66,746,870 Common Shares were issued and outstanding as of the close of business on December 10, 2013 as fully paid and non-assessable;

B.	There are no options, warrants or other securities outstanding that require the issue or sale of any securities of Company, other than the Options to acquire an aggregate of 1,709,302 Common Shares outstanding as of the close of business on December 10, 2013;

C.	Buyer proposes to acquire all of the Common Shares including Common Shares issued upon exercise of the Options described in recital B to this Agreement pursuant to the Arrangement as provided for in this Agreement for the aggregate Consideration contemplated herein;

Contemporaneously herewith, Parent and Buyer have entered into a voting support agreement (the "Voting Support Agreement") with certain holders of Common Shares (the "Locked-Up Shareholders") pursuant to which, among other things, Buyer has agreed to take all steps required of it to cause the Arrangement to occur and the Locked-Up Shareholders have agreed to vote in support of the Arrangement all of the Common Shares held or hereafter acquired by them, all on the terms and subject to the conditions set forth in the Voting Support Agreement; and

The board of directors of Company, after receiving the Fairness Opinion and legal advice and after considering other factors, has unanimously determined that it is in the best interests of Company to enter into this Agreement, to support and implement the Transactions and for the board of directors of Company to recommend that Shareholders vote in favour of the Arrangement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set out in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Company, Parent and Buyer agree that:

ARTICLE 1 - INTERPRETATION

1.1	Definitions

In this Agreement, unless otherwise defined or expressly stated herein or something in the subject matter or the context is clearly inconsistent therewith:

(1)	"Accrued Liabilities" means ordinarily recurring operating expenses of Company and its Subsidiaries incurred as of the Effective Time but which are not yet due and payable as of the Effective Time.

(2)

"Acquisition Proposal" means any proposal or offer with respect to any transaction (by purchase, merger, amalgamation, arrangement, business combination, liquidation, dissolution, recapitalization, take-over bid or otherwise) that would result in any person (or group of persons) other than Parent and its Subsidiaries acquiring (a) assets of Company and/or its Subsidiaries that represent 20% or more of the consolidated assets of Company, or which collectively produce 20% or more of the consolidated revenue of Company and its Subsidiaries, as at July 31, 2013, or (b) 20% or more of the equity (or rights thereto) of Company or any of its Subsidiaries (provided that, for purposes of Section 9.1(c), paragraphs (a) and (b) of the definition of "Acquisition Proposal" shall be read as follows: "(a) assets of Company and/or its Subsidiaries that constitute more than 50% of the consolidated assets of Company or any of its Subsidiaries; or (b) more than 50% of the equity (or rights thereto) of Company or any of its Subsidiaries").

(3)	"Act" or the "OBCA" means the Business Corporations Act (Ontario), as amended.

(4)	"affiliate" has the meaning corresponding to "affiliated companies" in the Securities Act (Ontario), as amended.

(5)

"Agency" means any domestic or ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, provincial or local government or governmental or quasi-governmental agency, department or authority or other regulatory authority (including (a) the TSX, and (b) any Health Agency) or administrative agency or commission (including the Securities Commissions) or any elected or appointed public official, in each case having jurisdiction over either of Company, any of its Subsidiaries, any of the Company Products, or over Parent.

(6)	"Agreement" has the meaning set out in the preamble to this Agreement.

(7)	"Alternative Transaction" means any Acquisition Proposal made by any person other than Parent or Buyer or any other affiliate of Parent.

(8)

"Antitrust Laws" means any and all United States (federal or state), Canadian or other foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other Laws, including any antitrust, competition or trade regulation Laws, that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening competition through merger or acquisition.

(9)	"Apotex Group" means Apotex Inc., Apotex Holdings Inc., ▇▇▇▇▇▇▇ Foundation, Apotex Foundation and ▇▇▇▇▇ ▇▇▇▇▇▇▇.

(10)	"Apotex Plan" has the meaning set out in Section 10.5(b).

(11)

"Arrangement" means an arrangement under Section 182 of the OBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with this Agreement (including the Plan of Arrangement) or made at the direction of the Court.

(12)	"Assigned Contracts" has the meaning set out in Section (ll)(vi) of Schedule E.

(13)	"Authorized Capital" has the meaning set out in Section (c) of Schedule E.

(14)	"Business" means the business of Company and its Subsidiaries as currently conducted.

(15)	"business day" or "Business Day" means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banks are not open for business in Winnipeg, Manitoba, Toronto, Ontario or Rockville, Maryland under applicable Law.

(16)	"Business Personnel" has the meaning set out in Section (r)(iii) of Schedule E.

(17)	"Buyer" means 2396638 Ontario Inc.

(18)	"CDSA" means the Controlled Drugs and Substances Act, SC 1996, c 19, as amended.

(19)	"Cessation Date" has the meaning set out in Section 10.5(b).

(20)	"Change of Recommendation" has the meaning set out in Section 7.5.

(21)	"Code" means the United States Internal Revenue Code of 1986, as amended.

(22)	"Common Shares" means the common shares in the capital of Company.

(23)	"Company" means Cangene Corporation, a corporation amalgamated under the laws of Ontario.

(24)	"Company Circular" means the notice of special meeting and accompanying management information circular of Company, including all appendices thereto, to be sent to Shareholders in connection with the Special Meeting.

(25)	"Company Disclosure Statement" means the statement delivered by Company to Parent concurrently with the execution of this Agreement.

(26)	"Company Expenses" has the meaning set forth in Section 9.2(b).

(27)	"Company Intellectual Property" has the meaning set forth in Section (q)(i) of Schedule E.

(28)	"Company Permits" has the meaning set forth in Section (j)(i) of Schedule E.

(29)	"Company Plans" has the meaning set out in Section (s)(i) of Schedule E.

(30)

"Company Products" means all products that are being researched, tested, developed, commercialized, manufactured, sold or distributed by Company or any of its Subsidiaries, and all products with respect to which Company or any of its Subsidiaries owns licenses to distribute, as set forth in Schedule 1.1(29); Provided, however, that Parent and Buyer acknowledge and agree that the Company Product episil® is licensed to Company and manufactured for Company a third party, and that the applicable Regulatory Approvals for episil® have been obtained and are owned by such third party. Accordingly, any and all representations and warranties made by Company in this Agreement relating to the development of, Regulatory Approvals for, and the manufacture of, episil® as a Company Product are made only to the knowledge of Company, notwithstanding any provision herein to the contrary.

(31)	"Company Property" has the meaning set out in Section (z) of Schedule E.

(32)	"Company Public Disclosure Documents" has the meaning set out in Section (e) of Schedule E.

(33)	"Competition Act" means the Competition Act (Canada), as amended, including the regulations promulgated thereunder.

(34)	"Confidentiality Agreement" means (a) the confidentiality agreement dated August 27, 2012 between Company and Parent and (b) that certain Clean Team and Confidentiality Agreement dated November 1, 2013 between Company and Parent governing the sharing of certain sensitive information of Company.

(35)	"Consents and Approvals" has the meaning set out in Section (d)(i) of Schedule E.

(36)

"Consideration" means the cash amount per Common Share calculated by dividing $222,000,000 by the number of outstanding Common Shares as at the Effective Date. Based upon there being 68,456,172 Common Shares outstanding on the Effective Date (after exercise of all outstanding Stock Options), the Consideration will be $3.24.

(37)	"Continuing Company Employee" has the meaning set out in Section 10.6(a).

(38)

"Contract" means any contract, royalty, instrument, permit, franchise, license, loan or credit agreement, note, bond, mortgage, indenture, lease or other property agreement, partnership or joint venture agreement or other legally binding agreement, arrangement or understanding whether oral or written.

(39)	"Contract Disputes Act" means the Contract Disputes Act of 1978 (41 U.S.C. § 7101-7109), which establishes the procedures to be used by contractors and contracting officers in resolving disputes.

(40)	"Court" means the Ontario Superior Court of Justice (Commercial List).

(41)	"CRA" means the Canada Revenue Agency.

(42)	"CTA" means a clinical trial application.

(43)	"Curable Matters" has the meaning set out in Section 8.1(c).

(44)	"Data Regulations" has the meaning set out in Section (ll)(xiv) of Schedule E.

(45)

"Data Room Information" means the documents relating to Company and its Subsidiaries provided by or on behalf of Company (including documents posted on the electronic data site) to Parent or its counsel on or before the execution of this Agreement but excluding financial projections and financial forecasts.

(46)	"DEA" means the United States Drug Enforcement Administration.

(47)	"Debt Financing" has the meaning set out in Section 6.3(b).

(48)	"Depositary" has the meaning set out in Section 5.9.

(49)	"DFARS" means the United States Defense Federal Acquisition Regulation Supplement and applicable supplements.

(50)	"Director" means the Director appointed pursuant to Section 278 of the OBCA.

(51)	"Disclosed Personal Information" has the meaning set out in Section 11.13(b).

(52)	"Effective Date" means the date on or before the Outside Date on which the Arrangement becomes effective in accordance with the OBCA and the Final Order.

(53)	"Effective Time" means the time on the Effective Date that the Arrangement becomes effective in accordance with its terms.

(54)	"EMA" means the European Medicines Agency.

(55)

"Employee Benefit Plan" means any employee benefit plan, program, policy, practices or other arrangement providing benefits to any current or former employee, officer, consultant or director of Company or any of its Subsidiaries or any beneficiary or dependent thereof that is sponsored or maintained by Company or any of its Subsidiaries or to which Company or any of its Subsidiaries contributes or is obligated to contribute or with respect to which Company or any of its Subsidiaries may have liabilities, whether or not written, including any employee welfare benefit plan within the meaning of Section 3(1) of ERISA, any employee pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA), any medical, health, hospitalization, dental, disability or life insurance plan, any pension plan, whether registered or not under any applicable pension benefits regulation or any tax laws of Canada or a province thereof, group registered retirement savings plan or unregistered savings plan, and any bonus, incentive, deferred compensation, vacation, stock purchase, stock option, severance, employment, change of control or fringe benefit plan, program or agreement.

(56)

"Employment Agreement" means a written contract, offer, letter or agreement of Company or of any of its Subsidiaries with or addressed to any individual who is rendering or has rendered services thereto as an employee or consultant pursuant to which Company or any of its Subsidiaries has any actual or contingent liability or obligation to provide compensation and/or benefits in consideration for past, present or future services.

(57)

"Environmental Laws" means any applicable federal, state, provincial or local law, common law, statute, ordinance, code, regulation, rule, approval, permit, license, judgment, decree, order, directive, or other legal requirement that pertains to the regulation, protection or preservation of the environment (including ambient air, soil, sediment, surface water, ground water, wetlands, land or subsurface strata), natural resources, public health and safety or worker health and safety as affected by Hazardous Materials, or that pertain to the handling, use, manufacturing, processing, storage, treatment, transportation, discharge, release, emission, disposal, re-use, recycling, or other management of or contact with Hazardous Materials.

(58)	"Environmental Permit" means any permit, license, authorization or consent required to be obtained by Company and its Subsidiaries pursuant to applicable Environmental Laws.

(59)	"ERISA" means the United States Employee Retirement Income Security Act of 1974, as amended, and the rules promulgated thereunder.

(60)	"Exclusivity Agreement" means the exclusivity agreement dated June 18, 2013 between Company and Parent, as amended.

(61)	"Existing Promotional Materials" has the meaning set out in Section (cc)(ix) of Schedule E.

(62)	"Export Control Laws" has the meaning set out in Section (kk)(i) of Schedule E.

(63)

"Fairness Opinion" means the opinion of the Financial Advisor to the board of directors of Company to the effect that, as of the date of the opinion, the consideration received pursuant to the Arrangement is fair to all Shareholders (other than the Apotex Group, Parent and their respective affiliates) from a financial point of view.

(64)	"FAR" means the United States Federal Acquisition Regulation and applicable supplements.

(65)	"FCPA" means the United States Foreign Corrupt Practices Act of 1977, as amended.

(66)	"FDA" means the United States Food and Drug Administration.

(67)	"FDCA" means the United States Federal Food, Drug and Cosmetic Act, as amended as of the date of this Agreement.

(68)	"Federal and State Healthcare Programs" means all Federal or State sponsored health care programs with which Company and its Subsidiaries are required to comply, including the federal health care programs listed in 42 U.S.C. § 1320a-7b(f), as amended from time to time.

(69)	"Filed Company Public Disclosure Documents" has the meaning set out in Section (h) of Schedule E.

(70)	"Final Order" means the final order of the Court approving the Arrangement, as such order may be amended by the Court at any time before the Effective Time, or if appealed, unless that appeal is withdrawn or denied, as affirmed or as amended on appeal.

(71)	"Financial Advisor" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Ltd.

(72)	"Food and Drugs Act" means the Canada act respecting food, drugs, cosmetics and therapeutic devices, as amended as of the date of this Agreement.

(73)	"GAAP" means Canadian generally accepted accounting principles.

(74)	"Government Bid" means any outstanding bid, quotation, proposal or grant application by Company which, if accepted or awarded, would result in a Government Contract.

(75)

"Government Contract" means any Contract, including any prime contract, subcontract, contractor team arrangement, joint venture, basic ordering agreement, letter contract, purchase order, delivery order, task order, change order, option or other arrangement of any kind between Company or any of its Subsidiaries and either (a) any Agency, (b) any prime contractor of any Agency or (c) any first tier subcontractor with respect to any contract described in clauses (a) or (b) of this definition, where the ultimate customer is an Agency, that has not been closed by the Agency, such prime contractor or such subcontractor, as appropriate, and is actively being performed by Company or any of its Subsidiaries.

(76)	"Grant" means an award of financial assistance in the form of money, or property or services in lieu of money, by a government or public entity to a recipient.

(77)

"Hazardous Materials" means any material, chemical, compound, substance, mixture, waste or by-product (regardless of physical form or concentration) that (a) is hazardous, toxic, infectious, explosive, radioactive, carcinogenic, ignitable, corrosive, reactive, or otherwise deleterious to living things or the environment, or (b) is defined, designated, listed, restricted or otherwise regulated under Environmental Laws. The term "Hazardous Materials" shall include any "hazardous substance" as defined, listed, designated or regulated under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq., as amended, any "hazardous waste" or "solid waste" as defined, listed, designated or regulated under Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended, polychlorinated biphenyls (PCBs), toxic mold, lead-based paints, urea-formaldehyde foam insulation, asbestos, and petroleum, petroleum products or by-products (including crude oil or any fraction thereof).

(78)

"Health Agency" means Health Canada, the HHS and each and all of its constituent agencies including FDA, EMA, European Commission's Enterprise Directorate General and any other governmental or quasi-governmental body (whether, federal, regional, state, provincial, or local) exercising comparable or similar authority, including any such body, having jurisdiction over Company, its Subsidiaries and their activities or over Parent, its Subsidiaries and their activities, as applicable, including regulating the quality, identity, strength, purity, safety, efficacy, manufacturing, distribution, sale, pricing, price reporting, government or private payment or reimbursement for, rebates related to, and import or export of the Company Products necessary for the lawful operating of the businesses of Company or any of its Subsidiaries as currently conducted, or as expected to be conducted following completion of the Transactions, or the products of Parent necessary for the lawful operating of the business of Parent or any of its Subsidiaries as currently conducted, as applicable and the testing, manufacturing, sale or distribution, as applicable, of each of the Company Products, that are material to the conduct of the business of Company and its Subsidiaries, as such business is currently conducted, or is expected to be conducted following completion of the Transactions, or of each of Parent's products that are material to the conduct of the business of Parent and its Subsidiaries, as such business is currently conducted, as applicable.

(79)	"HHS" means the United States Department of Health and Human Services.

(80)	"Holdco" means a corporation that satisfies the requirements set forth in Section 2.5 of the Plan of Arrangement.

(81)

"Holdco Agreement" means a share purchase agreement, in the form approved by Parent, acting reasonably, to be entered into between Parent, Buyer, a Holdco and all of the Holdco Shareholders of such Holdco, providing for the transfer of all of the issued and outstanding Holdco Shares of such Holdco to Buyer in accordance with the Plan of Arrangement and containing (a) the terms and conditions set forth in Section 2.5 of the Plan of Arrangement; (b) such representations and warranties, terms and conditions and indemnities as Parent and Buyer may reasonably request; and (c) the requirement for such Holdco Shareholder to arrange for the provision of an opinion of legal counsel to such Holdco in form satisfactory to Parent, acting reasonably, in connection with the transfer of such Holdco Shares, based on customary certificates of officers of such Holdco and assumptions, to the effect that: (v) the Holdco is a subsisting corporation or equivalent under its governing laws; (w) the Holdco Shareholders are the registered holders of all outstanding shares of the Holdco based solely on the registers of the Holdco; (x) all necessary corporate action has been taken by the Holdco to authorize the execution, delivery and performance of the share purchase agreement; (y) the execution, delivery and performance of the share purchase agreement by the Holdco does not and will not create a state of facts which, after notice or lapse of time or both, will result in a breach of all currently effective articles and by-laws or other organizational documents of the Holdco; (z) and the share purchase agreement constitutes a legal, valid and binding obligation of the Holdco enforceable against the Holdco in accordance with its terms.

(82)	"Holdco Shareholder" means a holder of Holdco Shares.

(83)	"Holdco Shares" means the common shares of a Holdco.

(84)	"HSR Act" means the United States ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976, as amended.

(85)	"HSR Approval" means any waiting period, and any extension thereof, under the HSR Act applicable to the Transactions shall have expired or shall have early terminated.

(86)	"IFRS" means International Financial Reporting Standards.

(87)	"including" means "including without limitation" and "includes" means "includes without limitation", unless limitation is specified.

(88)

"Inconsequential Inaccuracy" means any one or more inaccuracies in the representations and warranties of Company in (a) Schedule E or (b) in any other provision of this Agreement ( in each case, without giving effect to, applying to, or taking into consideration any materiality qualification contained in such representations and warranties) that, either individually or in the aggregate with all other inaccuracies in such representations and warranties, is not, and could not be, or would not reasonably be expected to be, Materially Adverse.

(89)	"IND" means an investigational new drug application, as defined at 21 C.F.R. Part 312.

(90)	"Indemnified Persons" has the meaning set out in Section 10.1.

(91)

"Intellectual Property" means all of the following in all jurisdictions worldwide: Patents, rights of copyrights (including the rights to copy, modify, create derivative works, and distribute), works of authorship fixed in any tangible medium of expression and in any medium, whether or not copyrightable, database rights, know-how, including manufacturing know-how, Trade Secrets, Marks, any registrations or applications with respect to any of the foregoing, any other intellectual property rights, and any rights under or with respect to any of the foregoing any such applications that are in fact filed, the right to file applications to register copyrights in copyrightable works that have been created in whole or part as of the date of this Agreement, and any such applications that are in fact filed.

(92)	"Interim Order" means an interim order of the Court, as may be amended, providing for, among other things, the calling and holding of the Special Meeting.

(93)	"ITA" means the Income Tax Act (Canada), as amended.

(94)	"ITAR" means International Traffic in Arms Regulations, 22 C.F.R. Parts 120-130.

(95)	"Law" means all laws, statutes, by-laws, rules, regulations, orders, decrees, ordinances, protocols, codes, guidelines, policies, notices, directions and judgements or other requirements of any nation, state, other government entity or Agency.

(96)	"Leased Real Property" has the meaning set out in Section (n)(ii) of Schedule E.

(97)	"Liens" has the meaning set out in Section (b) of Schedule E.

(98)	"Locked-Up Shareholders" has the meaning set out in recital D to this Agreement.

(99)

"Marks" means trademarks, service marks, trade dress, domain names, corporate names, fictitious or assumed names, and others indicators of source, origin, sponsorship, certification or endorsement worldwide, and all goodwill in and to all of the foregoing, as well as any other indicators of origin, sponsorship, certification or endorsement.

(100)

"Material Contract" has the meaning set out in Section (l) of Schedule E.

(101)

"Materially Adverse" means a fact, circumstance, change, effect, occurrence, event or state of facts that, individually or in the aggregate, would or could reasonably be expected to (a) materially and adversely affect the financial condition, operations, results of operations, business, assets or capital of Company and its Subsidiaries, taken as a whole, (b) prevent or impair (i) Company or any of its Subsidiaries from performing its material obligations under this Agreement, the Transactions or any other agreement contemplated hereby or thereby, or (ii) Company's ability to consummate the Transactions; provided that, except as hereinafter set forth in this definition, no fact, circumstance, change, effect, occurrence, event or state of facts relating to any of the following, individually or in the aggregate, shall be considered Materially Adverse, solely as contemplated in (a) above, (or be taken into account in determining whether a fact, circumstance, change, effect, occurrence, event or state of facts is Materially Adverse, solely as contemplated in (a) above):

(i)	general political, economic or financial conditions in North America or elsewhere;

(ii)

the state of (including any changes in) credit, banking, currency or capital markets generally in Canada, the United States, Europe or elsewhere (including the failure of any financial institution, whether or not Company has credit arrangements or other business dealings with such financial institution, or the imposition of any limitation (whether or not mandatory) by any Agency on the extension of credit generally by financial institutions);

(iii)

any changes in currency exchange rates, interest rates, monetary policy or inflation;

(iv)	any change in the trading price or trading volume of Common Shares;

(v)	conditions generally affecting any of the pharmaceutical, biologics or medical device industries;

(vi)	any change in Law, GAAP, IFRS or FAR or in the interpretation, application or non-application of Law, GAAP, IFRS or FAR by any Agency;

(vii)

any national or international, political or social conditions (including, the engagement by any country in hostilities, whether commenced before or after the date hereof, and whether or not pursuant to the declaration of a national emergency or war), or the occurrence of any military, militant or terrorist attack (or any escalation or worsening thereof);

(viii)

any failure by Company to meet any public estimates or expectations regarding its revenues, earnings or other financial performance or results of operations;

(ix)	any matters disclosed in this Agreement or in the Company Disclosure Statement;

(x)	the occurrence of a Net Cash Termination Event or a Working Capital Termination Event;

(xi)	any action or inaction taken by Company or any of its Subsidiaries to which Parent has expressly consented in writing or as expressly permitted by this Agreement;

(xii)

any strikes, slowdowns or work stoppages;

(xiii)

earthquakes, hurricanes, tsunamis, tornadoes, floods or other natural disasters, weather conditions, explosions or fires or other force majeure events;

(xiv)

any notice to Company that any Agency will not consent to a Novation Agreement or Other FAR 42.12 Agreement for any Assigned Contract; or

(xv)	any failure to obtain an Other FAR 42.12 Agreement for any Assigned Contract.

it being understood that any cause of any change referred to in clauses (iv) and/or (x) above may be taken into consideration when determining whether a fact, circumstance, change, effect, occurrence, event or state of facts is Materially Adverse, but excluding any underlying cause referred to in clauses (i) to (xv)) above (other than clauses (iv) and/or (x) above); it being further understood that any fact, circumstance, change, effect, occurrence, event or state of facts referred to in clauses (i), (ii), (iii), (v), (vi), (vii), (xii) and (xiii) may nevertheless be taken into consideration when determining whether a fact, circumstance, change, effect, occurrence, event or state of facts is Materially Adverse to the extent that any such circumstance, change, effect, occurrence, event or state of facts disproportionately has an impact on the financial condition, operations, results of operations, business, assets or capital of Company or its Subsidiaries relative to other participants in such party's industry.

(102)

"Multiemployer Plan" means any "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and includes any multi-employer plan within the meaning of any pension legislation in force in Canada or any province of Canada.

(103)

"Net Cash" means (a) all cash and cash equivalents held in money market, savings, investment, brokerage and other corporate bank accounts maintained by Company or its Subsidiaries plus (b) all fees associated with any filings made pursuant to applicable Antitrust Laws and paid by Company pursuant to Section 11.5 less (c) the actual closing costs arising from and attributable to the Transactions to the extent such costs are payable on or after the Effective Date, including costs in the categories identified in Schedule 1.1(103) plus (d) any amounts payable pursuant to Section 6.1(h) plus (e ) any amounts paid, or payable prior to the Effective Date, in respect of discharge of Liens pursuant to Section 5.2(a) not exceeding $600,000.

(104)

"Net Cash Termination Event" means, Net Cash, as disclosed in the statement produced pursuant to Section 6.4, is less than $30,000,000.

(105)

"Novation Agreement" means a Contract (a) executed by (i) Company; (ii) Parent; and (iii) Agency; and (b) by which the Agency recognizes the transfer of such Contract and related assets in accordance with FAR Subpart 42.12.

(106)

"Option Plan" means the amended and restated stock option plan of Company.

(107)

"Optionholders" means the holders at the relevant time of Options.

(108)

"Options" means all options to purchase Common Shares issued pursuant to the Option Plan.

(109)

"Other FAR 42.12 Agreement" means an agreement other than a Novation Agreement with an Agency addressing issues related to the change in ownership which may occur before or after the Effective Date.

(110)

"Outside Date" means March 31, 2014 or such later date to which Company and Parent may agree in writing.

(111)

"Owned Real Property" has the meaning set out in Section (n)(i) of Schedule E.

(112)

"Parent" means Emergent BioSolutions Inc., a corporation incorporated under the laws of Delaware.

(113)

"Parent Disclosure Statement" means the statement delivered by Parent to Company concurrently with the execution of this Agreement.

(114)

"Parent Expenses" has the meaning set out in Section 9.1(d).

(115)

"Parent Information" means all information as may be reasonably requested by Company or as required by the Interim Order or applicable Law to be disclosed in the Company Circular and any amendment or supplement thereto with respect to Parent.

(116)

"Parent Information Representation" has the meaning set out in Section 2.2(b).

(117)

"Patents" means all patents and patent applications (including utility patents, utility models, design patents, certificates of invention and applications for certificates of invention and related priority rights) and registered design and registered design applications and all rights in connection therewith in any country, and including all provisional applications, substitutions, continuations, continuations-in-part, divisions, renewals, reissues, re-examinations and extensions thereof.

(118)

"Permits" means all certificates, franchises, licenses, permits, grants, covenants, certificates, orders, registrations, consents, variances, authorizations and approvals issued to or granted by Agencies or other third parties. For the avoidance of doubt, this definition does not encompass any Environmental Permit.

(119)

"Permitted Liens" means (a) Liens for Taxes, assessments or similar charges incurred in the ordinary course of business that are not yet due and payable or which are being contested in good faith through appropriate proceedings (provided such items being contested are identified in Schedule 1.1(119)(i)); (b) pledges or deposits made in the ordinary course of business; (c) Liens of mechanics, materialmen, warehousemen or other like Liens securing obligations incurred in the ordinary course of business that are not yet due and payable or for which a bond has been posted if such Lien is being contested in good faith (provided such items for which a bond has been posted are identified in Schedule 1.1(119)(iii)); (d) matters of record or registered Liens affecting title to any asset; (e) requirements and restrictions of zoning, building and other applicable Law and municipal by-laws, and development, site plan, subdivision or other agreements with municipalities or other governmental entities; (f) statutory Liens of landlords for amounts that are not yet due and payable, are being contested in good faith by appropriate proceedings or may thereafter be paid without penalty; (g) Liens arising under conditional sales contracts and requirements leases with third parties entered into in the ordinary course of business; (h) defects, irregularities or imperfections of title and similar Liens and encumbrances which are incurred in the ordinary course of business consistent with past practice; (i) any easement, right of way, lease, license or sublease or encumbrance that would be set forth in a title policy; and (j) Liens that will be released prior to, or on, the Effective Date, and in each of (a) through (i) above do not individually or in the aggregate materially detract from the value of the related assets or properties or materially impair the continued use thereof in the operation of the Business.

(120)

"person" includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Agency, syndicate or other entity, whether or not having legal status.

(121)

"Plan" means any Employee Benefit Plan other than a Multiemployer Plan.

(122)

"Plan of Arrangement" means the plan of arrangement in the form and content of Schedule A, and any amendments or variations thereto made in accordance with Section 8.2 of this Agreement or Article 5 of the Plan of Arrangement or made at the direction of the Court.

(123)

"Pre-Arrangement Reorganization" has the meaning set out in Section 5.10.

(124)

"Premium Cap" has the meaning set out in Section 10.2(a).

(125)

"Principal" has the meaning set forth in FAR 2.101.

(126)

"Qualified Plans" has the meaning set out in Section (s)(v) of Schedule E.

(127)

"Real Property" has the meaning set out in Section (n)(ii) of Schedule E.

(128)

"Regulatory Approvals" means those sanctions, rulings, consents, orders, exemptions, permits, waivers, early termination authorizations, clearances, written confirmations of no intention to initiate legal proceedings and other approvals of an Agency necessary to consummate the Transaction (including (a) the lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a time lapses following the giving of notice of an objection being made by an Agency and (b) those set out on Schedule G).

(129)

"Representatives" of a person means, collectively, the directors, officers, employees, professional advisors, agents or other authorized representatives of such person.

(130)

"Response Period" has the meaning set out in Section 7.5(b).

(131)

"Reverse Termination Fee" means the fee in the amount of $15,820,000 payable by Parent to Company in the circumstances set out in Section 9.2.

(132)

"▇▇▇" means the U.S. government's System for Award Management.

(133)

"SEC" means the Securities Exchange Commission or its successor.

(134)

"Securities Commissions" means the securities regulatory authorities in each of the provinces of Canada.

(135)

"Shareholder Approval" means the approval of the Arrangement by the affirmative vote of 66 2/3% of the votes cast at the Special Meeting by Shareholders.

(136)

"Shareholders" means the holders at the relevant time of Common Shares or, where the context requires, of Holdco Shares.

(137)

"Special Meeting" means the special meeting of Shareholders, including any postponement or adjournment thereof, to be called and held in accordance with the Interim Order to consider the Arrangement.

(138)

"Specified Manufacturing Facilities" means the Baltimore, Maryland manufacturing facilities and each of the 3 Winnipeg, Manitoba manufacturing facilities as set forth in Schedule 1.1(138).

(139)

"Subsidiaries" means in respect of a person, each of the corporate entities, partnerships and other entities over which it exercises direction or control, and "Subsidiary" means any such entity.

(140)

"Successor Plan" has the meaning set out in Section 10.5(b).

(141)

"Superior Proposal" means any bona fide written Acquisition Proposal made before or after the date hereof by a third party that was not solicited after the date hereof in contravention of Section 7.1, that, in the good faith determination of the board of directors of Company (following consultation with the Financial Advisor and outside legal advisors): (a) is reasonably capable of being completed without undue delay (taking into account all legal, financial, regulatory and other aspects of such proposal and the party making such proposal), (b) is not subject to access conditions or any financing conditions, (c) if subject to a due diligence condition, any such due diligence shall be completed in no more than 2 weeks and (d) could reasonably be expected, if consummated in accordance with its terms (but not assuming away any risk of non-completion), to result in a transaction more favorable, from a financial perspective, to Shareholders (other than Parent and its affiliates) than the Arrangement (including any amendments to the terms and conditions of the arrangement proposed by Parent pursuant to Section 7.6).

(142)

"Tax" and "Taxes" means, with respect to any person, all income taxes (including any tax on or based upon net income, gross income, capital gains income as specially defined, earnings profits or selected items of income, earnings or profits) and all capital taxes, gross receipts taxes, environmental taxes, sales taxes, use taxes, ad valorem taxes, value added taxes, transfer taxes, franchise taxes, license taxes, withholding taxes or other withholding obligations, payroll taxes, employment taxes, Canada or Quebec Pension Plan premiums, excise, severance, social security premiums, workers' compensation premiums, unemployment insurance or compensation premiums, stamp taxes, conveyance fees, documentary taxes, occupation taxes, premium taxes, real property taxes or assessments, personal property taxes, windfall profits taxes, alternative or add-on minimum taxes, goods and services tax, customs duties or other taxes of any kind whatsoever, and any interest and any penalties or additional amounts imposed by any taxing Agency (domestic or otherwise) on such person or for which such person is responsible, and any interest, penalties, additional taxes, additions to tax or other amounts imposed with respect to the foregoing, and includes any items described above attributable to another person in respect of which the first person or any Subsidiary of such first person is liable to pay in accordance with applicable Law, Contract or otherwise, whether or not disputed.

(143)

"Tax Returns" means returns, reports and forms (including schedules thereto) required to be filed in accordance with applicable Law with any Agency of Canada, the United Kingdom or the United States or any provincial, state or local Agency thereof or therein or any other jurisdiction responsible for the imposition or collection of Taxes.

(144)

"Termination Fee" means the fee in the amount of $7,910,000 payable by Company to Parent in the circumstances set out in Section 9.1.

(145)

"Termination Period" has the meaning set out in Section 8.1(c).

(146)

"Trade Secrets" means all "Trade Secrets" as defined in the United States Uniform Trade Secrets Act.

(147)

"Transactions" means the Arrangement and the other transactions related to the acquisition of Company by Parent contemplated by this Agreement and the other agreements contemplated hereby.

(148)

"Transferred Members" has the meaning set out in Section 10.5(b).

(149)

"Transition Committee" has the meaning set out in Section 6.2.

(150)

"TSX" means the Toronto Stock Exchange or its successor.

(151)

"Unwinding Transaction" has the meaning set out in Section 5.10.

(152)

"US Dollars" or "$" means United States dollars.

(153)

"US Government Bid" means any outstanding bid, quotation, proposal, or grant application by Company which, if accepted or awarded, would result in a US Government Contract.

(154)

"US Government Contract" means any Contract, including any prime contract, subcontract, contractor team arrangement, joint venture, basic ordering agreement, letter contract, purchase order, delivery order, task order, change order, option or other arrangement of any kind between Company or any of its Subsidiaries and either (a) any US Agency, (b) any prime contractor of any US Agency or (c) any first tier subcontractor with respect to any contract described in clauses (a) or (b) of this definition, where the ultimate customer is an US Agency, that has not been closed by the US Agency, such prime contractor or such subcontractor, as appropriate, and is actively being performed by Company or any of its Subsidiaries.

(155)

"Voting Support Agreement" has the meaning set out in the recital D to this Agreement.

(156)

"WARN" has the meaning set out in Section 10.6(a).

(157)

"Working Capital" means the amount derived by calculating:

(i)

the gross value on the books of Company and its Subsidiaries of current assets, as defined under IFRS, including cash and cash equivalents, accounts receivable, inventories and contracts in progress, taxes recoverable, and prepaid expenses and deposits, plus all fees associated with any filings made pursuant to applicable Antitrust laws and paid or payable by Company pursuant to Section 11.5; less

(ii)

the gross value on the books of Company and its Subsidiaries of current liabilities, as defined under IFRS, including accounts payable and accrued liabilities, provision for chargebacks, and the current portion of each of royalty provisions, royalty liabilities, , incentive plan liabilities, taxes payable and deferred income provided always that any liabilities not exceeding $2,400,000 payable and accrued in respect of change of control severance payments for Company employees with employment agreements as set forth in Section (h)(iv)(C) of the Company Disclosure Statement shall be excluded from this calculation.

(158)

"Working Capital Termination Event" means Working Capital, as disclosed in the statement produced pursuant to Section 6.4, is less than $90,000,000.

1.2

Currency

Except as expressly indicated otherwise, all sums of money referred to in this Agreement are expressed and shall be payable in US Dollars.

1.3	Accounting Matters

All accounting terms used in this Agreement shall have the meanings attributable thereto under IFRS, GAAP or FAR, as applicable, and all determinations of an accounting nature required to be made in respect of Company and Parent shall be made in a manner consistent with IFRS, GAAP or FAR, as applicable.

1.4

Knowledge

Where the phrases "to the knowledge of Company", "Company has knowledge" or "Company's knowledge" or other phrases of similar import are used, such phrase shall mean, in respect of each representation and warranty or other statement which is qualified by such phrase, that such representation and warranty or other statement is being made based upon the knowledge of those individuals listed in Schedule 1.4(a)without any duty to conduct independent inquiry.

Where the phrases "to the knowledge of Parent", "Parent has knowledge" or "Parent's knowledge" or other phrases of similar import are used, such phrase shall mean, in respect of each representation and warranty or other statement which is qualified by such phrase, that such representation and warranty or other statement is being made based upon the knowledge of those individuals listed in Schedule 1.4(b) without any duty to conduct independent inquiry.

1.5	Date For Any Action

In the event that any date on which any action is required to be taken hereunder by any of the parties is not a business day, such action shall be required to be taken on the next succeeding day which is a business day.

1.6	Interpretation

When a reference is made in this Agreement to a Section or Sections, or an Exhibit or Schedule, such reference shall be to a Section or Sections of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning, construction or interpretation of this Agreement.

1.7

Schedules

The following are the Schedules to this Agreement, which form an integral part hereof:

Schedule A	–	Plan of Arrangement
Schedule B	–	Mutual Conditions
Schedule C	–	Conditions in Favour of Company
Schedule D	–	Conditions in Favour of Parent and Buyer
Schedule E	–	Representations and Warranties of Company
Schedule F	–	Representations and Warranties of Parent and Buyer
Schedule G	–	Regulatory Approvals

ARTICLE 2 - THE ARRANGEMENT AND ITS ANNOUNCEMENT

2.1	Process Regarding Company

Subject to the terms and conditions of this Agreement:

(a)

subject to compliance by Parent with its agreements and covenants in Section 2.2, as soon as practicable after the execution of this Agreement, and in any event within 30 days of the date of this Agreement, Company shall, in a manner acceptable to Parent, acting reasonably, apply to the Court pursuant to Section 182 of the Act for the Interim Order;

(b)

provided the Interim Order has been obtained, Company shall, in a manner acceptable to Parent, acting reasonably, and subject to Parent's agreements and covenants in Section 2.2, hold the Special Meeting as soon as reasonably practicable after the Interim Order has been obtained, and in any event within 66 days of the date of this Agreement (unless otherwise ordered in, or is not reasonably practicable as a result of, the Interim Order), and, in connection with the Special Meeting, ensure that the Company Circular contains all information necessary to permit Shareholders to make an informed judgement about the Arrangement;

(c)	after having called the Special Meeting, Company shall not, without the prior written consent of Parent, adjourn, postpone or cancel the Special Meeting, except as may be required for quorum purposes or by Law or the rules of the TSX or except as otherwise contemplated in this Agreement;

(d)	the Special Meeting shall be held regardless of whether the board of directors of Company determines at any time that this Agreement is no longer advisable or recommends that Shareholders reject the Arrangement or any other Change of Recommendation has occurred at any time;

(e)

Company shall, subject to the prior review and written approval of Parent, and subject to Parent's agreements and covenants in Section 2.2, prepare, file and distribute the Company Circular and such other documents (including documents required by the TSX and the Securities Commissions or applicable Law) as may be necessary or desirable to permit Shareholders to vote on the Arrangement;

(f)

provided the Arrangement is approved at the Special Meeting as set out in the Interim Order, as soon as reasonably practicable thereafter at a time determined with Parent, Company shall forthwith, in a manner acceptable to Parent, acting reasonably, take the necessary steps to submit the Arrangement to the Court and apply for the Final Order in such manner as the Court may direct; and

(g)

provided the Final Order is obtained and the conditions set out in Article 3 have been satisfied or waived, Company and Parent shall agree on a date, being not less than 3 Business Days and no more than 5 Business Days, after receipt of the Final Order, on which Company shall send to the Director, for endorsement and filing by the Director, articles of arrangement and such other documents as may be required under the OBCA to give effect to the Arrangement.

2.2

Circular

(a)

Company shall prepare the Company Circular (including supplements or amendments thereto) and cause the Company Circular (including supplements or amendments thereto) to be distributed in accordance with applicable Law. In preparing the Company Circular, Company shall provide Parent with a reasonable opportunity to review and comment on the Company Circular and, other than with respect to the Parent Information for which Parent shall be solely responsible, Company shall consider all such comments, provided that whether or not any comments are accepted or deemed appropriate shall be determined by Company in its discretion, acting reasonably. In a timely and expeditious manner so as to permit Company to comply with its obligations in Section 2.1(a) and Section 2.1(b), Parent shall promptly furnish to Company all Parent Information. Each of Company and Parent shall:

(i)

ensure that all information provided by it or on its behalf that is contained in the Company Circular does not contain any misrepresentation or any untrue statement of a material fact or omit to state a material fact required to be stated in the Company Circular that is necessary to make any statement that it contains not misleading in light of the circumstances in which it is made; and

(ii)

promptly notify the other if, at any time before the Effective Time, it becomes aware that the Company Circular, any document delivered to the Court in connection with the application for the Interim Order or Final Order or delivered to Shareholders in connection with the Special Meeting or any other document contemplated by Section 2.1 contains a misrepresentation or an untrue statement of material fact or omits to state a material fact required to be stated in those documents that is necessary to make any statement it contains not misleading in light of the circumstances in which it is made or that otherwise requires an amendment or a supplement to those documents; and in any such event, Company and Parent will reasonably cooperate with each other in the preparation, filing and dissemination of any required supplement or amendment to the Circular or such other document, as the case may be, and any related news release or other document necessary or desirable in connection therewith.

(b)

Parent represents and warrants that Parent Information does not and will not contain any untrue statement or omit to state a material fact necessary to make any such statement or material fact, in light of the circumstances in which it was made, not misleading (the "Parent Information Representation"). Parent shall indemnify and hold harmless each of the Indemnified Persons to the extent of a breach of the Parent Information Representation.

(c)	Company will advise Parent as Parent may reasonably request, and on a daily basis commencing 5 Business Days prior to the Special Meeting, as to the aggregate tally of the proxies and votes received in respect of the Special Meeting.

(d)	Company will promptly provide Parent with any notice relating to the Special Meeting and allow Representatives of the Buyer and Parent to attend the Special Meeting.

(e)	Company represents and warrants as of the date hereof, that, after due inquiry, it has been advised that, each of the directors of Company intends to vote all Common Shares held by each of them, or that may hereafter be acquired by each of them, in support of the Arrangement at the Special Meeting.

2.3	Public Announcement

Immediately after the execution of this Agreement, Company and Parent shall each issue a public announcement (such Parent public announcement also to be filed with the SEC on Form 8-K by Parent), announcing the entering into of this Agreement and the Transactions, which announcements shall be in form and substance acceptable to each of them, acting reasonably.

2.4	List of Securityholders

Upon the reasonable request from time to time of Parent, Company will provide Parent with lists (in both written and electronic form) of the registered Shareholders, together with their addresses and respective holdings of Common Shares, as applicable, lists of the names and addresses and holdings of all persons having rights issued or granted by Company to acquire or otherwise related to Common Shares (including Optionholders) and lists of non-objecting beneficial owners of Common Shares and participants in book-based nominee registers (such as CDS & Co. and CEDE and Co.), together with their addresses and respective holdings of Common Shares. Company will from time to time require that its registrar and transfer agent furnish Parent with such additional information, including updated or additional lists of Shareholders, including immediately upon exercise of the Options, information regarding beneficial ownership of Common Shares and lists of holdings and other assistance as Parent may reasonably request.

ARTICLE 3 - CONDITIONS TO THE ARRANGEMENT

3.1	Mutual Conditions

The respective obligations of the parties to complete the Arrangement shall be subject to the fulfillment, or the waiver by each of them, on or before the Outside Date, of the conditions set forth in Schedule B, each of which may be waived by mutual consent of the parties, in whole or in part. For greater certainty, the conditions set forth in Schedule B are inserted for the benefit of each of the parties to this Agreement and may be waived by mutual consent of Company and Parent (for itself and on behalf of Buyer), in whole or in part, in their sole discretion.

3.2	Conditions in Favour of Company

The obligations of Company to complete the Arrangement shall be subject to the fulfillment, or the waiver by Company, on or before the Outside Date, of the conditions set forth in Schedule C, each of which is for the exclusive benefit of Company and may be waived by Company alone, at any time, in whole or in part, in its sole discretion.

3.3	Conditions in Favour of Parent and Buyer

The obligations of each of Parent and Buyer to complete the Arrangement shall be subject to the fulfillment, or the waiver by Parent (for itself and on behalf of Buyer), on or before the Outside Date, of the conditions set out in Schedule D, each of which is for the exclusive benefit of Parent and Buyer and may be waived by Parent (for itself and on behalf of Buyer) alone, at any time, in whole or in part, in its sole discretion.

3.4	Satisfaction, Waiver and Release of Conditions

Upon the issuance of a certificate of arrangement in respect of the Arrangement by the Director in accordance with the Final Order and the OBCA, the conditions provided for in this Article 3 shall be deemed conclusively to have been satisfied, fulfilled, waived or released.

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES

4.1	Representations and Warranties of Company

Company represents and warrants to Parent and Buyer as to those matters set forth in Schedule E (and acknowledges that Parent and Buyer are relying on such representations and warranties in entering into this Agreement and completing the Transactions).

4.2	Representations and Warranties of Parent and Buyer

Parent and Buyer jointly and severally represent and warrant to Company as to those matters set forth in Schedule F (and acknowledge that Company is relying on such representations and warranties in entering into this Agreement and completing the Transactions).

4.3	Survival of Representations, Warranties and Covenants

The representations, warranties and covenants of Company and of Parent and Buyer contained in this Agreement or in any instrument delivered pursuant to this Agreement shall merge upon, and shall not survive, the Effective Date; provided that this Section 4.3 shall not limit any covenant or agreement of the parties, which by its terms contemplates performance after the Effective Time. Notwithstanding the foregoing, the parties acknowledge and agree that the representations, warranties and covenants in Section 10.6(a), 10.6(b) and 10.6(c) are intended only as an indication of Parent's and Buyer's current intent as of the date of this Agreement and are not intended to survive the Effective Date.

4.4	Effect of Inconsequential Inaccuracies.

Parent and Buyer agree that (a) Parent shall have no termination right pursuant to Section 8.1(c)(vi) as a result of an Inconsequential Inaccuracy, (b) an Inconsequential Inaccuracy shall not cause the condition set forth in Section (b) of Schedule D to be unsatisfied, and (c) where (a) or (b) above applies, Company shall have no obligation to pay Parent the Termination Fee pursuant to Section 9.1(c) or Parent Expenses pursuant to Section 9.1(d), and (d) neither Parent nor Buyer will have any recourse against Company, the Shareholders or any other officer, director, representative or employee of Company for an Inconsequential Inaccuracy.

ARTICLE 5 - IMPLEMENTATION

5.1

General

The Transactions are intended, subject to the terms and conditions hereof, to result in, among other things, Parent acquiring all Common Shares outstanding immediately prior to the Effective Time for the Consideration per Common Share and as set out in greater detail in the Plan of Arrangement. In addition, Parent agrees that, subject to compliance with the terms of the Plan of Arrangement, a Shareholder shall be entitled to: (a) deliver a notice to Parent at least 10 days prior to the date of the Special Meeting, notifying Parent of such Shareholder's intention to effect the transaction contemplated in Section 2.5 of the Plan of Arrangement; and (b) enter into a Holdco Agreement to transfer the Holdco Shares to Buyer under the Arrangement.

5.2	Satisfaction of Conditions

Each of Company, Parent and Buyer shall (and shall cause its Subsidiaries to) use all commercially reasonable efforts to satisfy each of the conditions precedent to be satisfied by it, as soon as practicable and in any event before the Effective Date, and to take, or cause to be taken, all other action and to do, or cause to be done, all other things necessary, proper or advisable to permit the completion of the Transactions in accordance with the Arrangement, this Agreement, the agreements that it contemplates and applicable Law, and to cooperate with each other in connection therewith, including using all commercially reasonable efforts to:

(a)

provide notice to, and obtain all waivers, consents, permits, licenses, authorizations, orders, approvals and releases, including release of any and all Liens, necessary or desirable to complete the Transactions from, Agencies and other persons, including parties to agreements, understandings or other documents to which each of Company and Parent (or their respective Subsidiaries) is a party or by which it or its properties are bound or affected (including loan agreements, shareholder agreements, leases, subleases, pledges, guarantees and security), the failure of which to provide or obtain would prevent the completion of the Arrangement or which, individually or in the aggregate, would reasonably be expected to be Materially Adverse;

(b)	obtain the Interim Order and the approval of Shareholders at the Special Meeting within the times provided in Section 2.1, subject to the terms of the Interim Order;

(c)

effect or cause to be effected all registrations and filings and submissions of information necessary or desirable to complete the Transactions or requested of it by Agencies, the failure of which to obtain would reasonably be expected to prevent the completion of the Transactions or would reasonably be expected to be Materially Adverse;

(d)	keep the other reasonably informed as to the status of the proceedings related to obtaining the Regulatory Approvals, including providing the other with copies of all related applications and notifications; and

(e)	to the extent required by any Agency, secure any Novation Agreement or Other FAR 42.12 Agreement from any Agency to the extent required to be obtained by any Agency in order to permit the consummation of the Transactions.

5.3	Options and other Equity Based Compensation Arrangements

(a)

Prior to the Effective Time, Company's board of directors shall accelerate the vesting of otherwise unvested Options and provide for the exercise of Options conditional on all conditions precedent to the Arrangement being satisfied or waived such that, immediately prior to the Effective Time, such Options that have been so conditionally exercised shall be deemed to have been exercised and the Common Shares issuable on exercise of such Options shall be deemed to be issued and outstanding.

(b)

Prior to the Effective Time, Company shall terminate the Option Plan, Employee Share Purchase Plan, Restricted Share Unit Plan, and Deferred Share Unit Plan by proper action of its board of directors and in accordance with applicable Law, so that on and after the Effective Time there shall be no further liability thereunder other than the obligation to make payments in accordance with any restricted share unit award agreements listed in Section (r)(i) of the Company Disclosure Statement and deferred share unit agreements and election notices listed in Section (r)(i) of the Company Disclosure Statement, to the extent still outstanding and effective as of the payout date.

5.4	Defence of Proceedings

Each of Company, Parent and Buyer shall diligently defend, or shall cause to be diligently defended, any lawsuits or other legal proceedings brought against it or any of its Subsidiaries or their respective directors, officers, shareholders or equityholders challenging this Agreement or the completion of the Transactions. Neither Company, Parent nor Buyer shall settle or compromise (or permit any of their respective Subsidiaries to compromise or settle) any such claim brought in connection with the Transactions, without the prior written consent of the other (provided that written consent of Parent shall only be necessary to the extent settlement of such claim would bind either Parent or Buyer or in any material respect affect, restrain or interfere with the conduct of the business of Company, Parent or any of their Subsidiaries or the consummation of the Transactions).

5.5	Registrar and Transfer Agent

Company shall permit the registrar and transfer agent for Common Shares to act as depositary in connection with the Arrangement and instruct that transfer agent to furnish to Parent (and such persons as it may reasonably designate) at such times as it may request such information and provide to Parent (and such persons as it may designate) such other assistance as it may reasonably request in connection with the implementation and completion of the Transactions.

5.6	Access; Confidentiality

(a)

Subject to (i) Agency approval, if applicable, (ii) compliance with applicable Law and the Confidentiality Agreement, and (iii) any request not being unduly disruptive to the running of the Business of Company, Company shall, and shall cause its Subsidiaries to, afford to Parent and to its Representatives, reasonable access during normal business hours during the period prior to the Effective Time to all of its Representatives, properties, offices, facilities, books, contracts, including Government Contracts (and any ex-U.S. government contracts), commitments, personnel, including officers and employees, and records of Company and its Subsidiaries, and, during such period, Company shall, and shall cause each of its Subsidiaries to, furnish promptly to Parent (i) a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of federal, provincial or state securities Law; and (ii) all other information concerning its business, properties, contracts, records and personnel as Parent may reasonably request, including any information with respect to Shareholder Approval at the Special Meeting and the status of the efforts to obtain such approval and any additional information as set forth on Schedule 5.6(a). Such information shall be held in confidence to the extent required by, and in accordance with, the provisions of the Confidentiality Agreement. Any reasonable costs of Company's external advisors under this Section 5.6(a) and incurred with Parent's prior written consent, will be borne by Parent.

(b)

Without limiting the generality of Section 5.6(a), within 10 days of the date of this Agreement, Company shall, and shall cause its Subsidiaries to, afford Parent and its Representatives, reasonable access during normal business hours to (i) the officers of Company and its Subsidiaries; and (ii) such financial statements of Company and its Subsidiaries as Parent or its Representatives may reasonably request for the purposes of promptly completing due diligence of Company's and its Subsidiaries' FCPA and similar anti-bribery Law compliance and practices.

(c)

Company agrees to provide, and to cause its Subsidiaries to provide, Parent, at Parent's cost and expense, with reasonable cooperation, in a reasonably timely manner, in connection with its capital raising activities as may be reasonably requested by Parent, including authorizing and directing its accountants to provide comfort letters and consents to the use of accountants' audit reports and financial statements relating to Company. Parent shall, promptly upon written request by Company, reimburse Company for all reasonable and documented out-of-pocket costs incurred by Company or any of its Subsidiaries in connection with such cooperation; provided that Company shall not incur any material expenses without the prior consent of Parent and provided that no expense incurred and not yet reimbursed by Parent shall constitute a reduction from Net Cash or Working Capital. Company will periodically update any information provided to be included in any offering document to be used in connection with Parent's capital raising activities.

(d)

Nothing in this Section 5.6 shall impair the ability of Company, in its sole and absolute discretion, to seek applicable third-party customer consent or require a non-disclosure agreement, in each case prior to granting access to or disseminating any reports, schedules, registration statements, documents and other information requested under this Section 5.6 with respect to third parties. Parent shall provide Company with a reasonable opportunity to review and comment on any description of Company, its business or operations, financial statements or projections, and any pro forma combined financial or other information involving Company contained in any disclosure document to be used by parent in its capital raising activities contemplated by this Section 5.6.

5.7	Duty to Inform

Each of Company and Parent shall keep the other reasonably apprised of the status of matters relating to the completion of the Transactions and work cooperatively in a reasonable manner in connection with obtaining the requisite approvals and consents or governmental orders, including:

(a)

subject to Agency approval, if applicable, promptly notifying the other of, and, if in writing, promptly furnishing the other with copies of, any communications from or with any Agency with respect to the Transactions, including with respect to any Agency communication to Company in connection with any Novation Agreement or Other FAR 42.12 Agreement for any Assigned Contract;

(b)

subject to Agency approval, if applicable, permitting the other party to review in advance, and considering in good faith the view of one another in connection with, any proposed communication with any Agency in connection with proceedings under or relating to any applicable Law relating to the Transactions; and

(c)

not agreeing to participate in any meeting or discussion with any Agency in connection with proceedings under or relating to any applicable Law relating to the Transactions unless it consults with the other party in advance, to the extent reasonably practicable, and, to the extent permitted by such Agency, giving the other party the opportunity to attend and participate for such portions of such meeting or discussion at which matters relating to the Transactions are to be discussed.

5.8	Board Recommendation

The board of directors of Company shall in the Company Circular, subject to Section 7.5, unanimously recommend that Shareholders approve the Arrangement.

5.9	Withholding Rights

Company, Buyer, Parent and any person acting as depositary (the "Depositary") in connection with the Arrangement shall be entitled to deduct and withhold from any dividend, price or consideration otherwise payable to any holder of Common Shares or Holdco Shares such amounts as Company, Buyer, Parent, Holdco or the Depositary is required to deduct and withhold with respect to such payment under the ITA, United States Tax Law or any other applicable Law in respect of Taxes. To the extent that amounts are so withheld or deducted, such withheld or deducted amounts shall be treated for all purposes hereof as having been paid to Shareholders in respect of which such deduction and withholding was made, provided that such withheld or deducted amounts are actually remitted to the appropriate taxing Agency by Company, Buyer, Parent, Holdco or the Depositary, as the case may be.

5.10	Pre-Closing Reorganization

Company covenants and agrees that, upon the reasonable request by Parent, Company shall, and shall cause each of its Subsidiaries to use its reasonable commercial efforts to (a) take such actions to reorganize their respective capital, assets and structure as Parent may request in writing, acting reasonably (collectively, the "Pre-Arrangement Reorganization") and (b) cooperate with Parent and its advisors in order to determine the nature of the Pre-Arrangement Reorganization that might be undertaken and the manner in which it might most effectively be undertaken; provided that the Pre-Arrangement Reorganization (i) does not interfere with the ongoing operations of Company and its Subsidiaries; (ii) is not prejudicial to Company or any Subsidiary of Company or Shareholders or inconsistent with the provisions of this Agreement; (iii) shall not, and any actions taken in furtherance thereof shall not be considered to, constitute a breach of the representations or warranties or covenants of Company hereunder; (iv) does not require the directors, officers, employees or agents of Company or its Subsidiaries to take any action in any capacity other than as a director, officer or employee; (v) does not impede, or interfere with, delay the occurrence of the Effective Date by more than 3 Business Days after the satisfaction or waiver of the last of the conditions to be satisfied or waived in Schedule B, Schedule C or Schedule D, or prevent the completion of the Transactions; (vi) shall not affect or modify in any respect the obligations of either of Parent or Buyer under this Agreement; (vii) is reasonably capable of being consummated following the date of the Final Order and prior to the Effective Time; (viii) does not have adverse Tax consequences to Company or its Subsidiaries; and (ix) does not require Company or any of its Subsidiaries to obtain any waivers, consents, approvals, or make any filing (other than any Tax filing or election) with, any Agency or other third party or otherwise adversely affect any contract or agreement between Company or any of its Subsidiaries and any third party. Parent shall provide written notice to Company of any proposed Pre-Arrangement Reorganization at least 5 business days prior to the Effective Time provided that the Pre-Arrangement Reorganization shall in no event be effective prior to the granting of the Final Order. Company shall advance all costs of the Pre-Arrangement Reorganization, including any liability for Taxes of Company or any of the Subsidiaries that may arise as a result of such Pre-Arrangement Reorganization, and Parent shall reimburse such costs prior to the Effective Time such that, for the avoidance of doubt, all of such reimbursed costs shall be not be deducted for the purpose of calculating Net Cash and/or Working Capital. The parties will use their commercially reasonable efforts to structure the Pre-Arrangement Reorganization in such a manner that it is made effective immediately prior to the Effective Time. In the event that the Pre-Arrangement Reorganization is completed and the Arrangement is not completed as contemplated herein as a result of any termination of this Agreement pursuant to Sections 8.1(a), 8.1(b) or 8.1(c) (other than a termination by Parent pursuant to Sections 8.1(c)(iii)(D) or 8.1(c)(vi)), Parent shall reimburse Company for any loss or damages, including any liability for Taxes, caused to or incurred by Company or any of its Subsidiaries directly or indirectly as a result of such Pre-Arrangement Reorganization and shall also bear any cost associated with returning the corporate structure, capital structure, business, operations and assets, as applicable and as the case may be, to their state immediately prior to the Pre-Arrangement Reorganization (an "Unwinding Transaction") where Company, in its sole discretion, considers such Unwinding Transaction to be necessary or desirable.

5.11

Knowledge

Parent and Buyer each agree that neither Parent nor Buyer has any knowledge of any fact, event or circumstance that would make any representation or warranty (including as disclosed in the Company Disclosure Statement) made by Company in this Agreement untrue. Parent and Buyer acknowledge and agree that any disclosure in any one Section to the Company Disclosure Statement shall be considered a disclosure in all other applicable Sections of the Company Disclosure Statement.

ARTICLE 6 - CONDUCT OF BUSINESS

6.1	Conduct of Business by Company

Prior to the Effective Time, unless Parent otherwise agrees in writing (which agreement shall not be unreasonably withheld or delayed), or as otherwise expressly contemplated or permitted by this Agreement or as disclosed in the Company Disclosure Statement, Company shall, and shall cause each of its Subsidiaries to, (a) maintain its existence in good standing (to the extent that the laws of the jurisdiction of its formation recognize the concept of good standing) under the laws of the jurisdiction of its incorporation, (b) operate its Business only in, not take any action except in, and maintain its facilities, including the Specified Manufacturing Facilities in, the ordinary course of business consistent with past practice, (c) maintain and preserve its business organization and its material rights and franchises, (d) use commercially reasonable efforts to retain the services of its current officers and key employees, (e) use commercially reasonable efforts to maintain relationships and goodwill with customers, suppliers, lessees, joint venture partners, licensees, lessors, licensors, clinical collaborators and other third parties, including Government Agencies, (f) comply with all applicable Law including for the filing of Tax Returns, the withholding of Taxes, and the payment of Tax installments due prior to the Effective Date and the timely filing of all reports, forms, or other documents with the System for Electronic Document Analysis and Retrieval (SEDAR) as required by the securities regulatory authorities in Canada (g) maintain all of its operational assets in their current condition (normal wear and tear excepted) to the end that the goodwill and ongoing business of Company and its Subsidiaries shall not be impaired in any material respect, (h) use commercially reasonable efforts to ensure that, at the Effective Time, Company has Working Capital of at least $90,000,000 and Net Cash of at least $30,000,000. Without limiting the generality of the foregoing, Company shall (unless Parent otherwise agrees in writing (which agreement shall not be unreasonably withheld or delayed and which agreement shall be deemed to have been given if Parent fails to object in writing within 2 Business Days after request from Company), or as otherwise expressly contemplated or permitted by this Agreement or as disclosed in the Company Disclosure Statement):

(a)	not do, permit any of its Subsidiaries to do, or permit to occur any of the following (directly or indirectly):

(i)	issue, grant, sell, transfer, pledge, lease, dispose of, encumber or agree to issue, grant, sell, pledge, lease, dispose of or encumber,

(A)	any Common Shares or other securities entitling the holder to rights in respect of the securities or assets of Company or its Subsidiaries, other than pursuant to rights to acquire such securities existing at the date of this Agreement as disclosed in the Company Disclosure Statement, or

(B)	any property or assets of Company or any of its Subsidiaries,

(ii)	amend or propose to amend the constitutional documents (including articles or other organizational documents or by-laws) of it or any of its Subsidiaries,

(iii)

adopt a plan of liquidation or resolution providing for the liquidation, arrangement, amalgamation, consolidation, restructuring recapitalization or other reorganization of Company or any of Company's Subsidiaries,

(iv)	accrue, declare, set aside or pay any dividend on or make any distribution or payment or return of capital in respect of the Common Shares,

(v)	redeem, purchase or offer to purchase any securities of its capital stock, or enter into any agreement, understanding or arrangement with respect to the voting, registration or repurchase of its capital stock,

(vi)

except as otherwise permitted pursuant to Article 7, acquire any equity interest or adjust, split, reverse split, combine or reclassify its capital stock or become a party to any merger consolidation, joint venture, share exchange, business combination, amalgamation, recapitalization, or similar transaction,

(vii)

(viii)

acquire or agree to acquire (by purchase, amalgamation, merger or otherwise) the services of any person or assets for a purchase price that individually or in the aggregate exceeds $500,000,

hire any officer or employee (except to fill any position set forth in Schedule 6.1 or replace any employee who has terminated his or her employment), promote any officer or employee, or terminate the employment of any officers or employees other than for cause,

(ix)	make, or commit to make, any capital expenditures, other than those listed in Schedule 6.1(a), that individually or in the aggregate exceeds $500,000,

(x)

incur, create, assume, commit to incur, act or fail to act in any manner that would reasonably be expected to accelerate any obligations in respect of, guarantee or otherwise become liable or responsible for, indebtedness for borrowed money, other than intercompany advances from Subsidiaries of Company made in the ordinary course of business consistent with past practice,

(xi)

conduct the development, manufacture, commercialization, or other making, having made, importing, selling, or offering for sale, including researching, holding or keeping (whether for disposal or otherwise), having used, exporting, transporting, distributing, promoting, marketing or having sold or otherwise disposing of Company's products and services, including the Company Products, other than in the ordinary course of business consistent with past practice,

(xii)

prepay any amount owing in respect of indebtedness for borrowed money,

(xiii)

settle or compromise any suit, claim, action, proceeding, hearing, notice of violation, demand letter or investigation,

(xiv)

commence any legal proceeding, except with respect to: (A) routine matters in the ordinary course of business and consistent with past practices; (B) in such cases where Company reasonably determines in good faith that the failure to commence suit would result in a material impairment of a valuable aspect of the Business (provided that Company consults with Parent and considers the views and comments of Parent with respect to such legal proceedings prior to commencement thereof); or (C) in connection with a breach of this Agreement or the agreements that it contemplates,

(xv)	modify, amend or terminate, or waive, release or assign any material rights or claims with respect to any confidentiality or standstill agreement to which Company is a party,

(xvi)

enter into any confidentiality agreements or arrangements other than in the ordinary course of business consistent with past practice, except as otherwise permitted in this Agreement,

(xvii)

enter into, adopt or amend any Employee Benefit Plan or Employment Agreement, except as otherwise may be required by Law,

(xviii)

enter into or modify any employment, severance, collective bargaining or similar agreements or arrangements with, or take any action with respect to or grant any salary increases, bonuses, benefits, severance or termination pay to (A) any current or former officers or directors, or (B) other than in the ordinary course of business, to other employees or consultants,

(xix)

other than as a result of the Transactions, take any action that would give rise to a right to severance benefits to (A) any current or former officer or director, or (B) other than in the ordinary course of business, to other employees or consultants, in each case pursuant to any employment, severance, termination, change in control or similar agreements or arrangements,

(xx)

adopt, amend, waive, increase or accelerate the timing, payment or vesting of benefits under or funding of, any bonus, profit sharing compensation, stock option (other than Options), pension, retirement, deferred compensation, employment or other employee benefit plan, agreement, trust, fund or arrangement for the benefit or welfare of any current or former employee, director or consultant, except as may be required under the terms of this Agreement,

(xxi)

except as contemplated by, or required by, this Agreement, amend the Option Plan or otherwise amend the terms of any Options,

(xxii)

except as otherwise required by Law, make any Tax election, settle or compromise any material Tax claim or assessment, file any Tax Return (other than any Tax Return due before the Effective Time and then only in a manner consistent with past practice), change any method of Tax accounting or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes,

(xxiii)

except as required by Law or provided for under IFRS, make any changes to existing accounting practices, or write up, write down or write off the book value of any assets in amount that, in aggregate, exceeds $500,000, except for depreciation and amortization in accordance with IFRS,

(xxiiv)

accelerate payment terms or permit prepayment to Company or its Subsidiaries by any third party other than in the ordinary course of business, or

(xxv)

other than in the ordinary course of business and consistent with past practice and that involve aggregate annual expenditures of $500,000 or less in the fiscal year ending July 31, 2014 or the following fiscal years: (A) enter into or become bound by, or permit any of the assets owned or used by it to become bound by, any Contract that would otherwise be a material Contract or any other Contract that is material to Company or its Subsidiaries, it being agreed that entering into or amending any real estate lease shall be deemed to be a material Contract not entered into in the ordinary course of business; or (B) amend, terminate, or waive any material right or remedy under, any material Contract or any other Contract that is otherwise material to Company or its Subsidiaries, other than termination thereof upon the expiration of any such Contract in accordance with its terms or upon a material breach thereof by the counterparty thereto;

(b)

use its commercially reasonable efforts to cause the current insurance (or re-insurance) policies, including its clinical trial insurance policies, of it and its Subsidiaries not to be cancelled or terminated or any other coverage under those policies to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance and reinsurance companies of nationally recognized standing reasonably acceptable to Parent providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect. Company and its Subsidiaries shall reasonably cooperate and coordinate with Parent or Buyer at its request regarding the renewal or replacement of any of Company or Subsidiary insurance policy that is expected to occur within 30 days prior to or 30 days after the then-estimated Effective Date, but in any case including the global liability policy currently set to expire November 2013, in order to ensure that the renewal or replacement process both maintains continuity of coverage and does not prejudice Buyer's efforts to later alter, cancel, or maintain coverage;

(c)	not do or permit any action that would, or would reasonably be expected to, render any representation or warranty made by it in this Agreement untrue or inaccurate in a manner that, individually or in aggregate, would, or would reasonably be expected to, be Materially Adverse;

(d)

promptly notify Parent orally and in writing of any change in the ordinary course of the business, operations or properties of Company or its Subsidiaries and of material complaints, investigations or hearings (or communications indicating that the same may be contemplated) that, individually is, or in the aggregate are, or would reasonably be expected to be, Materially Adverse;

(e)

promptly notify Parent orally and in writing of (i) any claim asserted or legal proceeding commenced, or, to the knowledge of Company, either: (A) with respect to a Government Agency, threatened; or (B) with respect to any other person, threatened in writing, against, relating to, involving or otherwise affecting Company or its Subsidiaries that relates to the Transactions, (ii) any receipt of any written notice of resignation of the current officers, directors and employees of any of Company or its Subsidiaries, (iii) any pending or threatened claim, action, proceeding or investigation of which Company has knowledge and that would reasonably be expected to result in the debarment or exclusion of any of Company or its Subsidiaries or their officers, consultants, employees or agents; (iv) any notice or other communication received by Company indicating that any person which is a party to a Contract may cancel, terminate or otherwise modify any such Contract; and (v) Company shall provide accurate summaries of all significant adverse drug experiences submitted to the FDA or any other Agency relating to any Company Products.

(f)	not implement any other change in the business, affairs, capitalization or dividend policy of Company or its Subsidiaries that is, or in the aggregate are, or would reasonably be expected to be, Materially Adverse;

(g)

not enter into or modify any contract, agreement, commitment or arrangement with respect to any of the matters set forth in this Section 6.1; provided that Company may enter into or modify any contract, agreement, commitment or arrangement with respect to any of the matters set forth in Section 6.1(a) with agreement of Parent given in the manner set out in this Section 6.1; and

(h)

use commercially reasonable efforts to oversee its distributors and commercial partners, including but not limited to requesting that such distributors and partners provide written reports related to their commercialization and marketing efforts. Provided that Parent agrees in writing, no later than immediately prior to the Effective Time, Company shall, to the extent it has the legal right to do so, terminate any agreements with distributors that would or could reasonably place Buyer in breach of applicable Law if such agreement were to remain in place after the Effective Time.

Notwithstanding the foregoing, none of the restrictions in this Section 6.1 shall apply to any of the matters identified in Schedule 6.1.

6.2

Not used

6.3

Financing

(a)

Parent represents and covenants to Company that it has sufficient funds available to it to pay the Consideration on the Effective Date. Parent covenants to maintain such funds available to it until the Effective Time and to utilize such funds to pay the Consideration, unless this Agreement is terminated as herein provided. To the extent that Parent and its financing sources have not executed binding definitive documentation covering the Debt Financing on the date hereof, Parent will use reasonable best efforts to enter into such definitive documentation as promptly as practicable. For the avoidance of doubt, a mere commitment letter shall not be deemed to be definitive documentation for purposes hereof. The sole remedy for Parent's breach of this Section 6.3(a) shall be payment of the Reverse Termination Fee, subject to and in accordance with the provisions of Section 9.2(a).

(b)

Company shall cooperate with Parent in a reasonably timely manner and will provide such information as shall be reasonably requested by Parent as required by its financing documents to be entered into on or about the date hereof (the "Debt Financing") and as expressly set forth in Schedule 6.3. Company shall not unreasonably withhold further co-operation should additional information be required by Parent's lenders.

(c)	Company acknowledges and agrees that under no circumstances shall it have any recourse to any lender connected to the Debt Financing under this Agreement or any other instrument.

(d)	Parent shall not assert as a defense(or counterclaim) to any claim brought by (or against) Company the refusal or failure of its lender to provide the Debt Financing.

6.4	Net Cash and Working Capital Statements

(a)

On the second Business Day after the date of the Final Order, Company shall prepare and deliver to Parent a statement, in the form attached as Schedule 6.4, setting out Working Capital, as of the end of the month preceding the date on which the Final Order is issued, and Net Cash, computed on a fully-reconciled basis or "book balance," as of the close of business on the Business Day on which the Final Order is issued; provided that if the Final Order is issued in the first 15 days of a calendar month, such statement shall set out the Working Capital as of the end of the month prior to the preceding month. Such statement shall be determinative of whether a Net Cash Termination Event or a Working Capital Termination Event has occurred, absent manifest error.

(b)

The parties shall in good faith reasonably cooperate so that Parent is kept apprised of Company's financial position. Without limiting the generality of the foregoing, for the period commencing on the date of first distribution of the Company Circular to the Shareholders and ending on the Effective Date, Company shall prepare and promptly deliver to Parent (i) weekly statements of cash computed from Company cash in account or "bank balance" (to be delivered within 2 Business Days after the last day of the relevant week), (ii) monthly statements of Working Capital ( to be delivered within 25 days after the end of the relevant fiscal month); provided however that Company shall notify Parent on a weekly basis if it reasonably believes that Working Capital will deviate by more than 10% from the most recently provided statement of Working Capital; (iii) monthly unaudited consolidated balance sheet computed on a fully-reconciled basis or "book balance" (and, to the extent prepared by Company, income statement) of Company and its Subsidiaries for each fiscal month of Company (to be delivered within 25 days of the end of each fiscal month); and (iv) such other financial information as Parent shall reasonably request.

ARTICLE 7 - ALTERNATIVE TRANSACTIONS

7.1	Non-Solicitation; Adverse Acts

Except in respect of any action or inaction that is permitted by this Agreement, Company shall not (and shall not permit any of its Subsidiaries to), directly or indirectly, through any of its or its Subsidiaries' Representatives or otherwise:

(a)

solicit, initiate, knowingly encourage, or facilitate (including by way of furnishing or affording access to non-public information, properties, and facilities of Company or any of its Subsidiaries) any inquiries or the making by any third party of any proposals regarding an Alternative Transaction;

(b)

participate in any discussions or negotiations with any person regarding any Alternative Transaction provided that Company may (i) advise anyone requesting access to non-public information that such access cannot be provided unless such person makes an Acquisition Proposal and (ii) advise anyone making an unsolicited Acquisition Proposal that such proposal is not a Superior Proposal;

(c)	approve or recommend any Alternative Transaction; or

(d)	accept or enter into, or publicly propose to accept or enter into, any agreement, arrangement or understanding related to any Alternative Transaction.

Additionally, Company shall:

(e)	immediately cease and cause to be terminated any existing discussions or negotiations, directly or indirectly, with any person with respect to any Alternative Transaction; and

(f)

not, directly or indirectly, waive or vary any terms or conditions of any confidentiality, non-solicitation or standstill agreement that it has entered into with any person considering any Alternative Transaction and shall promptly request the return (or the deletion from retrieval systems and data bases or the destruction) of all information, in each case subject to the terms and conditions of each such agreement.

7.2	Permitted Actions

Notwithstanding anything in this Agreement, nothing shall prevent Company, its Subsidiaries or its or their Representatives or the board of directors of Company from:

(a)	complying with the obligations of the board of directors of Company under applicable securities Law to prepare and deliver a directors' circular in response to a take-over bid; and

(b)

considering, participating in discussions or negotiations and entering into confidentiality agreements and providing information regarding a bona fide written Acquisition Proposal that (i) did not result from a breach of Article 7 prior thereto, and (ii) the board of directors of Company has determined by formal resolution, in good faith and after consultation with its financial advisors and outside legal counsel, is or is reasonably likely to result in, if consummated in accordance with its terms, a Superior Proposal, but only to the extent that the board of directors of Company also has determined by formal resolution, in good faith after consultation with its outside counsel, that the failure to take such action would be inconsistent with its fiduciary duties.

The board of directors of Company shall not, except in compliance with Sections 7.5 and 7.6, approve, recommend, accept, support or enter into any other agreement, arrangement or understanding in respect of any such Acquisition Proposal other than a confidentiality agreement contemplated by Section 7.4.

7.3	Notification of Acquisition Proposal

Company shall promptly (and in any event within 24 hours of receipt by Company) notify Parent, at first orally and then promptly thereafter in writing, of any Acquisition Proposal made after the date hereof and any inquiry that Company reasonably expects to lead to any Alternative Transaction, or any amendments to the foregoing, or any request for information relating to Company or any of its Subsidiaries in connection with any Alternative Transaction or for access to the properties, books, or records of Company or any of its Subsidiaries by any person that Company reasonably believes is proposing to make, or has made, any Alternative Transaction. Such notices shall include a description of the material terms and conditions of any proposal and the identity of the person making such proposal or inquiry. Company shall thereafter provide such other details of the proposal or inquiry, discussions or negotiations as Parent may reasonably request and shall attach copies of all letters, agreements and other documentation (whether executed or in draft) exchanged by or on behalf of Company and the party making the Acquisition Proposal in respect of such Alternative Transaction. Company shall keep Parent reasonably informed by way of further notices of the status including any change to the material terms of any such Alternative Transaction.

7.4	Access to Information

If Company receives a request for information from a person that has made a bona fide written Acquisition Proposal that complies with Section 7.2(b), then, and only in such case, the board of directors of Company may, subject to, only if such person is not already party to a confidentiality agreement in favour of Company, the execution by such person of a confidentiality agreement containing a standstill provision (which, for greater certainty, shall in no event prevent or restrict such person, Company, its Subsidiaries or its or their Representatives, or the board of directors of Company from engaging in any activities otherwise permissible under Section 7.2(b)), with terms that are no less favourable to Company in any material respect to the terms applicable to Company in the Confidentiality Agreement and a prohibition on such person's use of any information regarding Company or its Subsidiaries for any reason whatsoever other than as relates to such person's evaluation and consummation of the transaction that is the subject of the Acquisition Proposal, provide such person with access to information regarding Company and its Subsidiaries; provided for greater certainty that the substance of all confidential discussions between Company and Parent or Buyer must remain confidential; and further provided that Company sends a copy of any such confidentiality agreement to Parent promptly upon its execution and Company provides Parent (to the extent it has not already done so) with copies of the information provided to such person and promptly provides Parent with access to all information to which such person was provided access.

7.5	Implementation of Superior Proposal

Subject to Parent's rights under Section 7.6, Company may recommend, or propose to publicly recommend, the approval or adoption (and thereby change its recommendation regarding the Transactions) of a Superior Proposal, or resolve or agree to take any such action (each a "Change of Recommendation") in respect of which there has been no breach of Article 7 only if:

(a)

Company has complied with its obligations under this Article 7 with respect to the Superior Proposal, including by providing Parent with all documentation required to be delivered under Section 7.3 and a copy of the Superior Proposal (including any draft agreement proposed to be entered into by Company which governs the Superior Proposal and the financial value that the board of directors of Company has, in consultation with its financial advisors, determined in its good faith judgment should be ascribed to any non-cash consideration offered under the Superior Proposal);

(b)

such Change of Recommendation is made following the period expiring at 5:00 p.m. (Toronto time) on the fifth business day (the "Response Period") after the later of (i) the date on which Parent received written notice from the board of directors of Company that it intends, subject only to compliance with this Section 7.5, to effect a Change of Recommendation, and (ii) the date Parent received a copy of the Superior Proposal as provided in Section 7.5(a);

(c)

the board of directors of Company has considered any amendment to the terms of this Agreement proposed in writing by Parent (or on its behalf) before the end of the Response Period as contemplated in Section 7.6 and determined in good faith, after consultation with its financial advisors and outside legal counsel, that the Superior Proposal remains a Superior Proposal (as assessed against this Agreement, together with the written amendments, if any, proposed by Parent before the end of the Response Period) and that it would be inconsistent with its fiduciary duties not to effect a Change of Recommendation; and

(d)	the Special Meeting has not occurred.

If the Response Period would not terminate before the Special Meeting, Company shall adjourn the Special Meeting to a date specified by Parent that is no less than 2 and no more than 10 business days after the Response Period.

7.6	Response by Parent

During the Response Period, Parent shall have the right, but not the obligation, to offer in writing to amend the terms of this Agreement. The board of directors of Company shall review any such written offer by Parent to amend this Agreement in good faith, in consultation with its financial advisors and outside legal counsel, to determine whether the Acquisition Proposal to which Parent is responding would be a Superior Proposal when assessed against this Agreement, as would be amended in accordance with the written amendments, if any, proposed by Parent before the end of the Response Period. If the board of directors of Company does not so determine by formal resolution, it shall enter into an amended agreement with Parent and Buyer reflecting Parent's proposed written amendments. If the board of directors of Company does so determine then, Company may effect a Change of Recommendation; provided that in no event shall the board of directors of Company take any action that may obligate Company or any other person to seek to interfere with the completion of the Transactions, or impose any "break-up," "hello" or other fees or options or rights to acquire assets or securities, or any other obligations that would survive completion of the Transactions, on Company or any of its Subsidiaries, property or assets.

7.7

General

Nothing in this Article 7 (except as contemplated in Section 7.5) shall limit the obligation of Company to convene and hold the Special Meeting to consider the Arrangement as contemplated in Section 2.1. Each successive amendment to any material terms of an Acquisition Proposal shall constitute a new Acquisition Proposal for the purposes of Section 7.5 and 7.6 and Parent shall be afforded a new Response Period in respect of each such Acquisition Proposal.

ARTICLE 8 - TERMINATION AND AMENDMENT OF AGREEMENT

8.1	Termination

Except as otherwise set forth in this Section 8.1, the rights and obligations of the parties pursuant to this Agreement may be terminated at any time before the Effective Time:

(a)	by mutual agreement in writing executed by Company and Parent (for itself and on behalf of Buyer) (for greater certainty, without further action on the part of Shareholders if termination occurs after the holding of the Special Meeting);

(b)	by Company,

(i)

after the Outside Date, if the conditions provided in Section 3.1 or Section 3.2 have not been satisfied or waived by Company on or before the Outside Date, provided however that the right to terminate pursuant to this Section 8.1(b)(i) shall not be available to Company if its failure to fulfill any of its obligations under this Agreement or if its breach of any of its representations and warranties under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date; or

(ii)	if there shall be enacted or made any applicable Law that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins Company, Buyer or Parent from consummating the Arrangement and such applicable Law or enjoinment shall have become final and non-appealable; or

(iii)

at any time following the Special Meeting, if Shareholders do not cast (or do not cause to be cast) sufficient votes at the Special Meeting to permit completion of the Arrangement (provided Company has paid the Termination Fee to Parent if there has been a Change of Recommendation); or

(c)	by Parent,

(i)

after the Outside Date, if the conditions provided in Section 3.1 or Section 3.3 have not been satisfied or waived by Parent on or before the Outside Date, provided however that the right to terminate pursuant to this Section 8.1(c)(i) shall not be available to Parent if its or Buyer's failure to fulfill any of its or Buyer's obligations under this Agreement or if its or Buyer's breach of any of its or Buyer's representations and warranties under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date; or

(ii)	if there shall be enacted or made any applicable Law that makes consummation of the Arrangement illegal or otherwise prohibits or enjoins Company, Parent or Buyer from consummating the Arrangement and such applicable Law or enjoinment shall have become final and non-appealable; or

(iii)

at any time if the board of directors of Company, or Company, as applicable,

(A)

does not recommend in the Company Circular, or refuses to affirm (following the public announcement of any bona fide Acquisition Proposal within the later of (i) 5 days after a written request from Parent, and (ii) 1 day following the expiry of any applicable Response Periods) its recommendation, that Shareholders vote in favour of the Arrangement; or

(B)

does not recommend against (following the public announcement of any bona fide Acquisition Proposal within the later of (i) 5 days after a written request from Parent, and (ii) 1 day following the expiry of any applicable Response Periods) the Shareholders voting in favour of an Alternative Transaction, or

(C)	effects a Change of Recommendation but excluding the resolution referred to in Section 7.2(b); or

(D)

breaches or fails to perform any of the covenants or agreements set forth in Article 7 (other than those covenants and agreements set forth in Sections 7.3 and 7.4), or materially breaches or fails to perform in all material respects any of the covenants or agreements set forth in Sections 7.3 and 7.4; or

it being acknowledged and agreed that a recommendation that Shareholders vote in favour of the Arrangement or against an Acquisition Proposal, in either case, made by the board of directors of Company after the date hereof (other than in the Company Circular) other than on a unanimous basis shall not constitute a failure to recommend or to reaffirm the recommendation of the board of directors of Company;

(iv)	at any time if the Special Meeting is cancelled, adjourned or delayed except as expressly permitted or contemplated by this Agreement or agreed to by Parent in writing or requested by Parent; or

(v)	at any time following the Special Meeting, if Shareholders do not cast (or do not cause to be cast) sufficient votes at the Special Meeting to permit completion of the Arrangement; or

(vi)

at any time if Company shall have (A) breached any of its representations or warranties set forth in this Agreement (without giving effect to, applying to, or taking into consideration any materiality qualification contained in such representations and warranties), which breach, individually or in the aggregate, is, or would reasonably be expected to be, Materially Adverse; or (B) failed to perform any of its covenants or agreements set forth in this Agreement, which failure, individually or in the aggregate, (1) is, or would reasonably be expected to be, Materially Adverse, or (2) prevents, or impairs, or would reasonably be expected to prevent or impair the ability of Parent or Buyer to consummate the Transactions; or

(vii)

there is a Working Capital Termination Event and/or Net Cash Termination Event.

Neither Company nor Parent may seek to rely upon the failure to satisfy any conditions precedent in Sections 3.1, 3.2 or 3.3 or exercise any termination right arising therefrom or any termination right provided in Section 8.1(c)(vi), unless forthwith and in any event prior to the filing of the articles of arrangement for acceptance by the Director, Company or Parent, as the case may be, has delivered a written notice to the other specifying in reasonable detail all breaches of and failures to perform covenants, representations and warranties or other matters which Company or Parent, as the case may be, is asserting as the basis for the non-fulfilment of the applicable condition precedent or the exercise of the termination right, as the case may be. If any such notice is delivered, provided that Company or Parent, as the case may be, is proceeding diligently to cure all such matters, if and for so long as all such matters are susceptible of being cured (for greater certainty, except by way of disclosure in the case of representations and warranties) ("Curable Matters"), the other may not terminate this Agreement as a result thereof until the earlier of (i) the date that any Curable Matter is no longer susceptible of being cured, (ii) the date that Company or Parent, as the case may be, is no longer proceeding diligently to cure all Curable Matters, and (iii) the later of (A) the Outside Date and (B) the expiration of a period of 15 days from such notice (the "Termination Period"). If such notice has been delivered prior to the date of the Special Meeting, such meeting shall, unless the parties agree otherwise, be postponed or adjourned until the earlier of (1) the date that is 2 business days after the date that Company or Parent, as the case may be, notifies the other that all Curable Matters have been cured, and (2) the expiry of the Termination Period unless this Agreement is terminated on such date. If such notice has been delivered prior to the making of the application for the Final Order or the filing of the articles of arrangement for acceptance by the Director, such application and such filing shall be postponed until the earlier of (x) the date that is 2 business days after the date that Company or Parent, as the case may be, notifies the other that all Curable Matters have been cured, and (y) the expiry of the Termination Period unless this Agreement is terminated on such date. For greater certainty, if all Curable Matters are cured within the Termination Period without being Materially Adverse, this Agreement may not be terminated as a result of the Curable Matter having been cured.

In the event of the termination of this Agreement as provided in this Section 8.1 , this Agreement shall forthwith have no further force or effect and there shall be no obligation on the part of Parent, Buyer or Company hereunder except as set forth in Section 2.2(b), the last sentence of Section 5.6(a), the last sentence of Section 5.10 , this Article 8, Article 9, Section 10.3 and Article 11, which provisions shall survive the termination of this Agreement; provided further that, subject to Section 9.3, the termination of this Agreement in accordance with this Section 8.1 shall not relieve any party from any liability for any material breach by it of this Agreement. A termination of this Agreement shall not constitute a termination of the Confidentiality Agreement which shall continue in full force and effect in accordance with its terms.

8.2

Amendment

This Agreement, including the Plan of Arrangement, may be amended by written agreement of the parties at any time before and after the Special Meeting, but not later than the Effective Date and any such amendment may, subject to applicable Law or the Interim Order, without limitation:

(a)	change the time for performance of any of the obligations or acts of the parties;

(b)	waive any inaccuracies in or modify any representation or warranty contained in this Agreement or any document to be delivered pursuant to this Agreement;

(c)	waive compliance with or modify any of the covenants contained in this Agreement or waive or modify performance of any of the obligations of the parties; and/or

(d)	waive compliance with or modify any condition precedent contained in this Agreement.

8.3	Approval of Amendments

Company and Parent will use all commercially reasonable efforts to obtain the approvals of the Court and Shareholders in respect of any amendments to this Agreement, including the Plan of Arrangement, to the extent required by applicable Law.

ARTICLE 9 - TERMINATION PAYMENTS

9.1	Payment to Parent

Provided that neither Parent nor Buyer is in breach of or has failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, where such breach or failure would render Parent or Buyer, as the case may be, incapable of consummating the Transactions.

(a)

If there has been a Change of Recommendation by Company's board of directors, and the Shareholders do not approve the Arrangement at the Special Meeting, Company shall immediately following such Special Meeting pay (or cause to be paid) the Termination Fee to Parent in immediately available funds to an account designated by Parent.

(b)

If Parent exercises its right of termination pursuant to Section 8.1(c)(iii) [Board Recommendation; Confirmation of Board Recommendation; Change of Board Recommendation; Breach of Non-Solicit] or Section 8.1(c)(iv), then Company shall immediately pay (or cause to be paid) the Termination Fee to Parent in immediately available funds to an account designated by Parent.

(c)

If this Agreement is terminated pursuant to (I) Section 8.1(c)(v) in the circumstances where there has been no Change of Recommendation, or (II) Section 8.1(c)(vi)(B)(2); and (i) prior to the time of the Special Meeting, an Alternative Transaction has been publicly announced and has not been withdrawn prior to the Special Meeting, and (ii) at any time within the 12 months after the date of such termination, Company approves, recommends, accepts, or enters into any agreement, undertaking or arrangement in respect of, or Company or its Shareholders consummate, an Acquisition Proposal, then Company shall immediately pay (or cause to be paid) to Parent the Termination Fee, or, if Parent Expenses have previously been paid pursuant to Section 9.1(d), an additional cash amount equal to the difference between the Termination Fee and the Parent Expenses in immediately available funds to an account designated by Parent.

(d)

If Parent exercises its right of termination pursuant to Section 8.1(c)(vi); or Section 8.1(c)(vii); then Company shall immediately pay (or cause to be paid) to Parent, in immediately available funds to an account designated by Parent, Parent's reasonable and documented out-of-pocket expenses (excluding any financial advisor fees that were agreed to be contingent upon a successful completion of the Transactions) incurred in connection with this Agreement up to a maximum of $3 million (such amount so paid, the "Parent Expenses").

For greater certainty, and except as set forth in subparagraph (c) of this Section 9.1, in no circumstance shall Company be obligated to make a payment under more than one of subparagraphs (a), (b), (c) and (d) of this Section 9.1.

9.2	Payment to Company

Provided that Company is not in breach of or has failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, where such breach or failure would render Company incapable of consummating the Transactions.

(a)

If Parent shall be unable to pay on the Effective Date in full the aggregate Consideration for any reason other than the failure of any condition set out on Schedule B or Schedule D to be satisfied, Parent shall immediately thereafter pay (or cause to be paid) the Reverse Termination Fee to Company in immediately available funds to an account designated by Company.

(b)

If (i) Company is unable to obtain any applicable HSR Approval or (ii) Parent breaches the covenants set forth in Section 10.7(a) with respect to any required Novation Agreement or Other FAR 42.12 Agreement, then Parent shall immediately thereafter pay (or cause to be paid) to Company, in immediately available funds to an account designated by Company, Company's reasonable and documented out-of-pocket expenses (excluding any financial advisor fees that were agreed to be contingent upon a successful completion of the Transactions) incurred in connection with this Agreement up to a maximum of $3 million (such amount so paid, the "Company Expenses"); provided, however that the right to receive the Company Expenses pursuant to this Section 9.2(b) shall not be available to Company if its failure to fulfill any of its obligations under this Agreement, including Sections 5.2 and 10.7, has been the cause of, or resulted in the failure of Parent being unable to obtain any applicable HSR Approval in the case of clause (i) above or required Novation Agreement or Other FAR 42.12 Agreement in the case of clause (ii) above.

For greater certainty, in no circumstances shall Parent be obligated to make a payment under more than one of subparagraphs (a) and (b) of this Section 9.2.

9.3

Damages

The parties acknowledge and agree that the payment of the Termination Fee or other amounts set forth in Section 9.1, or the Reverse Termination Fee or other amounts set forth in Section 9.2, as the case may be, are payments of liquidated damages which are a genuine pre-estimate of the damages which Parent and Buyer, or Company, would suffer or incur as a result of the event giving rise to such damages and the resultant termination of this Agreement and are not a penalty. The parties further acknowledge and agree, however, that, notwithstanding any other provision in this Agreement to the contrary, in connection with any termination of this Agreement where a Termination Fee or other amount set forth in Section 9.1, or the Reverse Termination Fee or other amounts set forth in Section 9.2, is not paid or payable, Company, Parent and Buyer shall be entitled to any additional remedies set forth in this Agreement, including injunctive relief and specific performance, and all additional and other remedies available at law or in equity to which Company, Parent or Buyer, as applicable, may be entitled. Company, Parent and Buyer each irrevocably waive any rights they may have to raise a defence that any amounts that are required to be paid to Parent pursuant to Section 9.1, or to Company pursuant to Section 9.2, are excessive or punitive. Parent and Buyer, and Company, as the case may be, agree that the payment of the Termination Fee and other amounts set forth in Section 9.1, or the Reverse Termination Fee or other amounts set forth in Section 9.2, are the sole and exclusive remedies of Parent and Buyer, or Company, as the case may be, in respect of the events giving rise to the payment of such amounts; provided that the foregoing limitations shall not apply in the event of fraud or willful breach of this Agreement by a party. Notwithstanding any provision set forth in this Agreement to the contrary, including the provisions of this Section 9.3, the provisions of Section 9.2(a) shall provide Company's sole and exclusive remedy for the circumstances contemplated in Section 9.2(a).

ARTICLE 10 - PARENT, BUYER AND COMPANY COVENANTS

10.1	Indemnities

From and after the Effective Time, and subject to Section 10.2, Company shall, and Buyer shall cause Company to indemnify and hold harmless and provide advancement of expenses to, and honour all exculpation rights of, all present and past directors and officers of any member of Company and its Subsidiaries (the "Indemnified Persons") pursuant to all rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time and rights to advancement of expenses relating thereto now existing in favour of any Indemnified Person as provided in the articles of incorporation or by-laws or comparable organizing documents of any member of Company and its Subsidiaries or any indemnification contract or policy between such Indemnified Person and any member of Company and its Subsidiaries existing on the date hereof. Such rights shall survive the Effective Time and shall not be amended, repealed or otherwise modified in any manner that would adversely affect any right thereunder of any such Indemnified Person.

10.2	Directors and Officers Insurance and Other Indemnification Matters

(a)

Directors and Officers Insurance Coverage. Prior to the Effective Time, Company shall secure directors' and officers' liability tail insurance coverage effective at the Effective Time from a reputable and financially sound insurance carrier and containing terms and conditions that are no less advantageous as a whole to the directors and officers of Company and its Subsidiaries or Company and its Subsidiaries itself than those contained in Company's policy in effect on the date hereof for the current and former directors and officers of each member of Company and its Subsidiaries and Company and its Subsidiaries on a 6 year "trailing" (or "run-off") basis with respect to any claim related to any period of time at or prior to the Effective Time; provided, however, that Company shall not obtain policies providing such coverage except to the extent such coverage can be provided at an annual cost of no greater than 200% of the most recent annual premium paid by Company prior to the date hereof (the "Premium Cap"); and provided, further, that if equivalent coverage cannot be obtained, or can be obtained only by paying an annual premium in excess of the Premium Cap, Company shall only obtain coverage limits as can be obtained by paying an annual premium equal to the Premium Cap, beginning with the primary coverage of the type currently in place. Company may expend more than the Premium Cap only with the written consent of Parent.

If any member of Company and its Subsidiaries or any of their respective successors or assigns shall (i) amalgamate, consolidate with or merge or wind-up into any other person and shall not be the continuing or surviving corporation or entity, or (ii) transfer all or substantially all of its properties and assets to any person, then, and in each such case, Parent shall assume all of the obligations of Company set forth in Sections 10.1 and 10.2.

(b)

Director and Officer Indemnification. Parent shall cause, for a period of at least 6 years from the Effective Date, the organizing documents of Company as of the Effective Date to contain provisions no less favourable with respect to exculpation and indemnification of directors, officers, and employees from and against liabilities arising prior to the Effective Date than are set forth in the organizing documents of Company as of the Effective Date, except as required by applicable Law.

10.3	Third Party Beneficiaries

This Agreement is not intended to, and shall not, confer upon any other person any rights or remedies hereunder, except as required under applicable Law, or as set forth in or contemplated by the terms and provisions of Sections 4.4, 9.3, 10.1, 10.2, 11.14, this Section 10.3, the last sentence of Section 2.2(b), and the first sentence of Section 5.9 (which provisions shall for greater certainty survive the Effective Time and continue in full force and effect in accordance with their terms after the Effective Time), and the benefit of which provisions shall be deemed to have been received by Parent, Buyer or Company, as applicable, in trust, and will be held in trust, for the benefit of the third parties contemplated thereby, with the intention that such third parties shall be entitled to the benefit thereof, including direct rights of enforcement.

10.4

Guarantee

Parent unconditionally and irrevocably guarantees and agrees to be jointly and severally liable with Buyer for the due and punctual performance of each and every obligation of Buyer arising under this Agreement and in respect of the Transactions.

10.5	Termination or Other Disposition of Plans.

(a)

Termination Actions. Effective no later than the day before the Effective Time, Company and its Subsidiaries shall terminate its only Qualified Plan and such other Employee Benefit Plans as are set forth on Schedule 10.5. Before the Effective Time, Company shall provide to Buyer (a) copies of duly adopted board resolutions terminating the Qualified Plan and such other Employee Benefit Plans as are set forth on Schedule 10.5, and (b) an executed amendment to the Qualified Plan sufficient to assure compliance with all applicable requirements of the Code and regulations thereunder applicable to terminate such a plan. Notwithstanding anything in this Agreement or the Qualified Plan to the contrary, before the Effective Time, Company shall contribute all unpaid employer contributions (including matching contributions) to the Qualified Plan or provide for an appropriate accrual of such amounts.

(b)

Disposition of Apotex Plan. Effective on a day that is no later than the day before the Effective Time (the "Cessation Date"), Company shall take such action to withdraw from its participation in the Pension Plan for Employees of Apotex, Inc. and Associated Companies (the "Apotex Plan") and take such action to establish a defined contribution pension plan (the "Successor Plan") that is no less favourable in the aggregate to the defined contribution provision of the Apotex Plan to which the accounts of Company employees or employees of any wholly-owned Subsidiary of Company who were active members of the Apotex Plan as of the Cessation Date ("Transferred Members") may be transferred. Before the Effective Time, Company shall provide to Buyer copies of (i) duly adopted resolutions or evidence of authority to take such action, (ii) all amendments to the Apotex Plan necessary to effect such withdrawal, (iii) a copy of the Successor Plan, (iv) a copy of the funding agreement with respect to the Successor Plan, (v) a copy of the Statement of Investment Policies & Procedures for the Successor Plan, and (vi) a copy of the employee booklet and any other summary of provisions of the Successor Plan provided to members of the Successor Plan and their beneficiaries. Effective as of the date following the Cessation Date, Company shall cause Transferred Members to become members of the Successor Plan.

10.6	Employee Matters and Employee Benefit Matters

(a)	Employment in general.

(i)

As of the Effective Date, each then-current Company employee or employee of any wholly-owned Subsidiary of Company (each, a "Continuing Company Employee") shall remain an employee of Company or of any wholly-owned Subsidiary of Company, or be made an employee of Parent or Buyer. Other than as otherwise specified in this Section 10.6, nothing in this Agreement or this Section 10.6(a) shall limit Parent's ability to modify the conditions of or terminate the employment of any Continuing Company Employee at any time after the Effective Date (subject to the limitations set forth under any Employment Agreement, Parent severance pay plan, policy, practice or procedure, or applicable Law).

(ii)

At least 5 business days before the Effective Date, Company will provide Parent and Buyer a list of all the current Business Personnel as of such date along with their compensation and accrued holiday, vacation or personal leave time contemplated as of the Effective Date, pay cycles for all groups of employees, original hire date, home address, status under the United States Fair Labor Standards Act, as amended, and analogous laws, and base pay rate. Company shall update such list as of the Effective Date.

(iii)

For the avoidance of doubt, Parent and Buyer shall be responsible for any obligation with respect to the Business Personnel under the United States Worker Adjustment Retraining and Notification Act of 1988, any state, local, or provincial equivalent including the Employment Standards Code (Manitoba) (collectively, "WARN") arising or accruing on or after the Effective Date. The parties hereto agree to cooperate in good faith to determine whether any notification may be required under WARN as a result of the Transactions.

(b)	Employee Benefits – United States Employees.

(i)

Parent currently intends, subject to its ongoing review of Company's terms and conditions of employment, to provide to each Continuing Company Employee ordinarily resident in the United States terms and conditions of employment that are comparable in the aggregate (including with respect to base pay and Employee Benefit Plans, and including equity-based or other incentive compensation plans for executive employees in appropriately comparable subsidiary positions of Parent) to such terms and conditions of employment that Parent provides, in the aggregate, as of the date hereof to similarly situated Parent employees (including awarding service credit to each Continuing Company Employee for his or her past service with Company for purposes of eligibility and vesting only in each such Employee Benefit Plan of Parent, but not benefit accrual, for any of Parent's Employee Benefit Plans; provided, however, that in no event shall such credit result in the duplication of benefits. With regard to severance, however, notwithstanding the foregoing expression of intent, Parent currently intends that each Continuing Employee's service with Company shall be counted for determining the amount of severance from Parent.)

(ii)

Parent currently intends, subject to its ongoing review of Company's plans and benefits, to offer to and extend to Continuing Company Employees the medical, dental, health, vision, dependent care, life insurance and disability plans, and other fringe and severance benefits of Parent applicable to Continuing Company Employees ordinarily resident in the United States under the terms and conditions of such Parent plans and benefits then in effect. Notwithstanding the foregoing expression of intent, for purposes of providing group health plan coverage, (A) Parent shall provide the Continuing Employees with health plan coverage identical or comparable to that provided to Parent's employees, and (B) Parent shall waive, or cause to be waived, all pre-existing conditions or eligibility waiting periods for each Continuing Company Employee (and for the spouse and dependents of each such Continuing Company Employee) covered by Parent's group health plan. Parent also currently intends to allow Continuing Company Employees to participate immediately in its 401(k) plan, under the terms of such plan, giving credit for vesting and eligibility for service with Company or its Subsidiaries.

(c)	Employee Benefits – Canadian Employees.

(i)

Parent currently intends, subject to its ongoing review of Company's terms and conditions of employment, and subject to applicable Law, to provide to each Continuing Company Employee ordinarily resident in Canada terms and conditions of employment that are substantially comparable in the aggregate (including with respect to base pay and Employee Benefit Plans), than such terms and conditions of employment that Company provides, in the aggregate as of the date hereof, to Company employees (including awarding service credit to each Continuing Company Employee for his or her past service with Company for purposes of eligibility and vesting only, but not benefit accrual, for any of Parent's employee benefit plans; provided, however, that in no event shall such credit result in the duplication of benefits).

(ii)

Parent currently intends, subject to its ongoing review of Company's plans, to continue Company's Employee Benefit Plans, programs, policies, practices and procedures, to include (by way of example but not limitation) the following benefits: Medical, Prescription Drug, Dental, Vision, Life Insurance, Holiday Pay, Paid Time Off, Short and Long Term Disability, Tuition Reimbursement, and Severance (in compliance with applicable Law) and to make available equity based or other incentive compensation plans for Canadian executive employees of Company in appropriately comparable subsidiary positions to those of Parent.

(iii)

With respect to severance, however, notwithstanding the foregoing expression of intent, Parent currently intends that each Continuing Employee's service with Company shall be counted for determining the amount of severance from Parent.

(d)

Nothing in this Section 10.6 or any other provision of this Agreement shall (i) create or confer any right of continued employment for any person, (ii) be construed to establish, amend or modify any Employee Benefit Plan, compensation arrangement or other employment agreement, (iii) subject to Section10.5, prohibit or limit the ability of Parent or any of its Affiliates to amend, modify or terminate without notice any benefit or compensation plan, program, agreement or arrangement at any time assumed, established, sponsored or maintained by any of them, (iv) limit or restrict any right which employees may presently enjoy under contract or common-law or (v) confer any rights or benefits, including any third-party beneficiary rights, on any current Company employee or employee of any wholly-owned Subsidiary of Company person.

(e)

Continuing Company Employee Transferees. Parent currently intends, subject to Parent's existing and future plans and policies, to continue such programs and policies as currently are in force to compensate or equalize the compensation packages of Canadian citizen employees who work as expatriates in the United Sates, or United States citizen employees who work as expatriates in Canada, pursuant to Company's request for such assignment or secondment.

10.7

Novation

(a)	Parent, Buyer and Company shall act diligently and reasonably, and shall cooperate with each other, to secure any Novation Agreement or Other FAR 42.12 Agreement from any Agency required to be obtained by them in order to permit the consummation of the Transactions.

(b)

To the extent that any Novation Agreement or Other FAR 42.12 Agreement is required and in the event that any and all Novation Agreements or Other FAR 42.12 Agreements of any Assigned Contract, or any right or benefit arising thereunder or resulting therefrom, shall not have been obtained within 90 days after the Effective Date, then this Agreement, to the extent permitted by Law, shall constitute full and equitable assignment by Company to Buyer of all of right, title and interest of Company in and to, and all liabilities of Company under, such Assigned Contracts, and Buyer shall be deemed Company's agent for purpose of completing, fulfilling and discharging all liabilities of Company under any such Assigned Contract. The parties shall take all necessary steps and actions to provide Buyer with the benefits of such Assigned Contracts, and to relieve Company of the performance and other obligations thereunder, including entry into subcontracts for the performance thereof. Parent and Buyer agree to pay, perform and discharge, and indemnify Company against and hold Company harmless from, all liabilities of Company relating to such performance or failure to perform under such Assigned Contracts provided that Buyer receives the rights and benefits thereunder.

(c)

In the event that Company shall be unable to make the equitable assignment described in Section 10.7(b), or if such attempted assignment would give rise to any right of termination, or would otherwise adversely affect the rights of Company or Buyer under any such Assigned Contract, or would not assign all of the rights of Company thereunder, Company and Buyer shall continue to cooperate and use all reasonable efforts to provide Buyer with all such rights.

ARTICLE 11 - GENERAL

11.1	Confidentiality and Public Disclosure

Company and Parent shall consult with each other as to the general nature of any news releases or public statements with respect to this Agreement or the Transactions, and shall use their respective commercially reasonable efforts not to issue any news releases or public statements inconsistent with the results of such consultations. Subject to applicable Law, each party shall use its commercially reasonable efforts to enable the other party to review and comment on all such news releases and public statements prior to the release thereof. Company and Parent shall consult with each other in preparing and making any filings and communications in connection with any Regulatory Approvals and in seeking any third-party consents contemplated in Section 5.2 or Novation Agreements or Other FAR 42.12 Agreements contemplated in Section 10.7.

11.2	Assignment

Except as expressly permitted by the terms hereof, neither this Agreement including (for greater certainty) the Plan of Arrangement, nor any of the rights, interests or obligations hereunder or thereunder shall be assigned by any of the parties without the prior written consent of the other parties. Parent and Buyer may each assign all or any part of its rights or obligations under this Agreement to one or more of its direct or indirect wholly-owned Subsidiaries or any combination thereof provided that if such assignment takes place, Parent shall continue to be fully liable as primary obligor and not merely as surety and, on a joint and several basis with any such entity, to Company for any default in performance by the assignee of any of Parent's or Buyer's obligations hereunder and Parent agrees to provide to Company a guarantee in form and substance satisfactory to Company in respect thereof.

11.3	Binding Effect

This Agreement, including (for greater certainty) the Plan of Arrangement, shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns. No third party shall have any rights under this Agreement except as expressly set forth in Section 10.3.

11.4	Representatives

Each of Company, Parent and Buyer shall ensure that its and its Subsidiaries' Representatives (other than persons who are insiders only as a result of their shareholdings) are aware of the provisions of this Agreement, and each of Company, Parent and Buyer shall be responsible for any breach of those provisions by any of those persons, respectively.

11.5	Responsibility for Expenses

Except as provided in Section 5.10, Section 9.1 and Section 9.2, each party to this Agreement shall pay its own expenses incurred in connection with this Agreement and the completion of the Transactions, whether or not the Arrangement and the Transactions are completed. Notwithstanding the foregoing, Parent and Company shall each be responsible for one half of any fees associated with any filings made pursuant to applicable Antitrust Law.

11.6

Time

Time shall be of the essence of this Agreement in each and every matter or thing herein provided.

11.7

Notices

(a)	Each party shall give prompt notice to the other of:

(i)	the occurrence or failure to occur of any event that causes, or would reasonably be expected to cause, any representation or warranty on its part contained in this Agreement to be untrue or inaccurate or; and

(ii)	any material breach of its obligations under this Agreement, provided that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement.

(b)

Each of Company and Parent shall give prompt notice to the other of any previously undisclosed fact of which it becomes aware after the date of this Agreement that is, individually or in the aggregate, or would reasonably be expected to be, in the case of Company, Materially Adverse, or, in the case of Parent, that is, or would reasonably be expected to be, materially adverse to the ability of Parent or Buyer to perform its obligations under this Agreement.

(c)	Any notice or other communications required or permitted to be given under this Agreement shall be sufficiently given if delivered in person, by overnight courier, or if sent by facsimile transmission (provided such transmission is recorded as being transmitted successfully):

(i)	in the case of Company, to the following address:

Cangene Corporation
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Attention: ▇▇▇▇▇▇▇ St. ▇▇▇▇▇▇▇, General Counsel