INDEMNIFICATION AGREEMENT BETWEEN 4325231 CANADA INC. AND LORUS THERAPEUTICS INC. AND NUCHEM PHARMACEUTICALS INC. AND GENESENSE TECHNOLOGIES INC. MADE AS OF July 10, 2007 McCarthy Tétrault LLP
EXHIBIT
99.10
BETWEEN
4325231
CANADA INC.
AND
AND
▇▇▇▇▇▇
PHARMACEUTICALS INC.
AND
GENESENSE
TECHNOLOGIES INC.
MADE
AS OF
July
10, 2007
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP
THIS
AGREEMENT is made as of July 10, 2007.
BETWEEN:
4325231
CANADA INC., a corporation incorporated under the laws of Canada
(“Old Lorus”)
-
and -
LORUS
THERAPEUTICS INC., a corporation incorporated under the laws of Canada
(“New Lorus”)
-
and -
▇▇▇▇▇▇
PHARMACEUTICALS INC., a corporation incorporated under the laws of the
Province of Ontario (“▇▇▇▇▇▇”)
-
and -
GENESENSE
TECHNOLOGIES INC., a corporation incorporated under the laws of Canada
(“GeneSense”)
WHEREAS
Old Lorus, New Lorus and certain others have entered into the Arrangement
Agreement, pursuant to which Old Lorus agreed to reorganize its business (the
“Arrangement”) by way of a plan of arrangement pursuant to
section 192 of the Canada Business Corporations Act in accordance with
the terms set forth therein;
AND
WHEREAS pursuant to the Arrangement, all of the Assets have been
transferred to a Lorus Party pursuant to the Transfer Transactions;
AND
WHEREAS in connection with the Arrangement, Old Lorus will change its
name to its incorporation number, 4325231 Canada Inc., and New Lorus will change
its name to Lorus Therapeutics Inc.;
AND
WHEREAS without limiting any of the provisions of this Agreement and
subject to the terms and conditions set forth herein, the Lorus Parties have
agreed to indemnify the Indemnified Parties from and against all Losses incurred
by any of the Indemnified Parties which arise out of any matter or thing
occurring (a) prior to, at or after the Effective Time and directly or
indirectly relating to any of the Assets or the conduct of the business of
Old
Lorus or any Lorus Party prior to the Effective Time (b) prior to, at or after
the Effective Time as a result of any and all interests, rights, Liabilities
and
other matters relating to the Assets, and (c) prior to or at the Effective
Time
and directly or indirectly relating to any of the activities of Old Lorus or
the
Arrangement;
NOW
THEREFORE in consideration of the premises and the respective covenants
and agreements contained herein and other good and valuable consideration (the
receipt of which is hereby acknowledged), the parties hereto covenant and agree
as follows:
SECTION 1
INTERPRETATION
|
1.1
|
Definitions
|
In
this Agreement, including the recitals hereto, unless there is something in
the
subject matter or context inconsistent therewith, the following terms will
have
the following meanings, respectively:
|
|
1.1.1
|
“Agreement”
means this Indemnification
Agreement;
|
|
|
1.1.2
|
“Arrangement”
has the meaning ascribed thereto in the recitals of this
Agreement.
|
|
|
1.1.3
|
“Arrangement
Agreement” means the arrangement agreement dated as of May 1,
2007 between Old Lorus, NuChem, GeneSense, New Lorus, Pinnacle
International Lands, Inc. and 6707157 Canada
Inc.;
|
|
|
1.1.4
|
“Assets”
means, collectively, the assets and the Subsidiary Shares transferred,
directly or indirectly, by Old Lorus to the Lorus Parties, as applicable,
pursuant to the Transfer Transactions (including any assets held
in trust
by Old Lorus for a Lorus Party);
|
|
|
1.1.5
|
“Authorized
Authority” means, in relation to any Claim, any (i) federal,
provincial, municipal or local governmental body (whether administrative,
legislative, executive or otherwise), both domestic and foreign,
(ii) court, agency, authority, commission, instrumentality,
regulatory body or other entity exercising executive, legislative,
judicial, taxing, regulation or administrative powers or functions
of or
pertaining to government, (iii) court, arbitrator, commission or body
exercising judicial, quasi-judicial, administrative or similar functions,
and (iv) other body or entity created under the authority of or
otherwise subject to the jurisdiction of any of the foregoing, including
securities exchanges, in each case having jurisdiction over such
Claim;
|
|
|
1.1.6
|
“Business
Day” means a day other than a Saturday, Sunday or other day when
banks in Toronto, Ontario or Vancouver, British Columbia, are not
generally open for business;
|
|
|
1.1.7
|
“Canadian
Securities Regulatory Authorities” has the meaning ascribed to
such term in National Instrument 14-101 - Definitions, of the Canadian
Securities Administrators, as such instrument may be amended or
supplemented from time to time, or any similar instrument, rule or
regulation hereafter adopted by any of the Canadian Securities Regulatory
Authorities having substantially the same effect as such
instrument;
|
-
2
-
|
|
1.1.8
|
“Claims”
means any claim, demand, action, suit, arbitration, mediation, proceeding,
investigation or regulatory inquiry with respect to any given matter
for
which an Indemnified Party is entitled to be indemnified
hereunder;
|
|
|
1.1.9
|
“Claim
Notice” has the meaning ascribed thereto in
Section 4.1.1;
|
|
|
1.1.10
|
“Confidential
Information” has the meaning ascribed thereto in
Section 7.1;
|
|
|
1.1.11
|
“Counsel”
means legal counsel representing a Party hereunder with respect to
any
Claim;
|
|
|
1.1.12
|
“Damage
Recoveries” has the meaning ascribed thereto in
Section 2.2;
|
|
|
1.1.13
|
“Demand”
has the meaning ascribed thereto in
Section 2.3.1;
|
|
|
1.1.14
|
“Determination
Date” means the day upon which a Final Determination
occurs;
|
|
|
1.1.15
|
“Effective
Date” means the date of execution of this
Agreement;
|
|
|
1.1.16
|
“EffectiveTime”
means 12:01 a.m. (Toronto time) on the Effective
Date;
|
|
|
1.1.17
|
“Final
Determination” means, with respect to any Claim, the point in
time when such Claim has been finally resolved for all purposes,
which
will be deemed to occur upon the happening of the earlier of the
following
events:
|
|
|
(i)
|
a
binding Settlement Agreement being reached among all parties to the
Claim
and the filing of all applicable discontinuances and fully executed
releases in form and content acceptable to New Lorus and the Indemnified
Parties, acting reasonably and without undue delay, delivered amongst
such
parties as appropriate, and the satisfaction by or on behalf of New
Lorus
of any obligations it may have pertaining to such agreement or agreements;
and
|
|
|
(ii)
|
the
final resolution of each of the actions comprising the Claim by the
Authorized Authority, including the completion of any appeal proceedings
relating to a Judgment or the expiry of all applicable appeal periods,
if
any, and the satisfaction by or on behalf of New Lorus of any obligations
it may have pertaining to such
Claim;
|
|
|
1.1.18
|
“GeneSense”
means GeneSense Technologies Inc., a corporation existing under the
laws
of Canada;
|
|
|
1.1.19
|
“Governmental
Authority” means any federal, provincial, territorial, state,
local or foreign government or any department, agency, board, tribunal
(judicial, quasi-judicial, administrative, quasi-administrative or
arbitral) or authority thereof or other political subdivision thereof
and
any Person exercising executive, legislative, judicial, regulatory
or
administrative
|
-
3
-
|
|
|
functions
of, or pertaining thereto or the operation thereof, including the
Canadian
Securities Regulatory Authorities (or any successor to any of them),
the
United States Securities and Exchange Commission (or any successor
entity), the Toronto Stock Exchange and the American Stock
Exchange;
|
|
|
1.1.20
|
“Indemnified
Parties” means Old Lorus and each of its directors, officers and
employees in respect of any matter for which an Indemnified Party
is
entitled to be indemnified hereunder and “Indemnified
Party” means any one of the Indemnified
Parties;
|
|
|
1.1.21
|
“Indemnity”
means the indemnity given by New Lorus as set forth in this
Agreement;
|
|
|
1.1.22
|
“Judgment”
means an order, decree, assessment or other form of decision of an
Authorized Authority which is in effect and has not been appealed
or, if
appealed, the effect of the order has not been stayed pending the
outcome
of such appeal;
|
|
|
1.1.23
|
“Legal
Expenses” means all reasonable legal fees, disbursements, court
or hearing costs and related expenses, disbursements or costs pertaining
to the assessment or conduct of a Claim, including costs associated
with
preliminary or interlocutory proceedings, hearings, interrogations,
discoveries, trials, appeals, negotiations, settlements and
comprises;
|
|
|
1.1.24
|
“Liabilities”
means, with respect to any Person, any liability, commitment or obligation
of such Person of any kind, character or description, whether known
or
unknown, absolute or contingent, accrued or unaccrued, disputed or
undisputed, liquidated or unliquidated, secured or unsecured, joint
or
several, due or to become due, vested or unvested, and whether or
not the
same is required to be accrued on the financial statements of such
Person;
|
|
|
1.1.25
|
“Lorus
Parties” means, collectively, New Lorus, ▇▇▇▇▇▇ and GeneSense and
“Lorus Party” means any of
them;
|
|
|
1.1.26
|
“Losses”
means all damages, losses, expenses (including fines and penalties),
third
party costs and Legal Expenses which are suffered, sustained, paid
or
incurred in relation to any Claim or
Liability;
|
|
|
1.1.27
|
“Nominee”
means any nominee which New Lorus appoints to perform the duties
and
responsibilities of New Lorus hereunder, if any such nominee is so
appointed;
|
|
|
1.1.28
|
“▇▇▇▇▇▇”
means ▇▇▇▇▇▇ Pharmaceuticals Inc., a corporation existing under the
laws
of the Province of Ontario;
|
|
|
1.1.29
|
“Parties”
means, collectively, Old Lorus and New
Lorus;
|
-
4
-
|
|
1.1.30
|
“Person”
includes any individual, firm, partnership, joint venture, limited
liability company, unlimited liability company, association, trust,
trustee, executor, administrator, legal personal representative,
estate,
group, body corporate, corporation, unincorporated association or
organization, Governmental Authority, syndicate or other entity,
whether
or not having legal status;
|
|
|
1.1.31
|
“Power”
has the meaning ascribed thereto in Section
3.1.1;
|
|
|
1.1.32
|
“Settlement
Agreement” means any agreement entered into by a Party which
requires or will require an Indemnified Party (i) to pay any amounts
to,
or for the benefit of, any other party to proceedings relating to
Claims,
or (ii) to otherwise incur Losses;
|
|
|
1.1.33
|
“Solvency
Event” means the occurrence of one or more of the following
events:
|
|
|
(i)
|
if
a decree or order of a court of competent jurisdiction is entered
adjudging a Lorus Party a bankrupt or insolvent or approving as properly
filed a petition seeking the winding-up of a Lorus Party under the
Companies’ Creditors Arrangement Act (Canada), the Bankruptcy
and Insolvency Act (Canada) or the Winding Up Act (Canada)
or any other bankruptcy, insolvency or analogous laws or issuing
sequestration or process of execution against, or against any substantial
part of the assets of a Lorus Party or ordering the winding up or
liquidation of its affairs, and any such decree or order continues
unstayed and in effect for a period of 10 days;
or
|
|
|
(ii)
|
if
a Lorus Party becomes insolvent, makes any assignment in bankruptcy
or
makes any other assignment for the benefit of creditors, makes any
proposal under the Bankruptcy and Insolvency Act (Canada) or
any comparable law, seeks relief under the Companies’
Creditors Arrangement Act (Canada), the Winding Up Act
(Canada) or any other bankruptcy, insolvency or analogous law,
is
adjudged bankrupt, files a petition or proposal to take advantage
of any
act of insolvency, consents to or acquiesces in the appointment of
a
trustee, receiver, receiver and manager, interim receiver, custodian,
sequestrator or other Person with similar powers of itself or of
all or
any substantial portion of its assets, or files a petition or otherwise
commences any proceeding seeking any reorganization, arrangement,
composition or readjustment under any applicable bankruptcy, insolvency,
moratorium, reorganization or other similar law affecting creditors’
rights or consents to, or acquiesces in, the filing of such a
petition;
|
|
|
1.1.34
|
“Subsidiary
Shares” means, collectively, all of the shares in the capital of
(a) GeneSense and (b) ▇▇▇▇▇▇ transferred, directly or indirectly,
by Old
Lorus to New Lorus pursuant to a Transfer
Transaction;
|
-
5
-
|
|
1.1.35
|
“Tax”
means all federal, provincial, territorial, state, county, municipal,
local or foreign taxes, duties, imposts, levies, assessments, tariffs
and
other charges imposed, assessed or collected by a Governmental Authority,
including any gross income, net income, gross receipts, business,
royalty,
capital, capital gains, goods and services, value added, severance,
stamp,
franchise, occupation, premium, capital stock, sales and use, real
property, land transfer, personal property, ad valorem, transfer,
license, profits, windfall profits, environmental, payroll, employment,
employer health, pension plan, excise, severance, stamp, occupation,
or
premium tax, all withholdings on amounts paid to or by the Vendor,
all
employment insurance premiums, Canada, Ontario and any other pension
plan
contributions or premiums; and
|
|
|
1.1.36
|
“Transfer
Transactions” means, collectively, the transactions contemplated
by (a) the asset transfer agreement dated the date hereof between
Old
Lorus and GeneSense in connection with, among other things, certain
assets
of Old Lorus, (b) the asset transfer agreement dated the date hereof
between GeneSense and New Lorus in connection with, among other things,
certain patent assets of GeneSense, (c) the asset transfer agreement
dated
the date hereof between Old Lorus and GeneSense in connection with,
among
other things, the Virulizun patent assets and small molecule technology
of
Old Lorus, (d) the asset transfer agreement dated the date hereof
between
Old Lorus and GeneSense in connection with, among other things, the
prepaid expenses and receivables of Old Lorus, (e) the share purchase
agreement dated the date hereof between Old Lorus and New Lorus with
respect to the shares of GeneSense, and (f) the share purchase agreement
dated the date hereof between Old Lorus and New Lorus with respect
to the
shares of ▇▇▇▇▇▇.
|
|
1.2
|
Extended
Meanings
|
In
this Agreement words importing the singular number only include the plural
and
vice versa, words importing any gender include all genders and words importing
persons include individuals, corporations, limited and unlimited liability
companies, general and limited partnerships, associations, trusts,
unincorporated organizations, joint ventures and Governmental
Authorities. The term “including” means “including without limiting
the generality of the foregoing”.
|
1.3
|
Interpretation
|
The
division of this Agreement into Articles, Sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and will
not
affect in any way the meaning or interpretation of this Agreement. The Parties
acknowledge that their respective legal counsel have reviewed and participated
in settling the terms of this Agreement, and the Parties hereby agree that
any
rule of construction to the effect that any ambiguity is to be resolved against
the drafting Party will not be applicable in the interpretation of this
Agreement.
-
6
-
|
1.4
|
Article
References
|
Unless
the contrary intention appears, references in this Agreement to an Article,
Section, subsection, paragraph or Schedule by number or letter or both refer
to
the specified Article, Section, subsection, paragraph or Schedule, respectively,
bearing that designation in this Agreement.
|
1.5
|
Date
for any Action
|
In
the event that any date by or on which any action is required or permitted
to be
taken hereunder by any of the Parties is not a Business Day in the place where
the action is required or permitted to be taken, such action will be required
to
be taken by or on the next succeeding day which is a Business Day.
|
1.6
|
Governing
Law
|
This
Agreement will be governed by and interpreted in accordance with the laws of
the
Province of Ontario and the laws of Canada applicable therein. Each Party hereto
hereby irrevocably attorns to the non-exclusive jurisdiction of the courts
of
the Province of Ontario in respect of all matters arising under or in relation
to this Agreement.
SECTION 2
INDEMNITY
|
2.1
|
Covenant
to Indemnify
|
On
and subject to the terms and conditions hereof, the Lorus Parties hereby jointly
and severally covenant and agree that:
|
|
2.1.1
|
each
Lorus Party has acquired the Assets in accordance with the terms
of the
Transfer Transactions, on an “as is, where is” basis and subject to any
and all liens, encumbrances, agreements, commitments, rights of others
and
Liabilities pertaining thereto howsoever and whensoever
arising;
|
|
|
2.1.2
|
as
of the Effective Time, the Lorus Parties will, on a joint and several
basis, assume and be liable for all Liabilities of Old Lorus for,
and
indemnify, defend and save harmless the Indemnified Parties from
and
against all Losses suffered, sustained, paid or incurred by any of
the
Indemnified Parties, howsoever or by whomsoever caused which arise
out of,
any matter or thing occurring (a) prior to, at or after the Effective
Time
and directly or indirectly relating to any of the
Assets (including Losses for income, sales, excise and other Taxes
arising
in connection with the transfer of any Asset from Old Lorus, ▇▇▇▇▇▇
or
GeneSense to any Lorus Party) or the conduct of the business of Old
Lorus
or any Lorus Party prior to the Effective Time, (b) prior to, at
or after
the Effective Time as a direct or indirect result of any and all
interests, rights, obligations, indemnities, guarantees (whether
financial
or for performance), Liabilities and agreements of any kind whatsoever
and
whether matured or not, direct or indirect, contingent or absolute,
held
or provided by,
|
-
7
-
|
|
|
or
by which, Old Lorus or any Lorus Party is or was, prior to the
Effective
Time, bound relating to the Assets, including any guarantees, sureties,
indemnities, letters of credit or any other obligations that are
created,
whether by law or contract or any other way howsoever, and whether
as a
party or as agent, guarantor, surety or indemnitor or otherwise,
provided
that the foregoing will not extend to any guarantees, sureties,
indemnities, letters of credit or other Liabilities of Old Lorus
given, or
relating to events occurring, after the Effective Time, and (c)
prior to
or at the Effective Time and directly or indirectly relating to
any of the
activities of Old Lorus, any Lorus Party, including the activities
of any
director, officer, employee or other representative of Old Lorus,
or the
Arrangement, including any payments, obligations or Liabilities
directly
or indirectly relating to any exercise of the Dissent Rights (as
defined
in the Arrangement Agreement) or similar rights in connection with
the
Arrangement, except:
|
|
|
(i)
|
in
respect of Tax for any taxation year in any way caused by, arising
directly or indirectly or in any manner whatsoever from any event,
or fact
occurring after the Effective Time, but for greater certainty excluding
any Taxes payable as a result of the
Arrangement;
|
|
|
(ii)
|
in
respect of Tax where, after the Effective Time, Old Lorus has waived
in
writing any time limitation, statutory or otherwise for any taxation
period ending prior to the Effective Time;
or
|
|
|
(iii)
|
in
respect of Tax where, after the Effective Time, Old Lorus requests
or
knowingly initiates a review, ruling or opinion of any matter or
takes any
other action that affects the tax position of Old Lorus for any taxation
period ending prior to the Effective
Time;
|
|
|
2.1.3
|
a
Lorus Party will not be entitled to exercise and each Lorus Party
hereby
waives any rights or remedies such Lorus Party may now or in the
future
have against any of the Indemnified Parties in respect of Liabilities
assumed hereunder, including the right to name any of the Indemnified
Parties as a third party to any action commenced by any third party
against such Lorus Party; and
|
|
|
2.1.4
|
without
limiting the generality of any agreement referred to in the definition
of
“Transfer Transactions” or any conveyance or other document entered into
in connection therewith, each Lorus Party will see to the timely
performance of all obligations relating to the Assets transferred
to such
Lorus Party which, in the absence of this Agreement, would be the
responsibility of Old Lorus. The Lorus Parties will be liable, on
a joint
and several basis, to Old Lorus for and will, in addition, indemnify
Old
Lorus from and against, all Losses suffered, sustained, paid or incurred
by Old Lorus should a Lorus Party fail in the timely performance
of such
obligations.
|
-
8
-
|
2.2
|
Costs
and Damages
|
If,
following a Final Determination, the parties to Claims made by them and
applicable to any matter for which Indemnified Parties are entitled to be
indemnified hereunder, other than any of the Indemnified Parties, are
unsuccessful in whole or in part with respect of such Claims such that damages
and costs (“Damage Recoveries”) are awarded to any of the
Indemnified Parties, New Lorus will, provided that it is not then in default
of
its obligations hereunder relating to such Claims, be entitled to receive,
and
such Indemnified Parties will forthwith upon receipt thereof pay, or direct
the
payment by the payor of, all such Damage Recoveries to New Lorus, provided
that
the Indemnified Parties will be entitled to retain such amounts as may be
necessary to compensate for the Taxes paid by any of the Indemnified Parties,
if
any, resulting from the receipt by it of such Damage Recoveries or to satisfy
other Losses suffered, sustained, paid or incurred by any of the Indemnified
Parties pursuant to Claims if not already paid for by New Lorus.
|
2.3
|
Payments
under Indemnity
|
|
|
2.3.1
|
Subject
to the terms and conditions hereof and upon any of the Indemnified
Parties
sustaining, paying, incurring or suffering any Loss for which such
Indemnified Parties are entitled to be indemnified hereunder, each
of such
Indemnified Parties may provide a demand for payment to any or all
of
the Lorus Parties (a “Demand”), which Demand
will specify such Loss sustained, paid, incurred or suffered or to
be
incurred or suffered by the Indemnified Party and will be accompanied
by
copies of any relevant Judgments, documents, invoices or instruments
(along with reasonable evidence of such payment or the requirement
for
payment substantiating the amount and nature of the Loss incurred
or to be
incurred).
|
|
|
2.3.2
|
Subject
to the terms and conditions hereof, the Lorus Parties will make the
required payment or relieve the Indemnified Parties of the obligation
to
incur or suffer the relevant Loss within (i) 30 days after receipt of
a Demand, or (ii) within such lesser period as may be required in
connection with a Judgment.
|
|
2.4
|
Termination
of Power
|
|
|
2.4.1
|
Subject
to Section 2.4.2, an Indemnified Party may, upon written notice given
to
New Lorus, terminate the Power if (i) any Lorus Party has defaulted
in the
payment of a proper Demand on the basis contemplated in Section 2.3
without full and complete remedy of such default within 30 days of
receipt of written notice of such default, or (ii) Old Lorus shall
have
determined, in its sole discretion, that New Lorus shall not have
conducted the proceedings relating to any Claim in a competent, timely
or
professional manner.
|
|
|
2.4.2
|
It
will be a condition precedent to the right of the Indemnified Parties
to
elect to terminate the Power under this Section 2.4, that the
Indemnified Parties will have unequivocally undertaken in writing
to
thereafter assume and conduct proceedings relating to any Claim in
a
competent and professional manner.
|
-
9
-
|
|
|
Notwithstanding
any such termination of the Power, the Indemnity will continue
to apply,
including the obligation to indemnify for all Losses, provided
however:
|
|
|
(i)
|
New
Lorus will be entitled to access to all written information relating
to
any such Claim on the same basis as the right granted to the Indemnified
Parties pursuant to Section 3.7.1 and will have the right to monitor
and
be informed of (each on a without prejudice basis) all material steps
and
proceedings relating to any Claim on the same basis as the right
granted
to the Indemnified Parties pursuant to Section 3.7.2;
and
|
|
|
(ii)
|
the
Indemnified Parties may not, without the prior written consent of
New
Lorus, acting reasonably and without delay, settle any Claim or consent
to
entry of a Judgment with respect thereto which imposes any indemnification
obligations upon New Lorus.
|
|
|
2.4.3
|
In
the event that the Indemnified Parties elect to terminate the Power
other
than pursuant to the terms of this section 2.4, the Indemnified Parties
will not be entitled any longer to indemnification pursuant to the
terms
of this Agreement.
|
|
2.5
|
Payment
of Interest on Unpaid
Amounts
|
Any
amount owed to an Indemnified Party by a Lorus Party hereunder remaining unpaid
will bear interest calculated daily and compounded monthly from the day such
amount was due until the day such amount was paid, at the rate of
1% per annum above the annual rate of interest designated
by the main branch in Toronto of Royal Bank of Canada as its reference rate
for
Canadian dollar commercial loans made in Canada and which is announced by such
bank as its prime rate.
SECTION 3
POWER
OF ATTORNEY
|
3.1
|
Granting
of Power
|
|
|
3.1.1
|
On
and subject to the terms and conditions hereof, each of the Indemnified
Parties, hereby irrevocably appoints New Lorus and New Lorus’s Nominee (if
so appointed by New Lorus), as its sole and exclusive attorney and
agent,
such parties to be entitled to act independently or jointly, for
any and
all purposes associated with all Claims with full and absolute power
(herein the “Power”) to negotiate, settle, compromise,
litigate or otherwise deal with the same in New Lorus’s absolute and
unfettered discretion through to a Final Determination, which Power
will,
without limiting the generality of the foregoing, include the
following:
|
|
|
(i)
|
the
right to retain or confirm the retention of
Counsel;
|
-
10
-
|
|
(ii)
|
subject
to section 3.3.3(i), the right to instruct Counsel from time to time
as
may be necessary or prudent;
|
|
|
(iii)
|
the
power to settle or compromise a Claim, but only if such settlement
or
compromise (A) includes an unconditional release of such Indemnified
Party
from all Liability on such Claim and (B) does not include a statement
as
to or an admission of fault, culpability or a failure to act by or
on
behalf of any Indemnified Party;
|
|
|
(iv)
|
subject
to clause (iii) of this Section 3.1.1, the power and authority to
direct
all Authorized Authority proceedings on behalf of the Indemnified
Parties
and make all decisions pertaining
thereto;
|
|
|
(v)
|
subject
to Section 3.4.2, the power to commence and conduct in the name of
the
Indemnified Parties any counterclaims or claim over against third
Persons
in respect of or related to any Claim and the subject matter thereof;
and
|
|
|
(vi)
|
to
pay on behalf of the Indemnified Parties, any amounts required to
effect
or assist in ultimately effecting a Final
Determination.
|
|
|
3.1.2
|
Subject
to Sections 2.4, 3.3 and 3.4, the Power will be irrevocable by the
Indemnified Parties until a Final Determination has occurred, but
may be
exercised by New Lorus or New Lorus’s Nominee through any individuals
designated by New Lorus or New Lorus’s Nominee for that purpose from time
to time, which individuals and New Lorus’s Nominee may, subject to the
provisions hereof, be changed by New Lorus or on its behalf at the
sole
discretion of New Lorus. New Lorus will, within a reasonable time,
notify
the Indemnified Parties in writing as to appointments or changes
in New
Lorus’s Nominee or the designated individuals of New Lorus or New Lorus’s
Nominees, if any, who will be authorized to exercise the Power on
behalf
of New Lorus.
|
|
3.2
|
Acceptance
of Appointment
|
By
its execution hereof, New Lorus hereby accepts, on behalf of itself and its
Nominee, if any, its appointment or their respective appointments as attorney
for and on behalf of the Indemnified Parties on the basis set forth
herein.
|
3.3
|
Conduct
of Claims and Precondition of
Power
|
|
|
3.3.1
|
New
Lorus will, within 15 days of receiving a Claim Notice, or such shorter
period as may be appropriate in the circumstances to avoid any prejudice
or increased potential for Losses, in respect of any Claim, give
notice in
writing to the applicable Indemnified Party
that:
|
-
11
-
|
|
(i)
|
New
Lorus has irrevocably and unconditionally confirmed that the entirety
of
such Claim is one for which the Indemnified Party is entitled to
be fully
indemnified under the terms of this
Agreement;
|
|
|
(ii)
|
New
Lorus is unable, without further inquiry, to determine whether such
Claim
is one for which the Indemnified Party is entitled to be indemnified,
in
whole or in part, under the terms of this
Agreement;
|
|
|
(iii)
|
the
Claim is one for which the Indemnified Party is not entitled to
indemnification under the terms of this Agreement;
or
|
|
|
(iv)
|
the
Claim is one for which the Indemnified Party is only entitled to
indemnification, in part, under the terms of this
Agreement.
|
|
|
3.3.2
|
It
will be a precondition to the continuance and exercise of the Power,
or
any part thereof, in respect of any Claim, that (i) New Lorus will
have
irrevocably and unconditionally confirmed, within such 15 day period,
that
the entirety of such Claim is one for which the Indemnified Party
is
entitled to be fully indemnified under the terms of this Agreement,
and
(ii) a Solvency Event shall not have
occurred.
|
|
|
3.3.3
|
In
the event that New Lorus gives notice under Section 3.3.1(ii), until
such
time that New Lorus is able to determine whether or not the entirety
of
the Claim is one for which the Indemnified Party is entitled to be
fully
indemnified under the terms of this Agreement, the Indemnified Party
will
be possessed of the power to negotiate, settle, compromise, litigate
or
otherwise deal with such Claim, provided however
that:
|
|
|
(i)
|
the
Indemnified Party and New Lorus will mutually agree in writing upon
the
retention of Counsel, unless the Indemnified Party has received an
opinion
of counsel to the effect that the interests of the Indemnified Party
and
New Lorus with respect to such Claim are sufficiently adverse to
prohibit
the representation by the same counsel of both parties under applicable
ethical rules, in which event the Indemnified Party will have the
unilateral right to employ separate Counsel and the fees and expenses
of
such Counsel will be included as part of any Losses incurred, sustained
and suffered by such Indemnified
Party;
|
|
|
(ii)
|
the
Indemnified Party will not, without New Lorus’s prior written consent
(such consent not to be unreasonably withheld or delayed), settle,
compromise, consent to the entry of any Judgment in or otherwise
seek to
terminate such Claim;
|
|
|
(iii)
|
the
Indemnified Party will provide, on a timely basis, New Lorus with
(A)
access to all information relating to such Claim and the status thereof;
and (B) copies of reports and other correspondence it receives
|
-
12
-
|
|
|
from
Counsel on the status of such Claim and the results of any settlement
discussions that have occurred or are
scheduled;
|
|
|
(iv)
|
the
Indemnified Party will consult with New Lorus on strategic decisions
relating to such Claim; and
|
|
|
(v)
|
should
it wish to do so, New Lorus will be entitled to monitor at its own
expense
the conduct of such Claim with a view to being informed as to all
material
aspects thereof, including the Indemnified Party’s strategy and its
estimates of liability exposure and relevant
timing.
|
Notwithstanding
the foregoing but subject to Section 2.4, this Section 3.3 and Section 3.4,
New
Lorus reserves the right, at any time, to exercise the Power by providing an
irrevocable and unconditional confirmation that the Claim is one for which
the
Indemnified Party is entitled to be fully indemnified under the terms of this
Agreement, in which event the Indemnified Party will take all commercially
reasonable steps to transition the Claim to New Lorus in a manner that will
not
prejudice such Claim or New Lorus’s ability to defend such Claim.
|
|
3.3.4
|
In
the event that New Lorus gives notice, at any time, that a Claim
is one
for which an Indemnified Party is not entitled to indemnification
under
this Agreement, the Indemnified Party will, without prejudice to
any other
rights or remedies of the Indemnified Party in respect of such Claim
or in
respect of a Lorus Party hereunder, have full and absolute power
to
negotiate, settle, compromise, litigate or otherwise deal with the
Claim
in the Indemnified Party’s absolute and unfettered discretion through to a
Final Determination, which powers will include those powers enumerated
in
Section 3.1.1.
|
|
|
3.3.5
|
In
the event that New Lorus gives notice, at any time, that a Claim
is one
for which an Indemnified Party is entitled, under the terms of this
Agreement, to indemnification, in part, and the Indemnified Party
agrees
that it is only entitled to indemnification in part, the Parties
hereby
agree to use commercially reasonable efforts to, depending upon the
nature
of the Claim, either (i) conduct a joint defence in respect of the
Claim,
or (ii) bifurcate the Claim, in which event New Lorus would exercise
the
Power only in respect of that part of the Claim that is subject to
indemnification.
|
|
3.4
|
Limitation
on Power
|
Neither
the Power nor any other provision of this Agreement will:
|
|
3.4.1
|
obligate
an Indemnified Party to incur, pay, suffer or sustain any Losses
which it
would not be entitled to recover from New Lorus pursuant to Section
2.1
and only if such amounts would be recoverable in full by the Indemnified
Party from New Lorus, or if such obligation does or may reasonably
be
expected to exceed such amounts, New Lorus will have provided to
the
Indemnified Party reasonable assurances as to payment of such excess
|
-
13
-
|
|
|
amounts
by documentation in form and substance satisfactory to the Indemnified
Party, acting reasonably, and will have received prior written
consent of
the Indemnified Party, such consent not to be unreasonably withheld
or
delayed, prior to exercising the Power;
or
|
|
|
3.4.2
|
entitle
or permit New Lorus to commence or conduct in the name of Indemnified
Parties any counter claims or claims pursuant to Section 3.1.1(v),
unless
such claims relate specifically to the subject matter of the Claim,
without the prior written consent of the Indemnified Parties, such
consent
not to be unreasonably withheld or
delayed.
|
|
3.5
|
Contract
Directly
|
During
the currency of the Power, New Lorus will contract directly for the services
of
Counsel, experts or other necessary or desirable Persons (as determined by
New
Lorus, subject to Section 3.6, in its sole and absolute discretion) for any
and all purposes associated with the Claims and New Lorus further agrees that
it
will not retain any such Persons unless it will have confirmed to these Persons,
with a copy to the Indemnified Parties, that such Persons will have recourse
solely to New Lorus and will have no Claims for compensation, costs or otherwise
against any of the Indemnified Parties.
|
3.6
|
Diligence
|
New
Lorus covenants to exercise its powers hereunder in a competent and professional
manner.
|
3.7
|
Access
to Information and Participation by the Indemnified
Parties
|
|
|
3.7.1
|
The
Indemnified Parties will be entitled to access to all material or
relevant
written information relating to any Claim and the status thereof.
New
Lorus agrees to provide, on a timely basis, the Indemnified Parties,
with
copies of reports it receives from Counsel or New Lorus’s Nominee on the
status of any Claim and the results of, or strategy relating to any
Claim
or any settlement discussions that have occurred or are scheduled.
Notwithstanding the foregoing, if the Indemnified Parties breach,
in any
material respect, the provisions of Section 7, then, without limiting
any other rights or remedies New Lorus may have against the Indemnified
Parties or other Persons breaching such obligations, the rights provided
for in this Section 3.7.1 will be
suspended.
|
|
|
3.7.2
|
Should
it wish to do so, an Indemnified Party will, in addition to Section
3.7.1,
be entitled to monitor at its own expense the conduct of any Claim
with a
view to being informed as to all material aspects thereof, including
New
Lorus’s strategy and its estimates of New Lorus’s exposure and relevant
timing.
|
-
14
-
|
|
3.7.3
|
New
Lorus will forthwith notify the Indemnified Party upon becoming aware
of
any Losses which are embodied in or arise as a result of or pursuant
to
any Judgment or Settlement
Agreement.
|
SECTION 4
OBLIGATIONS
OF INDEMNIFIED PARTIES
|
4.1
|
Specific
Obligations
|
As
and from the Effective Date to and including a Determination Date, the
Indemnified Parties hereby covenant and agree with New Lorus to:
|
|
4.1.1
|
promptly
provide New Lorus with written notice of any outstanding, pending
or
threatened Claim which the Indemnified Parties become aware of (a
“Claim Notice”); provided that the failure to promptly
provide such notice will not relieve New Lorus or any obligation
to
indemnify such Indemnified Party, except to the extent such failure
prejudices New Lorus;
|
|
|
4.1.2
|
in
relation to any identified Claim for which New Lorus is exercising
the
Power pursuant to Section 3.1 and in accordance with the terms of
this
Agreement, take such commercially reasonable action as New Lorus
may
request and take no action that has the effect of prejudicing such
Claim
or New Lorus’s ability to defend such Claim, except where such Indemnified
Party is permitted by the terms hereof to act in a contrary
manner;
|
|
|
4.1.3
|
comply
in all material respects with the provisions of this Agreement and
with
the reasonable written instructions given by New Lorus, its Nominee,
or
Counsel in relation to any of the Powers granted to New Lorus pursuant
to
Section 3.1. Such written requests will be given to the Indemnified
Parties detailing the requested action. The Indemnified Parties will
in
all cases be afforded a reasonable period in which to comply with
the
request having due regard to the terms here of and to applicable
prescription periods or offers which expire within a specified time
in
respect of which New Lorus has provided the Indemnified Parties with
as
much notice as is reasonably practicable in the circumstances;
and
|
|
|
4.1.4
|
provide
to New Lorus and its authorized representatives access at all reasonable
times to, and the right to photocopy, the files and records of the
Indemnified Parties pertaining or relating to any Claims, or the
subject
matter thereof.
|
SECTION 5
COOPERATION
|
5.1
|
Cooperation
|
|
|
5.1.1
|
Subject
to Section 3.4.1 and Section 3.1.1(iii), in connection with the
negotiation of any Settlement Agreement and any documents contemplated
|
-
15
-
|
|
|
thereunder,
the Indemnified Parties will cooperate on a commercially reasonable
basis
with New Lorus and execute and deliver the same in accordance with
the
reasonable requests and requirements of New Lorus with respect
thereto;
provided that, if, in the sole discretion of an Indemnified Party,
a
Settlement Agreement obligates such Indemnified Party to incur
any Losses
for which they are not indemnified, such Indemnified Party will
not be
required to sign the Settlement Agreement and will not, on that
basis, be
in breach of their obligations under this Section
5.1.
|
|
|
5.1.2
|
The
obligations of the Indemnified Parties under Section 5.1.1 will be
applicable only when New Lorus is exercising the Power in accordance
with
Section 3.1.
|
SECTION 6
REPRESENTATIONS
AND WARRANTIES
|
6.1
|
Representations
and Warranties
|
Each
of the Parties represents and warrants to each other as of the date hereof
that:
|
|
6.1.1
|
it
is duly incorporated and validly subsisting under the laws of its
incorporating jurisdiction and has the corporate power and authority
and
the legal right to enter into this Agreement and fully complete and
perform its obligations hereunder;
|
|
|
6.1.2
|
this
Agreement has been duly and properly executed and delivered by it
and
constitutes legal, valid and binding obligations of it enforceable
against
it in accordance with its terms;
and
|
|
|
6.1.3
|
it
has the requisite power, capacity and authority to enter into this
Agreement.
|
SECTION 7
CONFIDENTIALITY
OBLIGATIONS
|
7.1
|
Confidentiality
Obligations
|
All
documents, information, discussions and disclosures made hereunder or pursuant
hereto (the “Confidential Information”) will at all times be
held in the strictest confidence by each of the Parties, will not be used for
any purpose whatsoever other than those specifically relating to this Agreement
and Claims and will not be disclosed for any purpose whatsoever to any third
Person, including the other parties to Claims adverse in interest to an
Indemnified Party, or its Counsel, provided, however, that such restrictions
on
disclosure will not apply if:
|
|
7.1.1
|
the
disclosure of the Confidential Information is required by applicable
law;
|
|
|
7.1.2
|
the
Confidential information is or becomes publicly available other than
through a breach of the provisions hereof by any Person to whom disclosure
is made in accordance herewith; or
|
-
16
-
|
|
7.1.3
|
the
written consent of the Parties is given prior to any such use or
disclosure being made.
|
SECTION 8
GENERAL
|
8.1
|
Breach
by Indemnified Party
|
A
breach by an Indemnified Party of any of the terms and provisions of this
Agreement or a default on the part of an Indemnified Party in the performance
of
its obligations hereunder will not in any way reduce or discharge any Lorus
Party from any obligations that it may have to indemnify the Indemnified Parties
in respect of a Claim nor will it terminate this Agreement or the obligations
of
any Lorus Party hereunder, provided however that the Indemnity will not apply
to
any Losses incurred as a direct result of such breach or default.
|
8.2
|
Notices
|
Any
notice, request, consent, waiver, direction or other communication required
or
permitted to be given under this Agreement will be in writing and may be given
by delivering same or sending same by facsimile transmission or by delivery
addressed to the Party to which the notice is to be given at its address for
service herein or to such other address as may be indicated in writing from
time
to time. Any such notice, request, consent, waiver, direction or other
communication will, if delivered, be presumed to have been
given and received on the day on which it was delivered to the address provided
herein (if that day is a Business Day, and if it is not, then on the next
succeeding Business Day), and if sent by facsimile transmission will be deemed
to have been given and received at the time of receipt unless actually received
after 4:00 p.m. at the point of delivery, in which case it will be deemed
to have been given and received on the next Business Day.
|
|
8.2.1
|
If
to Old Lorus prior to the Effective
Time:
|
▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇
Attention: Director
of Finance
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
|
|
8.2.2
|
If
to Old Lorus after the Effective
Time
|
c/o
Pinnacle International Realty Group, Inc.
▇▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇
Attention: Vice
President Finance
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
-
17
-
|
|
8.2.3
|
If
to New Lorus:
|
|
|
▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
|
|
|
▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇
|
Attention: Director
of Finance
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
|
8.3
|
Time
of Essence
|
Time
will be of the essence in this Agreement.
|
8.4
|
Entire
Agreement
|
Except
for the various collateral agreements entered into in connection with the
Arrangement, this Agreement constitutes the entire agreement between the Parties
and cancels and supersedes all prior agreements (including the letter agreement
dated April 4, 2006) and understandings between the Parties with respect to
the
subject matter hereof.
|
8.5
|
Assignment
|
Except
as expressly permitted by the terms hereof, neither this Agreement nor any
of
the rights, interests or obligations hereunder will be assigned by any Party
without the prior written consent of the other Party.
|
8.6
|
Binding
Effect
|
This
Agreement will be binding upon and will enure to the benefit of the parties
hereto and their respective successors and permitted assigns.
|
8.7
|
Further
Assurances
|
Each
Party hereto will, from time to time, and at all times hereafter, at the request
of the other Parties hereto, but without further consideration, do all such
further acts and execute and deliver all such further documents and instruments
as are reasonably required in order to fully perform and carry out the terms
and
intent hereof.
|
8.8
|
Severability
|
If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of law or public policy, all other conditions
and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon
such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely
as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
-
18
-
|
8.9
|
Counterpart
Execution
|
This
Agreement may be executed in any number of counterparts and each such
counterpart will be deemed to be an original instrument but all such
counterparts together will constitute one agreement.
[The
remainder of this page has been intentionally left blank.]
-
19
-
|
4325231
CANADA INC.
|
|||
|
by:
|
“▇▇▇▇▇▇
▇▇▇▇▇”
|
||
| Name: | |||
| Title: | |||
|
|
|||
|
by:
|
“▇▇▇▇▇▇
▇▇▇▇▇”
|
||
| Name: | |||
| Title: | |||
|
▇▇▇▇▇▇
PHARMACEUTICALS INC.
|
|||
|
by:
|
“▇▇▇▇▇▇
▇▇▇▇▇”
|
||
| Name: | |||
| Title: | |||
|
GENESENSE
TECHNOLOGIES INC.
|
|||
|
by:
|
“▇▇▇▇▇▇
▇▇▇▇▇”
|
||
| Name: | |||
| Title: | |||