Document:

Exhibit 10.1

	
  

  	
   

  

Confidential treatment has been requested for portions
of this exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been filed separately with the Securities and Exchange
Commission.

 

August 1, 2006

Mr.
Mark Stolper

Primedex
Health Systems, Inc.

Chief Financial Officer

1510 Cotner Avenue

Los Angeles, CA 90025

Dear Mr. Stolper:

Engagement
and Services:

This
letter is to confirm our understanding of the services our firm, MorganFranklin
Corporation (“MorganFranklin” or “we”),
are to provide Primedex Health Systems, Inc. (“Primedex” or “you”) to assist you from time to time in the evaluation of
applicable accounting treatment, to provide support in the form of technical analysis related to accounting
and financial reporting matters that may arise, and to provide additional point of view regarding preliminary conclusions reached bay management
on certain matters.

We will endeavor to complete our
work within the time period determined by you and the engagement leader identified below. Although MorganFranklin
is not a public accounting firm, we will perform our work in accordance with Standards for Consulting Services
established by the American Institute of Certified Public Accountants (“AICPA”). Accordingly, we will provide no
opinion, attestation or other form of
assurance with respect to our work or the information upon which our work is
based. The procedures we will be performing will not constitute an examination
or a review in accordance with generally
accepted auditing standards or attestation standards. We will not audit or
otherwise verify the information
supplied to us in connection with this engagement, from whatever source, except
as may be specified in this
engagement letter.

It
is the Primedex’s responsibility to establish and maintain their internal
controls. In addition, it is the Company’s
responsibility to determine the
procedures deemed necessary in connection with your compliance with the provisions of the Act and
related Securities and Exchange Commission (SEC) rules, to execute those procedures and to assess the results of your procedures adequacy
thereof. We provide no opinion or other form of assurance with respect
to your compliance with the Act, related SEC rules, or your procedures. We make no representation as to
whether your procedures are sufficient for your purposes. Our services should not be taken to supplant inquiries and
procedures that the Company should undertake
for purposes of obtaining and using the information necessary in conjunction
with the Company’s compliance with
the provisions of the Act and related SEC rules.

You agree to provide us with all
documentation and information, access to computer systems, codes and software, and access to your employees and
consultants which we jointly agree to be necessary to complete our work. If we
believe that any failure to make reasonably requested information or persons

 1
 

 

available interferes with our
completing our work in accordance with the mutually agreed upon timeliness of
our engagement objectives, we will so notify you. In such event, you will not
hold us responsible and all fees and expenses will be paid to us in accordance
with the terms of the engagement.

Our services and advice will be
personal to you, and will be based, for the most part, on information that you
provide to MorganFranklin in the course of our engagement. Reports and other
deliverables, whether written or electronically produced, submitted by
MorganFranklin to Primedex (“Reports”) will be solely for Primedex’s benefit
and may not be relied upon by any third party. We will be available to review
our Reports with senior management, the audit committee the auditors of
Primedex and/or the board of directors of Primedex.

Staffing and Fees:

To ensure the highest
level of service and attention, [***] will serve as the engagement leader and
be responsible for our overall service delivery. He will report directly to
Mark Stolper, Chief Financial Officer. In addition to the engagement leader,
all of our clients are assigned a quality control officer who is kept informed
of engagement activities and assists in ensuring the highest quality of service
delivery, [***] will serve as the quality control officer.

[***]
We will ensure, to the greatest extent possible, that the following people will
service the account for the duration of the engagement:

	
  MorganFranklin
  Personnel

  	
   

  	
  Standard 

  Monthly Rate

  
	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

If, for whatever reason, additional MorganFranklin
personnel are required, the applicable rates will be addressed and agreed upon
prior to the additional personnel commencing fieldwork on the eagagement.

 

[***] Certain information on this page has been omitted
and filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.

 2
 

 

Our performance of services may involve direct and
indirect costs that we will incur on your behalf. These disbursements and
charges include items incurred and paid by us on your behalf such as long
distance telephone charges, postage, special mail or delivery charges,
transportation, meals, lodging and other costs necessary for out-of-town
travel, photocopying, and use of other service providers such as printers or
experts, if needed. These charges may include the actual costs plus
administrative charges which cover our services and costs for advancing funds.

In the event
MorganFranklin or its personnel are required pursuant to subpoens or other
legal process to produce documents or provide testimony relating to this
engagement in any administrative or judicial or quasi-judicial proceeding to
which MorganFranklin is not a party, Primedex shall reimburse MorganFranklin
for its professional time and expenses, including reasonable attorneys’ fees,
incurred in responding to such request.

We will invoice monthly,
payable net 30 days. Payment should be made in U.S. dollars, in checks or
drafts payable to “MorganFranklin Corporation,” or via electronic transfer.
Point of contact for all billing related matters is [***]

Limitations:

Our services will be
rendered in good faith by qualified personnel and our reports will be based
upon our good faith business and professional judgment. Accounting principles
and their application vary from industry-to-industry, and the application of
various accounting principles is often based upon facts and circumstances.
Similarly, internal controls systems and procedures are often specially
designed and implemented. The in-depth evaluation of internal controls is
relatively new, and testing procedures continue to evolve. Unless expressly
engaged for such purpose by Primedex, MorganFranklin will not be responsible
for identifying material weaknesses significant deficiencies in internal
controls, or identifying material errors, fraud or illegal acts. However, if
any such matters come to our attention in the course of our work, we will so
notify the appropriate Company representative(s). 

MorganFranklin makes no
other representation or warranty regarding either its services or Reports; any
express or implied warranties arising from custom of usage in the accounting
profession and warranties arising by operation of law are expressly disclaimed.
Accordingly, (1) there can be no assurance that Primedex’s independent
auditors, financial institutions, governmental agencies (including without
limitation, the SEC) or any self-regulatory organization (e.g., securities
exchange) will not challenge, perhaps successfully, financial reporting
positions taken by Primedex after considering our Reports; (2) Primedex agrees
that neither MorganFranklin, nor any of its personnel shall be liable,
accountable or responsible, in damages or otherwise, to Primedex or its
successors and assigns for any loss, damages, liability costs, or expense
incurred or sustained that are attributable to any financial reporting position
taken by Primedex in reliance upon MorganFranklin’s Reports; (3) Primedex shall
indemnify, defend and hold harmless MorganFranklin and its personnel from and
against any loss, liability, damage, cost or expense (including reasonable
attorney’s fees) sustained or incurred as a result of any act or omission by
Primedex, whether or not in reliance upon MorganFranklin reports.

 

[***] Certain information on this page has been omitted
and filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.

 3
 

 

The
foregoing shall not limit MorganFranklin’s liability or responsibility for its
own gross negligence or willful misconduct.

In no
event will MorganFranklin be liable for special, punitive, incidental or
consequential damages even if we have bean advised of the possibility of such
damages. Our maximum liability to Primedex, whether in tort, contracts, or
otherwise, is limited to the amount of fees paid to us for our services under
this engagement:

Dispute Resolution:

Any
controversy or claim arising out of, or relating to the services covered by
this letter or hereafter provided to
Primedex shall be submitted first to voluntary mediation and, if mediation is
not successful, then to binding
arbitration. Such arbitration proceedings shall be conducted under the rules then prevailing of the American
Arbitration Association in the city where this letter is signed by Primedex.
The judgment or award of the arbitrators shall be binding and conclusive upon
MorganFranklin and Primedex and may be entered in any court of competent
jurisdiction.

We appreciate
the opportunity to be of service to you and believe this letter accurately
summarizes the significant terms of
our engagement. If you have any questions, please let us know. If you agree
with the terms of our engagement as described
in this letter, please sign and return to us the enclosed copy of this letter.

Very truly yours,

	
  /s/ Christopher Mann

  	
   

  
	
  Christopher Mann

  Senior Vice President-FAS

  

 

 4
 

 

RESPONSE:

This letter correctly sets forth our understanding of the terms of your
engagement.

Primedex Health Systems Inc.:

	
  /s/ Mark D. Stolper

  	
   

  
	
  Officer signature

  
	
   

  
	
  Chief Financial
  Officer

  	
   

  
	
  Title

  
	
   

  
	
  8/23/06

  	
   

  
	
  Date

  
			

 

This letter is to confirm our understanding of the services of our
firm, MorganFranklin Corporation (“we”), are to provide (“Primedex” or “you”)
to assist you in:

 5Exhibit
10.1

SUPPORT
AGREEMENT

between

ANORMED
INC.

and

MILLENNIUM
PHARMACEUTICALS, INC.

Dated as of
September 26, 2006

 

TABLE OF
CONTENTS

	
  ARTICLE 1 INTERPRETATION

  	
  1

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Disclosure of Information

  	
  13

  
	
  1.3

  	
  Knowledge

  	
  13

  
	
  1.4

  	
  Singular, Plural, etc.

  	
  14

  
	
  1.5

  	
  Deemed Currency

  	
  14

  
	
  1.6

  	
  Headings, etc.

  	
  14

  
	
  1.7

  	
  Date for any Action

  	
  14

  
	
  1.8

  	
  Governing Law

  	
  14

  
	
  1.9

  	
  Attornment

  	
  14

  
	
  1.10

  	
  Incorporation of Schedules

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 THE OFFER

  	
  15

  
	
  2.1

  	
  The Offer

  	
  15

  
	
  2.2

  	
  Conditions Precedent to Making of the Offer

  	
  17

  
	
  2.3

  	
  Board of Directors Recommendation

  	
  18

  
	
  2.4

  	
  Directors’ Circular

  	
  19

  
	
  2.5

  	
  Superior Proposals

  	
  20

  
	
  2.6

  	
  Company Support of the Offer

  	
  21

  
	
  2.7

  	
  Outstanding Stock Options

  	
  22

  
	
  2.8

  	
  Subsequent Acquisition Transaction

  	
  22

  
	
  2.9

  	
  Performance of Acquisition Company

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE
  PARENT

  	
  23

  
	
  3.1

  	
  Representations and Warranties

  	
  23

  
	
  3.2

  	
  Survival of Representations and Warranties

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE
  COMPANY

  	
  23

  
	
  4.1

  	
  Representations and Warranties

  	
  23

  
	
  4.2

  	
  Survival of Representations and Warranties

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 CONDUCT OF BUSINESS

  	
  23

  
	
  5.1

  	
  Conduct of Business by the Company

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 COVENANTS OF THE COMPANY

  	
  27

  
	
  6.1

  	
  Notice of Material Change

  	
  27

  
	
  6.2

  	
  Non-Completion Fee

  	
  28

  
	
  6.3

  	
  Non-Solicitation

  	
  29

  
	
  6.4

  	
  Board of Directors of the Company

  	
  30

  
	
  6.5

  	
  Pre-Acquisition Reorganization

  	
  30

  
	
  6.6

  	
  Accuracy of Representations

  	
  30

  
	
  6.7

  	
  Directors’ and Officers’ Insurance

  	
  30

  

 

 

 

	
  6.8

  	
  Employment Agreements

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 MUTUAL COVENANTS

  	
  31

  
	
  7.1

  	
  Additional Agreements and Filings

  	
  31

  
	
  7.2

  	
  Investment Canada

  	
  32

  
	
  7.3

  	
  Access to Information

  	
  33

  
	
  7.4

  	
  Privacy Issues

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER

  	
  35

  
	
  8.1

  	
  Termination

  	
  35

  
	
  8.2

  	
  Effect of Termination

  	
  37

  
	
  8.3

  	
  Amendment

  	
  37

  
	
  8.4

  	
  Waiver

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 GENERAL PROVISIONS

  	
  37

  
	
  9.1

  	
  Disclosure

  	
  37

  
	
  9.2

  	
  Notices

  	
  38

  
	
  9.3

  	
  Entire Agreement

  	
  39

  
	
  9.4

  	
  Enurement

  	
  40

  
	
  9.5

  	
  Third Parties

  	
  40

  
	
  9.6

  	
  Assignment

  	
  40

  
	
  9.7

  	
  Expenses

  	
  40

  
	
  9.8

  	
  Severability

  	
  41

  
	
  9.9

  	
  Counterpart Execution

  	
  41

  
	
   

  	
   

  	
   

  
	
  SCHEDULE A CONDITIONS OF THE OFFER

  	
  A-1

  
	
   

  	
   

  	
   

  
	
  SCHEDULE B REPRESENTATIONS AND WARRANTIES OF THE
  PARENT

  	
  B-1

  
	
   

  	
   

  	
   

  
	
  SCHEDULE C REPRESENTATIONS AND WARRANTIES OF THE
  COMPANY

  	
  C-1

  

 

 2

SUPPORT AGREEMENT

THIS AGREEMENT made as of the
26th day of September, 2006

BETWEEN:

MILLENNIUM PHARMACEUTICALS, INC., a corporation incorporated under the laws of
the State of Delaware

(the “Parent”)

AND:

ANORMED INC., a
corporation incorporated under the federal laws of Canada

(the “Company”).

WHEREAS:

A.                                   The Parent directly or indirectly through a
wholly-owned company to be designated by Parent after the date hereof (the “Acquisition
Company”), desires to acquire all of the outstanding common shares of the
Company and all rights attached or appurtenant thereto (the “Shares”),
including all Shares issuable on the exercise of the outstanding stock options
(the “Options”) granted pursuant to the Company’s Stock Option Plans prior to
the date hereof, and is prepared to make an offer to acquire such Shares;

B.                                     Contemporaneously herewith, the Parent has
entered into agreements (the “Shareholder Support Agreements”) with the
Supporting Shareholders pursuant to which, among other things, each of the
Supporting Shareholders has agreed to irrevocably tender of the Shares held or
hereafter acquired by them (or that they are now entitled to acquire) and to
support the Offer; and

C.                                     The board of directors of the Company (the “Board
of Directors”), after consulting with its financial and outside legal advisors,
has unanimously determined that it would be in the best interests of the
Company for the Board of Directors to support the Offer and that it will
recommend acceptance of the Offer to holders of Shares (the “Shareholders”),
all on the terms and subject to the conditions contained herein;

NOW THEREFORE THIS AGREEMENT
WITNESSES that, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each party, the
parties hereby covenant and agree as follows:

 

ARTICLE
1

INTERPRETATION

1.1                               Definitions

In this Agreement, unless
there is something in the subject matter or context inconsistent therewith, the
following terms have the meanings set forth below.

(a)                                  “Acquisition Company” an indirect
wholly-owned subsidiary of the Parent.

(b)                                 “Affiliate” has the meaning ascribed to that
term in the CBCA.

(c)                                  “Agreement,” “this Agreement,” “herein,”
“hereto,” and “hereof’ and similar expressions refer to
this Agreement as the same may be amended or supplemented from time to time
and, where applicable, to the appropriate Schedules to this Agreement.

(d)                                 “Alternative Transaction” means (other than
by the Offeror or its Affiliates and except for the transactions contemplated
hereby): (i) any merger, formal take-over bid or tender offer made by way of
take-over bid circular, amalgamation, plan of arrangement, business
combination, reorganization, recapitalization, consolidation, issuer bid,
liquidation or winding-up in respect of the Company or any of its Subsidiaries;
(ii) any sale of assets of the Company or any of its Subsidiaries having an
aggregate value equal to 20% or more of the fair market value of the Company’s
and its Subsidiaries’ assets on a consolidated basis, or any license, strategic
alliance, lease, supply agreement or other arrangement having a similar
economic effect; (iii) any transaction to which the Company is a party which
would result in any Person owning or controlling or having the right to acquire
20% or more of the Shares; (iv) any transaction similar to the foregoing
clauses (ii) or (iii) of or involving the Company or any of its Subsidiaries;
or (v) any written proposal or offer to do, or public announcement of an
intention to do, any of the foregoing with or from any Person.

(e)                                  “Benefit Plans” means all bonus, deferred
compensation, pension, profit sharing, retirement, retention, severance, stock
option, group insurance, death benefit, welfare or other benefit plan or
written policy for the benefit of any of the Employees or former Employees,
excluding statutory benefit plans to which the Company or a Subsidiary are
required to participate in or comply with, including the Canada Pension Plan
and plans administered pursuant to applicable health tax, workplace safety
insurance and employment insurance legislation.

(f)                                    “Bid Circular” has the meaning set forth in
Section 2.1(b).

(g)                                 “Board of Directors” means the board of
directors of the Company.

(h)                                 “Business Day” means any day excepting a
Saturday, Sunday or statutory holiday in Vancouver, British Columbia or Boston,
Massachusetts.

 2
 

 

(i)                                     “Canadian Tax Act” means the Income Tax Act (Canada).

(j)                                     “CBCA” means the Canada
Business Corporations Act.

(k)                                  “Claims” includes claims, demands,
complaints, grievances, actions, applications, suits, causes of action, orders,
charges, indictments, prosecutions, informations or other similar processes,
assessments or reassessments, judgments, debts, liabilities, expenses, costs,
damages or losses, contingent or otherwise, including loss of value,
professional fees, including fees and disbursements of legal counsel on a full
indemnity basis, and all costs incurred in investigating or pursuing any of the
foregoing or any proceeding relating to any of the foregoing.

(l)                                     “Commercialization” means the marketing,
sale, licensing, export, and other commercialization of the drug products or
candidates that are sold or manufactured by the Company or its Subsidiaries or
that are the subject of studies, tests or preclinical or clinical trials by or
on behalf of the Company or its Subsidiaries.

(m)                               “Commercially Available Technology” means
computer software and other Technology that is currently licensed for use by
the Company and/or its Subsidiaries on standard terms for the business of the
Company and its Subsidiaries as currently conducted and that is otherwise
readily available for license, in the current license volume or configuration.

(n)                                 “Company” means AnorMED Inc., a corporation
incorporated under the CBCA.

(o)                                 “Company Disclosure Letter” means the letter
dated the date of this Agreement from the Company delivered to the Offeror
concurrently with the execution and delivery of this Agreement.

(p)                                 “Company Governing Documents” means the
articles of incorporation and by-laws of the Company and, where applicable, the
certificates, articles and by-laws of its Subsidiaries.

(q)                                 “Confidentiality Agreement” means the
confidentiality agreement dated September 5, 2006 between the Company and the
Parent.

(r)                                    “Contract” means any contract, agreement,
commitment, undertaking, lease, licence, note, bond, mortgage, indenture, loan
or deed of trust to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries is bound.

(s)                                  “Data Room Information” means the documents
listed in the index attached to the Company Disclosure Letter; provided,
that all such documents shall have been provided or made available to the
Parent and its representatives prior to 4:00 p.m. (Vancouver time) on September
25, 2006.

 3
 

 

(t)                                    “Diluted Basis” means, with respect to the
number of outstanding Shares at any time, such number of outstanding Shares
calculated assuming that all outstanding Options and other rights to purchase
Shares in consideration of payment of an exercise price which is less than the
price to be paid under the Offer are exercised and all other such rights are
cancelled.

(u)                                 “Directors’ Circular” has the meaning set
forth in Section 2.2(j).

(v)                                 “Effective Time” means the time that the
Offeror shall have taken-up, acquired ownership of and paid for at least the
Minimum Required Shares pursuant to the terms of the Offer.

(w)                               “Employees” means all Persons employed or
retained by the Company or any of its Subsidiaries on a full-time, part-time or
temporary basis including, without limitation, all members of the Board of
Directors, officers, Persons on disability leave, parental leave or other
absence from work.

(x)                                   “Encumbrances” means any pledge, lien, priority,
security interest, lease, license, title retention agreement, restriction,
easement, right-of-way, right of first refusal, title defect, option, adverse
claim or encumbrance of any kind or character whatsoever.

(y)                                 “Environmental Laws” has the meaning set
forth in Section 28 of Schedule C.

(z)                                   “ESPP” means the Company’s Employee and
Director Share Purchase Plan dated September 1, 1998, as amended and restated
as of June 12, 2003.

(aa)                            “Exchange Act” means the U.S. Securities
Exchange Act of 1934, as amended.

(bb)                          “Expiry Time” has the meaning set forth in
Section 2.1(b).

(cc)                            “Fairness Opinion” means the written opinion
of the Company’s Financial Advisor, to be referenced in and appended to the
Directors’ Circular, to the effect that the Offer is fair from a financial
point of view to the Shareholders.

(dd)                          “FDA” means the United States Food and Drug
Administration.

(ee)                            “Financial Advisor” means Goldman, Sachs
& Co., the financial advisor to the Company.

(ff)                                “Financial Statements” means the audited consolidated
financial statements of the Company and its Subsidiaries for the financial
years ended as at March 31, 2006, March 31, 2005 and March 31, 2004, and the
unaudited consolidated financial statements of the Company and its Subsidiaries
for the three months ended and as at June 30, 2006 including, without
limitation, the notes thereto, in each case in the form in which the Company
filed them under applicable Securities Laws.

 4
 

 

(gg)                          “Governmental Authority” means any
regulatory authority, government or government department or agency,
commission, ministry, office, tribunal, Crown corporation or any other entity
with the power to establish laws having jurisdiction or claiming to have
jurisdiction on behalf of any nation, province, territory, state, municipality
or other geographic or other subdivision thereof.

(hh)                          “Information Technology” means computer
hardware, software, websites for the Company or any of its Subsidiaries and
databases owned or used by the Company or any of its Subsidiaries for the business
of the Company and its Subsidiaries as currently conducted.

(ii)                                  “Initial Expiry Time” has the meaning set
forth in Section 2.1(b).

(jj)                                  “Intellectual Property” means intellectual
property rights, whether registered or not, including:

(i)                                     inventions,
pending patent applications (including divisionals, reissues, renewals,
re-examinations, continuations, continuations-in-part and extensions) and
issued patents (including statutory extensions and supplemental protection
certificates thereof);

(ii)                                  trade-marks,
trade dress, trade-names, business names and other indicia of origin;

(iii)                               copyrights,
including copyright registrations and applications; and

(iv)                              industrial
designs and similar rights,

that are owned or used by the
Company or any of its Subsidiaries for the business of the Company and its
Subsidiaries as currently conducted or that are otherwise necessary for the
Commercialization.

(kk)                            “Interested Person” has the meaning set
forth in Section 22 of Schedule C.

(ll)                                  “Laws” means all applicable laws, by-laws,
rules, regulations, orders, codes, policies, notices and directions and
judicial, arbitral, administrative, ministerial or departmental judgments,
awards, or other requirements of any governmental, regulatory, court or other
authority having jurisdiction over the applicable party.

(mm)                      “Latest Mailing Time” has the meaning set
forth in Section 2.1(b).

(nn)                          “Leased Real Property” has the meaning set
forth in Section 25 of Schedule C.

(oo)                          “material” means, with respect to the
Company and its Subsidiaries, taken as a whole, a fact, asset, liability,
transaction or circumstance, as applicable, concerning the business, assets,
rights, liabilities, capitalization, operations or financial condition of the
Company and its Subsidiaries, taken as a whole, that would or would likely (i)
result in a Material Adverse Change or (ii) prevent or 

 5
 

 

materially interfere with the consummation of
the transactions contemplated hereby.

(pp)                          “Material Adverse Change” means any change,
effect, event or occurrence in or on the business, operations, results of
operations, assets, liabilities, obligations (whether absolute, accrued,
conditional, contingent or otherwise), or condition (financial or otherwise) of
the Company (on a consolidated basis) which is, or could likely be expected to
be, material and adverse to the Company (on a consolidated basis) other than a
change, effect, event or occurrence relating to:

(i)                                     the
Canadian, United States or international political, economic or financial
conditions in general;

(ii)                                  the
state of Canadian, United States or international securities or currency
exchange markets in general;

(iii)                               the
industry in which the Company and its Subsidiaries operate;

(iv)                              changes
in Laws or interpretations thereof by any Governmental Authority;

(v)                                 changes
in accounting requirements not specifically directed at the Company;

(vi)                              the
announcement of the transactions contemplated by this Agreement or other
communication by Parent or Acquisition Company of its plans or intentions with
respect to any of the businesses of the Company or any of its Subsidiaries;

(vii)                           the
consummation of the transactions contemplated by this Agreement or any actions
taken pursuant to this Agreement;

(viii)                        any delay
or disruption to the ordinary course of the Company’s business occasioned by
the announcement or implementation of the transactions contemplated by this
Agreement;

(ix)                                any
natural disaster or any acts of terrorism, sabotage, military action or war
(whether or not declared) or any escalation or worsening thereof;

(x)                                   any
change in the market price or trading volume of the Shares;

(xi)                                any
matter, either alone or in combination with other matters, that has been
disclosed in the Company Reports;

(xii)                             any
suspension, rejection, refusal of or request to refile any regulatory
application or filing, other than with respect to the Company’s Mozobil product
candidate,

 6
 

 

(xiii)                          any
other negative actions, requests, recommendations or decisions of the FDA,
Health Canada or similar Governmental Authority, other than with respect to the
Company’s Mozobil product candidate, which would materially and adversely cause
a delay in the development of such product candidate;

(xiv)                         any
change, effect, event or occurrence relating to the Company’s clinical trials
or studies, other than a halt, hold, cessation or termination (prior to
completion) of either of the Company’s two Phase III clinical trials concerning
the Company’s Mozobil product candidate or;

(xv)                            any
change, effect, event or occurrence relating to the products, product candidates,
clinical trials or studies of any other Person;

(xvi)                         safety
findings with respect to a therapeutic agent other than safety reports or
findings associating a fatal or severe serious adverse event with Mozobil, not
previously detected or a significant increase in the rate of any previously
seen fatal or serious severe adverse event with Mozobil and which, in either
case, would have a materially negative impact on the label for Mozobil once
approved;

For greater certainty,
Material Adverse Change shall be deemed to include without limitation (a) a
halt, hold, cessation or termination (prior to completion) of either of the
Company’s two Phase III clinical trials concerning the Company’s Mozobil
product candidate, or (b) the suspension, rejection, refusal or request to
refile of any regulatory application or filing with the FDA, Health Canada, any
similar federal, state, provincial or other regulatory authority in any country
with respect to the Company’s Mozobil product candidate.

(qq)                          “Material Adverse Effect” when used in
connection with the Company, means any effect in or on the business,
operations, results of operations, assets, liabilities, obligations (whether
absolute, accrued, conditional, contingent or otherwise), or condition
(financial or otherwise) of the Company (on a consolidated basis) which is, or
could likely be expected to be, material and adverse to the Company (on a
consolidated basis) other than a change, effect, event or occurrence relating
to:

(i)                                     the
Canadian, United States or international political, economic or financial
conditions in general;

(ii)                                  the
state of Canadian, United States or international securities or currency
exchange markets in general;

(iii)                               the
industry in which the Company and its Subsidiaries operate;

(iv)                              changes
in Laws or interpretations thereof by any Governmental Authority;

 7
 

 

(v)                                 changes
in accounting requirements not specifically directed at the Company;

(vi)                              the
announcement of the transactions contemplated by this Agreement or other
communication by Parent or Acquisition Company of its plans or intentions with
respect to any of the businesses of the Company or any of its Subsidiaries;

(vii)                           the
consummation of the transactions contemplated by this Agreement or any actions
taken pursuant to this Agreement;

(viii)                        any delay
or disruption to the ordinary course of the Company’s business occasioned by
the announcement or implementation of the transactions contemplated by this
Agreement;

(ix)                                any
natural disaster or any acts of terrorism, sabotage, military action or war
(whether or not declared) or any escalation or worsening thereof;

(x)                                   any
change in the market price or trading volume of the Shares;

(xi)                                any
matter, either alone or in combination with other matters, that has been
disclosed in the Company Reports;

(xii)                             any
suspension, rejection, refusal of or request to refile any regulatory
application or filing, other than with respect to the Company’s Mozobil product
candidate,

(xiii)                          any
other negative actions, requests, recommendations or decisions of the FDA,
Health Canada or similar Governmental Authority, other than with respect to the
Company’s Mozobil product candidate, which would materially and adversely cause
a delay in the development of such product candidate;

(xiv)                          any
change, effect, event or occurrence relating to the Company’s clinical trials
or studies, other than a halt, hold, cessation or termination (prior to
completion) of either of the Company’s two Phase III clinical trials concerning
the Company’s Mozobil product candidate or;

(xv)                            any
change, effect, event or occurrence relating to the products, product
candidates, clinical trials or studies of any other Person;

(xvi)                          safety
findings with respect to a therapeutic agent other than safety reports or
findings associating a fatal or severe serious adverse event with Mozobil, not
previously detected or a significant increase in the rate of any previously
seen fatal or serious severe adverse event with Mozobil and which, in either
case, would have a materially negative impact on the label for Mozobil once
approved;

 8
 

 

For greater certainty, Material Adverse
Effect shall be deemed to include without limitation (a) a halt, hold,
cessation or termination (prior to completion) of either of the Company’s two
Phase III clinical trials concerning the Company’s Mozobil product candidate,
or (b) the suspension, rejection, refusal or request to refile of any
regulatory application or filing with the FDA, Health Canada, any similar
federal, state, provincial or other regulatory authority in any country with
respect to the Company’s Mozobil product candidate.

(rr)                                “Material Company Intellectual Property” has
the meaning set forth in Section 24 of Schedule C.

(ss)                            “Material Company Technology” means all
Technology, other than Commercially Available Technology, that is used by and
material to the business of the Company and its Subsidiaries as currently
conducted including, without limitation, the Commercialization.

(tt)                                “Material Contract” means:

(i)                                     each
Contract identified in the Data Room Information as a Material Contract;

(ii)                                  any
lease of real property by the Company or any of its Subsidiaries, as tenant,
with third parties providing for payment of annual rents in excess of $250,000;

(iii)                               any
shareholder agreement, voting trust or right to require registration under any
applicable Securities Laws to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound;

(iv)                              any
Contract under which an obligation to pay amounts in excess of $1,000,000 is
outstanding or may be incurred;

(v)                                 any
Contract providing for the sale or exchange of, or option to sell or exchange,
any property or asset where the sale price or agreed value (or, where the
Contract does not specify a sale price or agreed value for the property or
asset expressed in terms of money, the fair market value) of such property or
asset is in excess of $250,000, or the purchase or exchange of, or option to
purchase or exchange, any property or asset where the purchase price or agreed
value (or, where the Contract does not specify a purchase price or agreed value
for the property or asset expressed in terms of money, the fair market value)
of such property or asset is in excess of $250,000 entered into in the past 12
months (or entered into more than 12 months prior to the date hereof in respect
of which the applicable transaction has not been consummated);

(vi)                              any
Contract to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound: (A) granting or 

 9
 

 

obtaining any right to use any material
Intellectual Property (other than any Contract granting rights to use readily
available commercial software that is generally available on non-discriminatory
pricing terms) or (B) restricting the rights of the Company or any of its
Subsidiaries, or permitting other persons, to use or register any material
Intellectual Property, except any such Contract which, if terminated, would not
reasonably be expected to result in a Material Adverse Change;

(vii)                           any
Contract that purports to limit the right of the Company or any of its
Subsidiaries: (A)  to engage in any line
of business or (B) to compete with any person or operate in any location; and

(viii)                        any
Contract under which the Company or any of its Subsidiaries is obliged to make
annual payments or incur annual obligations in excess of an aggregate of
$500,000 other than any Contract of the types referred to in clauses (i)
through (vii) of this definition (without regard to the dollar amounts set
forth in such clauses).

(uu)                          “Minimum Condition” means the condition set
forth in paragraph (a) of Schedule A.

(vv)                          “Minimum Required Shares” means at least
that number of the outstanding Shares required pursuant to the Minimum
Condition unless the Offeror shall have varied the Minimum Condition in
accordance with this Agreement, in which case “Minimum Required Shares” means that number of the outstanding
Shares which the Offeror takes up on the Take-up Date.

(ww)                      “NASDAQ” means NASDAQ Global Market.

(xx)                              “Non-Completion Fee” has the meaning set
forth in Section 6.2.

(yy)                          “Offer” has the meaning set forth in Section
2.1(a).

(zz)                              “Offer Deadline” has the meaning set forth
in Section 8.1(b).

(aaa)                      “Offeror” means the Parent, together with
the Acquisition Company, if applicable.

(bbb)                   “Officer Obligations” means the obligations
or liabilities of the Company or any of its Subsidiaries to its directors or
Senior Executives, employees and consultants for severance or termination
payments in connection with the termination of their employment or service upon
a change of control of the Company pursuant to any written employment
agreements or otherwise, as set out in the Company Disclosure Letter.

(ccc)                      “Optionholder” means a holder of Options.

(ddd)                   “Options” has the meaning set forth in the
recitals to this Agreement.

 10
 

 

(eee)                      “Owned Real Property” has the meaning set
forth in Section 25 of Schedule C.

(fff)                            “Parent” means Millennium Pharmaceuticals,
Inc., a corporation incorporated under the laws of the State of Delaware.

(ggg)                   “Permit” means any licence, permit,
franchise, certificate, approval or similar authorization of or issued by any
Governmental Authority and held by the Company or any of its Subsidiaries,
including any federal, provincial or state licence.

(hhh)                   “Person” means any individual, sole
proprietorship, partnership, firm, entity, unincorporated association,
unincorporated syndicate, unincorporated organization, trust, corporation,
limited liability company, unlimited liability company, governmental,
regulatory or court authority, and a natural person in such person’s capacity
as trustee, executor, administrator or other legal representative.

(iii)                               “Pre-Acquisition Reorganization” has the
meaning set forth in Section 6.5.

(jjj)                               “Rights Plan” means the Shareholder Rights
Plan Agreement dated effective August 29, 2006 between the Company and
Computershare Investor Services Inc., as rights agent, as amended.

(kkk)                      “Real Property” has the meaning set forth in
Section 25 of Schedule C.

(lll)                               “Real Property Leases” has the meaning set
forth in Section 25 of Schedule C.

(mmm)             “Schedule 14D-9” means the Schedule 14D-9
required to be filed by the Company in connection with the Offer pursuant to
the Exchange Act.

(nnn)                   “Schedule TO” has the meaning set forth in
Section 2.1(d).

(ooo)                   “SEC” means the United States Securities and
Exchange Commission.

(ppp)                   “Securities Authorities” means the TSX,
NASDAQ and the appropriate securities commissions or similar regulatory
authorities in Canada and each of the provinces and territories thereof, the
SEC and any applicable state securities regulatory authorities.

(qqq)                   “Securities Laws” means the securities laws,
rules and regulations of each of the provinces and territories of Canada and
applicable federal and state securities laws of the United States.

(rrr)                            “Senior Executives” means the Chief
Executive Officer, President, Chairman, Chief Financial Officer, Chief
Scientific Officer, Secretary, Treasurer, Vice-President – Business Development
and Vice-President – Research, of the Company (in any case whether acting or
interim).

 11

 

(sss)                      “Shares” has the meaning set forth in the
recitals to this Agreement.

(ttt)                            “Shareholder Support Agreements” has the
meaning set forth in the recitals to this Agreement.

(uuu)                   “Shareholders” has the meaning set forth in
the recitals to this Agreement.

(vvv)                   “Stock Option Plans” means the Company’s
1996 Incentive Stock Option Plan, as amended, and 2006 Incentive Stock Option
Plan, as amended.

(www)             “Subsequent Acquisition Transaction” has the
meaning set forth in Section 2.8.

(xxx)                         “Subsidiary” has the meaning set forth in
the CBCA.

(yyy)                   “Superior Proposal” means any bona fide written proposal for an Alternative Transaction
(i) which, in the opinion of the Board of Directors, acting in good faith and
after receiving the advice of its financial advisors and outside legal
advisors, is reasonably capable of constituting a commercially feasible
transaction taking into account all legal, financial, regulatory and other
aspects of such proposal and the party making the proposal, for which adequate
financial arrangements have been made to ensure that the required funds or
other consideration will be available to effect payment in full for the Shares
or otherwise complete such transaction and which could be carried out within a
time frame that is reasonable in the circumstances, and which if consummated,
would result in the Shareholders receiving a greater cash consideration per
Share than contemplated by the Offer or, in the case of an Alternative
Transaction including consideration other than cash, which is otherwise more
favourable to Shareholders from a financial point of view than the Offer, and
(ii) which did not result from a breach of Section 6.3 hereof,

(zzz)                         “Supporting Shareholders” means,
collectively, Baker Bros. Investments, L.P., Baker Bros. Investments II, L.P.,
Baker Biotech Fund I, L.P., 14159, L.P., Baker/Tisch Investments, L.P., Baker
Brothers Life Sciences, L.P., and Kenneth Galbraith.

(aaaa)                “Take-up Date” means the date that the
Offeror first takes up and acquires Shares pursuant to the Offer.

(bbbb)            “Tax Returns” means all returns, reports,
declarations, elections, notices, filings, information returns and statements,
including all amendments, schedules, attachments or supplements thereto, and
whether in tangible, electronic or other form, filed or required to be filed in
respect of Taxes.

(cccc)                “Taxes” means all taxes, duties, fees,
premiums, assessments, levies and other fees of any kind whatsoever levied by
any Governmental Authority or to be paid under any Laws (including, without
limitation, income tax, goods and services tax, sales and excise tax, capital
tax, tax deductions, property tax, corporate tax, customs duties and transfer
fees, health, payroll and employment tax, withholding 

 12
 

 

tax, employment insurance or Canada pension
plan contributions) and including any interest, penalties, fines, surtaxes or
other additional amounts levied or imposed in respect thereof.

(dddd)            “Technical Information” means know-how and
related technical knowledge, including:

(i)                                     trade
secrets, confidential information and other proprietary know-how;

(ii)                                  uniform
resource locators, domain names and email addresses; and

(iii)                               documented
research, forecasts, studies, marketing plans, market data, developmental,
demonstration or engineering work, information that can be used to define a
design or process or procure, produce, support or operate material and
equipment, methods of production and procedures, all formulas and designs and
drawings, blueprints, patterns, plans, flow charts, manuals and records, specifications,
and test data,

that is owned or used by the
Company or any of its Subsidiaries for the business of the Company and its
Subsidiaries as currently conducted or that are otherwise necessary for the
Commercialization.

(eeee)                “Technology” means Intellectual Property,
Technical Information and Information Technology.

(ffff)                        “TSX” means the Toronto Stock Exchange.

1.2                               Disclosure
of Information

(a)                                  The
phrase “as previously disclosed” and similar expressions used in this Agreement
will be construed for all purposes of this Agreement as referring to
information:

(i)                                     set
forth in the Company Disclosure Letter;

(ii)                                  included
in the Data Room Information; or

(iii)                               filed
publicly by the Company with the Securities Authorities.

(b)                                 Disclosure
of information in the manner set out in Section 1.2(a) shall be deemed to be
disclosure of such information for all purposes of this Agreement, whether or
not such disclosure refers to one or more Articles, Sections or Schedules.

1.3                               Knowledge

In this Agreement, whenever a
representation or warranty is made on the basis of the knowledge or awareness
of the Company, Parent or Acquisition Company, such knowledge or awareness
consists only of the actual knowledge or awareness after due inquiry, as of the
date of this 

 13
 

 

Agreement, in the case of the
Company, of the Senior Executives, and in the case of the Offeror, of the
senior officers of the Parent and the Acquisition Company, respectively, but
does not include the knowledge or awareness of any other individual or any
constructive, implied or imputed knowledge.

1.4                               Singular,
Plural, etc.

 In this Agreement, words importing the
singular number include the plural and vice versa and words importing gender
include the masculine, feminine and neuter genders.  Unless the context otherwise requires, any
reference to a “party” herein is a reference to a party hereto.  Any references to “including” or “includes”
means “including (or includes) without limitation”.

1.5                               Deemed
Currency

Unless otherwise expressly
stated, all references to dollars, “$” or currency herein shall mean U.S.
currency.

1.6                               Headings,
etc.

The division of this Agreement
into Articles, Sections and Schedules, the provision of a table of contents
hereto and the insertion of the recitals and headings are for convenience of reference
only and shall not affect the construction or interpretation of this Agreement
and, unless otherwise stated, all references in this Agreement or in the
Schedules hereto to Articles, Sections and Schedules refer to Articles,
Sections and Schedules of and to this Agreement or of the Schedules in which
such reference is made, as applicable.

1.7                               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.

1.8                               Governing
Law

This Agreement shall be
governed by and interpreted in accordance with the laws of the Province of
British Columbia and the laws of Canada applicable therein.

1.9                               Attornment

The parties hereby irrevocably
and unconditionally consent to and submit to the non-exclusive jurisdiction of
the courts of the Province of British Columbia for any actions, suits or
proceedings arising out of or relating to this Agreement or the matters
contemplated hereby and further agree that service of any process, summons,
notice or document by single registered mail to the addresses of the parties
set forth in this Agreement shall be effective service of process for any
action, suit or proceeding brought against either party in such court.  The parties hereby irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the matters contemplated hereby
in the courts of the Province of British Columbia and hereby further
irrevocably and unconditionally waive and 

 14
 

 

agree not to plead or claim in
any such court that any such action, suit or proceeding so brought has been
brought in an inconvenient forum.

1.10                        Incorporation
of Schedules

Each of the Schedules attached
hereto and described below shall, for all purposes hereof, form an integral
part of this Agreement.

Schedule
A:          Conditions to the Offer

Schedule
B:           Representations and Warranties of the Parent

Schedule
C:           Representations and Warranties of the Company

Schedule D:           Form of Press Release

ARTICLE 2

THE OFFER

2.1                               The
Offer

(a)                                  Subject
to the terms and conditions hereof, the Offeror agrees to make a take-over bid
by way of a formal take-over bid circular to acquire all the issued and
outstanding Shares (other than those owned directly or indirectly by the
Offeror), including Shares issuable upon exercise of any Options outstanding on
the date hereof, at a price per Share of $12.00 in cash  (as such offer may be extended or amended as
permitted form time to time under this agreement, the “Offer”). 
The Offer shall only be subject to the conditions set forth in Schedule
A hereto and shall be made in accordance with all applicable Laws, including
Securities Laws, including, without limitation, Regulations 14D and 14E under
the Exchange Act.

(b)                                 The
Offer shall be made to the holders of Shares in accordance with applicable
Laws, including Securities Laws, and shall be open for acceptance until a time
or times that is not earlier than 5:00 p.m. (Vancouver time) on the 36th day
after the date of the commencement of the bid, and no later than the 40th day
after the date of the commencement of the bid, as determined under the Securities Act (British Columbia) (the time at which the
Offer initially expires being referred to herein as the “Initial Expiry Time”), subject to the right
of the Offeror, in its sole discretion, to extend, or further extend, the
period during which Shares may be deposited under the Offer (the time at which
the Offer, as it may be extended, expires being referred to herein as the “Expiry Time”). If at the Initial Expiry
Time all of the conditions set forth in Schedule A hereto are satisfied except
for the condition described in paragraph (b) of Schedule A, the Offeror shall
extend the period during which Shares may be deposited under the Offer by an
additional 15 calendar days after the Initial Expiry Time provided that the
consents, approvals, decisions or other actions referred to in such paragraph
can, in the reasonable opinion of the Offeror, be obtained within such
additional 15 calendar day period. Any such extension shall comply with
applicable Securities Laws, including, without limitation, Rule 14d-11 under
the Exchange Act.

 15
 

 

(c)                                  Provided
that this Agreement has not otherwise been terminated, the Offeror shall mail
the Offer and accompanying take-over bid circular (such circular, together with
the Offer and any documents required to be sent along with or as part of the
Offer, being referred to as the “Bid Circular”)
prepared in the English language and French language in accordance with
applicable Laws, including the Securities Laws, to each Shareholder and
Optionholders as soon as reasonably practicable following the filing of the
Schedule TO (as defined below) and, in any event, not later than 11:59 p.m.
(Vancouver time) on October 6, 2006 (such time on such date being referred to
herein as the “Latest Mailing Time”).  However, if the mailing of the Bid Circular
is delayed by reason of: (i) an injunction or order made by a court or
regulatory authority of competent jurisdiction; (ii) the Offeror not having
obtained any regulatory waiver, ruling or order which is necessary to permit
the Offeror to make the Offer; (iii) the failure of the Company to provide the
Offeror with a list of Shareholders and Optionholders as contemplated in
Section 2.6, or (iv) any failure of a condition in Sections 2.2(b), 2.2(c) or
2.2(d) to be satisfied, written notice of such failure has been given by the
Offeror, then, provided that such injunction or order is being contested or
appealed, such regulatory waiver, ruling or order is being actively sought,
such list of Shareholders or Optionholders is being actively sought or such
failure of such condition to be rectified within five days following notice
thereof, as applicable, then the Latest Mailing Time shall be extended for a
period ending on the 5th Business Day following the date on which such
injunction or order ceases to be in effect or such waiver, ruling or order is
obtained, or such list of Shareholders and Optionholders is obtained, or such
cure effected, as applicable.  The
Company and its advisors shall be given an opportunity to review and comment on
the Bid Circular, and any supplements or amendments thereto, prior to its
filing or printing, recognizing that whether or not such comments are
appropriate will be determined by the Offeror, acting reasonably.

(d)                                 As
soon as reasonably practicable on the date the Offer is commenced, the Offeror
shall file with the SEC a Tender Offer Statement on Schedule TO (together with
all amendments and supplements thereto, the “Schedule
TO”) with respect to the Offer that will comply with the provisions
of all applicable Securities Laws of the United States and will contain
(including as exhibits) or incorporate by reference the Bid Circular.

(e)                                  The
Offeror agrees to promptly correct the Bid Circular if and to the extent that
it shall become false and misleading and to supplement the information
contained therein to include any information that shall become necessary, in
order to make the statement therein, in light of the circumstances under which
they were made, not misleading, and the Offeror shall take all steps necessary
to cause the Bid Circular, as so corrected or supplemented, to be filed with
all applicable Securities Authorities and disseminated to the Shareholders and
Optionholders, to the extent required under applicable Laws, including any
Securities Laws.  The Offeror agrees to
amend the Schedule TO from time to time in accordance with the requirements of
Regulation 14D under the Exchange Act. 
The Offeror shall provide the Company with copies of any written
comments and telephone 

 16
 

 

notification of any oral comments that the
Offeror or its counsel receive from any applicable Securities Authority with
respect to the Bid Circular or Schedule TO promptly after receipt of such
comments.  The Offeror shall use its
commercially reasonable efforts to respond to such comments promptly, shall
provide the Company with a reasonable opportunity to participate in all
communications with any applicable Securities Authority, including meetings and
telephone conferences, relating to the Bid Circular or Schedule TO and shall
provide the Company copies of any written responses and telephone notification
of any verbal responses by the Offeror or its counsel in respect of such
communications.

(f)                                    The
Company acknowledges and agrees that the Offeror may, in its sole discretion,
modify or waive any term or condition of the Offer, provided however, that the
Offeror shall not, without the prior written consent of the Company: (i) vary
or waive the Minimum Condition described in paragraph (a) of Schedule A hereto;
(ii) decrease the consideration per Share; (iii) change the form of consideration
payable under the Offer (other than to add additional consideration, whether in
the form of cash or securities of the Parent or otherwise); (iv) decrease the
number of Shares in respect of which the Offer is made; (v) impose additional
conditions to the Offer; or (vi) or otherwise vary the Offer (or any terms or
conditions thereof) in a manner which is adverse to Shareholders.

(g)                                 The
Offeror agrees that, provided all of the conditions to the Offer set out in
Schedule A shall have been satisfied or waived, the Offeror shall within the
time periods required by applicable Laws take up and pay for all the Shares
validly tendered (and not withdrawn) under the Offer and in any event not later
than three Business Days following the time at which it becomes entitled to
take up such Shares under the Offer pursuant to applicable Laws.

2.2                               Conditions
Precedent to Making of the Offer

The obligation of the Offeror
to make the Offer is conditional on the prior satisfaction of the following
conditions:

(a)                                  this
Agreement shall not have been terminated;

(b)                                 the
Company shall not be in breach of any of its material covenants or agreements
contained herein;

(c)                                  all
representations and warranties of the Company contained herein:

(i)                                     that
are qualified by a reference to a Material Adverse Change or materiality shall
be true and correct in all respects at the time of the making of the Offer; and

(ii)                                  that
are not qualified by a reference to a Material Adverse Change or materiality
shall be true and correct in all material respects at the time of the making of
the Offer;

 17
 

 

(d)                                 no
Material Adverse Change shall have occurred since the date hereof.

(e)                                  the
Offeror shall have received certificates of the Company, signed by two Senior
Executives satisfactory to the Offeror, acting reasonably, dated the date of
the making of the Offer, certifying the matters set out in paragraphs (b) and
(c) above;

(f)                                    no
circumstance, fact, change, event or occurrence shall exist or have occurred,
other than a circumstance, fact, change, event or occurrence caused by the
Offeror, that would render it impossible or substantially unlikely for one or
more of the conditions of the Offer as set out in Schedule A hereto to be
satisfied;

(g)                                 the
Offeror shall have received from all applicable Securities Authorities or other
regulatory authorities all such waivers, rulings or orders necessary for the
making of the Offer;

(h)                                 the
Company shall have either (i)  redeemed
the Rights or otherwise terminated the Rights Plan with effect no earlier than
the Expiry Date, or (ii)  deferred the
separation of the rights under the Rights Plan and waived or suspended the
operation of or otherwise rendered the Rights Plan inoperative in respect of
the Offer with effect immediately prior to the Expiry Date;

(i)                                     the
Company shall not have (i) deferred the separation of the rights under the
Rights Plan for the benefit or in respect of any Person other than the Offeror
or Genzyme Corporation and its Affiliates, or (ii) waived or suspended the
operation of or otherwise rendered the Rights Plan inoperative in respect of
any Alternative Transaction other than the take-over bid for the Company
commenced by Genzyme Corporation or its Affiliate on September 1, 2006;

(j)                                     the
Board of Directors shall not have withdrawn, changed, modified or qualified its
determinations and resolutions referred to in Section 2.3(b) in a manner
adverse to the Offeror, and the Board of Directors shall have prepared and
approved in final form, authorized for printing and distribution to
Shareholders and delivered to the Offeror for mailing with the Bid Circular,
following the filing of the Schedule TO and Schedule 14D-9 pursuant to the
Exchange Act, a directors’ circular (such circular, together with any documents
required to be sent along therewith, as the same may be amended or supplemented
from time to time, being referred to as the “Directors’
Circular”) which contains such recommendation and a copy of the
Fairness Opinion; and

(k)                                  the
Shareholder Support Agreements shall have been entered into and shall not have
been terminated.

The foregoing conditions are
for the sole benefit of the Offeror and may be waived by it in whole or in part
in its sole discretion.

2.3                               Board
of Directors Recommendation

The Company hereby represents
and warrants to and in favour of the Offeror that:

 18
 

 

(a)                                  the
Financial Advisor retained by the Company has delivered the Fairness Opinion to
the Board of Directors;

(b)                                 the
Board of Directors, after consulting with its Financial Advisor and outside
legal advisors, has unanimously:

(i)                                     determined
that the Offer is fair from a financial point of view to all Shareholders
(other than the Offeror) and that it is in the best interests of the Company;

(ii)                                  approved
this Agreement; and

(iii)                               resolved
that it will recommend acceptance of the Offer by the Shareholders; and

(c)                                  after
reasonable inquiry, the Company has been advised and reasonably believes that
all of the directors and Senior Executives of the Company intend to tender to
the Offer all of their Shares, including any Shares issued upon the exercise of
all in the money Options held by them.

2.4                               Directors’
Circular

The Company shall prepare the
Directors’ Circular and Schedule 14D-9 (in the case of the Directors’ Circular,
in both French and English), in accordance with applicable Laws, including
applicable Securities Laws.  The
Directors’ Circular and Schedule 14D-9 will set forth (among other things) the
recommendation of the Board of Directors as described in section 2.3(b) and
include a copy of the Fairness Opinion. 
The Offeror and its advisors shall be given an opportunity to review and
comment on the Directors’ Circular and Schedule 14D-9 prior to its filing,
recognizing that whether or not such comments are appropriate will be
determined by the Board of Directors, acting reasonably. The Directors’
Circular and Schedule 14D-9 will be filed by the Company with the applicable
Securities Authorities and the Director’s Circular will be disseminated to the
Shareholders and Optionholders contemporaneously and together with the Bid
Circular.  The Directors’ Circular and
Schedule 14D-9 shall also comply with the applicable rules governing the
recommendation or solicitation by the subject company and others set forth in
Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act. The Company agrees
promptly to correct the Directors’ Circular if and to the extent that it shall
become false and misleading and to supplement the information contained therein
to include any information that shall become necessary, in order to make the
statements therein not misleading, in light of the circumstances under which
they were made and the Company shall take all steps necessary to cause the
Directors’ Circular as so corrected or supplemented, to be filed with all
applicable Securities Authorities and disseminated to the Shareholders and
Optionholders, to the extent required by any applicable Law, including
applicable Securities Laws.  The Company
agrees to amend the Schedule 14D-9 from time to time in accordance with the requirements
of Rule 14d-9 under the Exchange Act. 
The Company shall provide the Offeror with copies of any written
comments and notification of any oral comments that the Company or its counsel
receives from any applicable Securities Authority with respect to the Directors’
Circular or Schedule 14D-9 promptly after receipt of such comments.  The Company shall use its commercially
reasonable 

 19
 

 

efforts to respond to such
comments promptly, shall provide the Offeror with a reasonable opportunity to
participate in all communications with any applicable Securities Authority,
including meetings and telephone conferences, relating to the Directors’
Circular and/or Schedule 14D-9 or any amendment or supplement thereto and shall
provide the Offeror copies of any written responses and telephone notification
of any verbal responses by the Company or its counsel in respect of such
communications.

2.5                               Superior
Proposals

Notwithstanding Section 2.3:

(a)                                  the
Board of Directors may, subject to compliance with the other provisions of this
Section 2.5, withdraw, modify or change any recommendation regarding the Offer
or approve, recommend or enter into an agreement in respect of a Superior
Proposal, if prior to the expiry of the Offer, a Superior Proposal is received
by, or offered or made to, the Company or any member of the Board of Directors,
Senior Executive or the Financial Advisor or any agent or representative of the
Company or Shareholder, and (i) in the determination of the Board of Directors
acting in good faith (after receiving the advice of its financial advisor and
outside legal advisors), to refrain from taking such action would be
inconsistent with the performance by the Board of Directors of its fiduciary
duties under applicable Law, (ii) this Agreement is concurrently terminated
pursuant to Section 8.1(f) or 8.1(g), and (iii) the Company has previously, or
concurrently will have, paid the Non-Completion Fee to the Parent;

(b)                                 upon
receipt by the Company of (i) any notice, proposal or inquiry that the Board of
Directors determines in good faith, could reasonably be expected to lead to, an
Alternative Transaction or any amendments thereto, or any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or a Subsequent Acquisition Transaction,
or (ii) any request for non-public information relating to the Company or any
of its Subsidiaries in connection with an Alternative Transaction, or (iv) any
request for access to the properties, books or records of the Company or any of
its Subsidiaries in connection with an Alternative Transaction, the Company
shall advise the Offeror thereof by telephone promptly, and shall in any event
no later than 24 hours thereafter give notice to the Offeror thereof (including
identifying the Person proposing such transaction and the terms and conditions
of such transaction and include a copy of any documents received by the Company
in respect of such transaction).  Prior
to providing any non-public information to such Person, the Company will confirm
in writing to the Offeror that it has received from such Person an executed
confidentiality agreement having terms substantially similar to the
Confidentiality Agreement (other than the standstill clause restricting such
Person from initiating an Alternative Transaction as provided for by paragraph
5 of the Confidentiality Agreement). The Company will provide or make available
to the Offeror copies of any information (if not previously provided to the
Offeror) provided to any Person promptly following the provision of such
information to such Person and in any event within 24 

 20
 

 

hours. 
The Company shall keep the Offeror informed on a timely basis of the
status, including any change to the material terms or termination of
discussions or negotiations, of any such Alternative Transaction, and the
Company shall promptly provide the Offeror copies of any documents relating to
such Alternative Transaction forthwith upon receipt thereof;

(c)                                  if
the Board of Directors determines that the Alternative Transaction constitutes
a Superior Proposal, the Company shall give the Offeror at least three Business
Days advance notice of any action to be taken by the Board of Directors to
withdraw, modify or change any recommendation regarding the Offer or to approve
or recommend or enter into an agreement in respect of the Superior Proposal and
shall negotiate in good faith with the Offeror to make such adjustments to the
terms and conditions of this Agreement and the Offer as would enable the
Offeror to proceed with the Offer, as amended. 
Any such adjustments shall be in the discretion of the Offeror at such
time.  The Board of Directors shall
review any proposal by the Offeror to amend the terms of its Offer in order to
determine, in good faith in the exercise of its fiduciary duties (after
receiving the advice of its financial and outside legal advisors), whether the
Offeror’s proposal to amend the Offer would result in the Alternative
Transaction not being a Superior Proposal;

(d)                                 if
any Alternative Transaction is publicly announced or made by a party other than
the Company and   the Board of Directors
determines it is not a Superior Proposal; or  
the Board of Directors determines that a proposed amendment to the terms
of the Offer pursuant to Section 2.5(b) would result in the Alternative
Transaction not being a Superior Proposal, and the Offeror has so amended the
terms of the Offer, then the Board of Directors shall as soon as practicable
reaffirm this Agreement and its recommendation of the Offer by press release
and if required under applicable Law, an updated Directors’ Circular.  The Offeror and its advisors shall be given
an opportunity to review and comment on the press release and updated Directors’
Circular prior to its release or printing, as applicable recognizing that
whether or not such comments are appropriate will be determined by the Board of
Director, acting reasonably; and

(e)                                  the
Company acknowledges and agrees that each successive material modification to
any Superior Proposal shall require an additional notice by the Company under
Section 2.5(c).

2.6                               Company
Support of the Offer

The Company agrees to take all
reasonable actions to cooperate with the Offeror in making the Offer and to
support and facilitate the success of the Offer and shall provide such information
and assistance as the Offeror or its agents may reasonably request in
connection with communicating the Offer and any amendments and supplements
thereto to the Shareholders and to such other Persons as are entitled to
receive the Offer under the Securities Laws, including delivering or causing to
be delivered to the Offeror: (a) as soon as reasonably practicable, and in any
event within three Business Days following the date of this Agreement, a list
(in electronic 

 21
 

 

form or mailing labels, if
requested by the Offeror) of all registered holders of Shares and Options,
showing the name and address of each holder and the number of Shares or
Options, as the case may be, held by each such holder, all as shown on the
records of the Company or its transfer agent as of a date as current as
reasonably practicable prior to the date of delivery of such lists; and
(b)  as soon as reasonably practicable, a
list of participants in the CDS & Co. and CEDE & Co. book based nominee
registration systems in respect of the Company, and a list of any non-objecting
beneficial holders of Shares as of a date as current as reasonably practicable
prior to the date of the delivery of such lists, and from time to time, at the
request of the Offeror, acting reasonably, supplemental lists setting out any
changes from the lists referred to in clause (a) and (b), and together with
such other information as may be reasonably requested by the Offeror in order
to be able to communicate the Offer in accordance with applicable Securities Laws.

2.7                               Outstanding
Stock Options

Subject to the receipt of any
necessary approvals of any applicable Securities Authorities, the Company shall
make such amendments to the Stock Option Plans or option agreements thereunder,
if any, as may be necessary, and take all such other steps as may be necessary
or desirable, to cause the exercise, cash-out and termination as of the Expiry
Time of all “in-the-money” Options outstanding pursuant to the Stock Option
Plans and to use its reasonable efforts to cause the cancellation, without
payment of any consideration therefor, of any “out-of-the-money” Options
outstanding pursuant to the Stock Option Plans. 
Subject to the receipt of any necessary approvals of Securities
Authorities, the Company may permit holders of Options to elect to receive, in
respect of each Share under Option, a payment equal to the positive difference
between the purchase price for each Share under the Offer less the exercise
price pursuant to the Option, less applicable withholding or other taxes, on
cancellation of such Options in lieu of exercising such options (and the
termination and cancellation, without the payment of any consideration thereof
of any unexercisable or unexercised options which have an exercise price which
is greater than the purchase price for each Share under the Offer), and, in
either case, use commercially reasonable efforts to procure from each holder of
Options an option termination agreement in form and substance satisfactory to
the Offeror.

2.8                               Subsequent
Acquisition Transaction

If, within 120 days after the date of the
Offer, the Offer has been accepted by Shareholders holding not less than 90% of
the outstanding Shares, excluding Shares held at the date of the Offer by or on
behalf of the Offeror, or an affiliate or associate of the Offeror, the Offeror
may, to the extent possible, acquire the remainder of the Shares from those
Shareholders who have not accepted the Offer pursuant to the statutory right of
acquisition pursuant to Section 206 of the CBCA.  The Company agrees that, upon the Offeror
taking up and paying for more than 66 2/3% of the outstanding Shares (on a
Diluted Basis) under the Offer, it will assist the Offeror in acquiring the
balance of the Shares as soon as practicable, but in any event, not later than
120 days after the Expiry Date, by such means as may be determined by the
Offeror, including by way of amalgamation, statutory arrangement, capital
reorganization or other transaction of the Company and the Offeror or an
affiliate of the Offeror (a “Subsequent Acquisition
Transaction”) for consideration per Share at least equal in value to
the consideration paid by the Offeror under the Offer.

 22

 

2.9                               Performance
of Acquisition Company

The Parent unconditionally and irrevocably guarantees, and covenants and
agrees to be jointly and severally liable with the Acquisition Company for, the
due and punctual performance of each and every obligation of the Acquisition
Company arising under this Agreement.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE PARENT

3.1                               Representations
and Warranties

The Parent hereby represents and warrants to the Company as set forth in
Schedule B to this Agreement, and acknowledges that the Company is relying upon
such representations and warranties in connection with the entering into of
this Agreement.

3.2                               Survival
of Representations and Warranties

The representations and warranties of the Parent contained in this
Agreement shall remain in effect during the term of this Agreement, and shall
expire upon the completion or expiration of the Offer or the termination of
this Agreement for any reason.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

4.1                               Representations
and Warranties

The Company hereby represents and warrants to the Parent as set forth in
Schedule C to this Agreement, and acknowledges that the Parent is relying upon
such representations and warranties in connection with the entering into of
this Agreement.

4.2                               Survival
of Representations and Warranties

The representations and warranties of the Company contained in this
Agreement shall remain in effect during the term of this Agreement, and shall
expire upon the completion or expiration of the Offer or the termination of
this Agreement for any reason.  No
investigations made by or on behalf of the Offeror or any of its authorized
agents at any time shall have the effect of waiving, diminishing the scope of
or otherwise affecting any representation, warranty or covenant made by the
Company herein or pursuant hereto.

ARTICLE 5

CONDUCT OF BUSINESS

5.1                               Conduct
of Business by the Company

The Company (which term for the purposes of this Section 5.1 includes
each of its Subsidiaries) covenants and agrees that, during the period from the
date of this Agreement until this Agreement is terminated by its terms, unless
the Offeror shall otherwise agree in writing, and except as otherwise expressly
permitted or specifically contemplated by this Agreement:

 23
 

 

(a)                                  the
business of the Company shall be conducted only in, and the Company shall not
take any action except in, the ordinary course of business and consistent with
past practice and in compliance with applicable Laws.  The Company shall use all reasonable efforts
to maintain and preserve its business organization and goodwill and assets, to
continue to diligently prosecute its clinical trials according to its current
schedule and budget (other than as disclosed in the Company Disclosure Letter),
to keep available the services of its officers and Employees and to maintain
satisfactory relationships with its suppliers, service providers, distributors,
customers and others having business relationships with the Company, and shall
not, other than as disclosed in the Company Disclosure Letter, make any
material change in the business, assets, liabilities, operations, capital or
affairs of the Company, in particular, with respect to the prosecution, budget,
nature, progress or reporting with respect to its clinical trials except as required
by applicable laws;

(b)                                 the
Company shall not directly or indirectly do or permit to occur any of the
following:

(i)                                     amend
the Company Governing Documents;

(ii)                                  declare,
pay or set aside for payment any dividend or other distribution of any kind
(whether in cash, shares, property or otherwise) in respect of Shares or other
securities owned by any Person;

(iii)                               issue,
sell or pledge or agree to issue, sell or pledge any Shares or other securities
of the Company, or securities convertible into or exchangeable or exercisable
for, or otherwise evidencing a right to acquire Shares, other than Shares
issuable pursuant to the terms of the Options outstanding on the date hereof,
as previously disclosed in the Company Reports;

(iv)                              redeem,
purchase or otherwise acquire any of its outstanding Shares or other
securities;

(v)                                 split,
combine or reclassify any of its Shares;

(vi)                              adopt
a plan of liquidation or resolutions providing for the liquidation,
dissolution, merger, consolidation or reorganization of the Company;

(vii)                           reduce
the stated capital of the Company;

(viii)                        reorganize,
amalgamate or merge the Company with any other Person; or

(ix)                                enter
into or modify any Contract to do any of the foregoing;

(x)                                   sell,
pledge, lease, dispose of or grant any Encumbrance over or in respect of any of
its assets, except in the ordinary course of business (subject to a maximum
value of $100,000 per individual asset and an aggregate maximum value of all
assets of $500,000);

 24
 

 

(xi)                                except
for planned acquisitions or investments as previously disclosed acquire (by
merger, amalgamation, consolidation, acquisition of shares or assets or
otherwise) another Person or division thereof or make any investment either by
purchase of shares or securities, contribution of capital (other than to
wholly- owned Subsidiaries), property transfer or purchase of any property or
assets of any other Person or division thereof, except for purchases of
inventory or equipment or short term debt securities in the ordinary course of
business consistent with past practice;

(xii)                             incur
any indebtedness for borrowed money or any other material liability or
obligation or issue any debt securities or assume, guarantee, endorse or
otherwise become responsible for or agree to indemnify the obligations of any
other Person (other than in respect of the Company or one of its Subsidiaries)
or make any loans or advances, except in the ordinary course of business;

(xiii)                          except
for planned expenditures as previously disclosed, expend or commit to expend
any amounts with respect to capital expenses except in the ordinary course of
business (subject to a maximum of $250,000 per expenditure and an aggregate
maximum of all expenditures of $500,000);

(xiv)                         except as
previously disclosed, discharge or satisfy any material Claims, liabilities or
obligations other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in the
Financial Statements or of liabilities incurred since March 31, 2006 in the
ordinary course of business;

(xv)                            except
as previously disclosed, waive, release, relinquish, license, lease, grant or
transfer any rights of material value, except in the ordinary course of
business, or modify, amend or change in any material respect any existing Material
Contract or any material Permit;

(xvi)                         except as
previously disclosed, enter into or renew any Contract (i) containing (A) any
limitation or restriction on the ability of the Company or, following
completion of the transactions contemplated hereby, the ability of the Parent
or its Subsidiaries, to engage in any type of activity or business, (B) any
limitation or restriction on the manner in which, or the localities in which,
all or any portion of the business of the Company or, following consummation of
the transactions contemplated hereby, all or any portion of the business of
Parent or its Subsidiaries, is or would be conducted, or (C) any limit or
restriction on the ability of or, following completion of the transactions
contemplated hereby, the ability of the Parent or its Subsidiaries, to solicit
customers or employees, (ii) that would reasonably be expected to materially
delay or prevent the consummation of the transactions contemplated by this
Agreement, or (iii) that involves or would reasonably be expected to involve
payments in excess of $500,000 in the aggregate over the term of the contract
and that 

 25
 

 

is not terminable within 30 calendar days of
the Take-Up Date without payment by the Parent or its Subsidiaries except with
respect to the Company’s current premises lease that expires on January 31,
2007;

(xvii)                      commence or
settle any litigation, proceeding, Claim, action, assessment, or investigation
involving the Company before any Governmental Authority other than claims
settled in the ordinary course of business, consistent with past practice that
involves solely monetary damages not in excess of $100,000 individually and
$500,000 in the aggregate; or

(xviii)                   authorize or
propose any of the foregoing, or enter into or modify any Contract to do any of
the foregoing;

(c)                                  the
Company shall use its reasonable efforts to cause the current insurance (or re
insurance) policies of the Company to remain in force and not to be cancelled
or terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies underwritten
by insurance and re-insurance companies of nationally recognized standing
providing coverage equal to or greater than the coverage under the cancelled,
terminated or lapsed policies for substantially similar premiums are in full
force and effect;

(d)                                 the
Company shall not increase any coverage or premiums under any directors’ and
officers’ insurance policy or implement or enter into any new policy (other
than a renewal of existing policies), except as contemplated by Section 6.7;

(e)                                  the
Company shall not take any action or omit to take any action that would render,
or that reasonably may be expected to render any representation or warranty
made by it in this Agreement misleading or untrue in any material respect and
not take any action or omit to take any action which would cause, or which
reasonably may be expected to cause, any condition of the Offer not to be
satisfied;

(f)                                    the
Company shall not create any new Officer Obligations, and the Company shall not
grant to any officer, director or Employee an increase in compensation in any
form (including any bonuses or salary increases), make any loan to any officer,
director or Employee, take any action with respect to the grant of any
severance, retention or termination remuneration arising from the Offer or a
change of control of the Company, enter into or modify any employment agreement
with any officer, director or Employee or enter into any other agreement with
respect to any increase of benefits payable under its current severance,
retention or termination remuneration or any other policies, except (i)
pursuant to existing arrangements as previously disclosed, or (ii) to give
effect to practices regarding employee wages and benefits in the normal course
consistent with past practices;

 26
 

 

(g)                                 the
Company shall duly and timely file all material forms, reports, schedules,
statements and other documents required to be filed pursuant to any applicable
Laws, including corporate Laws and Securities Laws;

(h)                                 the
Company shall not adopt, amend or waive any performance or vesting criteria,
accelerate vesting, exercisability or funding or make any contribution to any
bonus, profit sharing, Stock Option Plans or any stock option thereunder,
pension, retirement, deferred compensation, insurance, incentive compensation,
other compensation or other similar plan, agreement, trust, fund or
arrangements for the benefit of Employees, except (i) as contemplated in this
Agreement, (ii) as is necessary to comply with Laws, or (iii) with respect to
existing provisions of any such plans, agreements, programs or arrangements as
previously disclosed;

(i)                                     the
Company shall:

(ii)                                  duly
and timely file all Tax Returns required to be filed by it on or after the date
hereof and all such Tax Returns will be true, complete and correct in all
material respects;

(iii)                               timely
withhold, collect, remit and pay all Taxes which are to be withheld, collected,
remitted or paid by it;

(iv)                              not
make or rescind any material election relating to Taxes;

(v)                                 not
make a request for a tax ruling or enter into any agreement with any taxing
authorities or consent to any extension or waiver of any limitation period with
respect to Taxes;

(vi)                              not
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes; and

(vii)                           not
change any of its methods of reporting income, deductions or accounting for
income tax purposes from those employed in the preparation of its income Tax
Return for its tax year most recently ended, except as may required by
applicable Laws.

ARTICLE 6

COVENANTS OF THE COMPANY

6.1                               Notice
of Material Change

From the date hereof and until the termination of this Agreement, the
Company shall promptly notify the Offeror in writing of:

(a)                                  the
occurrence of or impending or anticipated occurrence of any Material Adverse
Change;

 27
 

 

(b)                                 any
facts or circumstances which would cause the Company’s representations and
warranties set forth in this Agreement to be misleading or untrue in any
material respect or which would lead to the breach in any respect of any of the
Company’s material covenants or obligations set forth in this Agreement; or

(c)                                  any
governmental or third party complaints, investigations or hearings which could
be material and adverse to the business, operation, or financial condition of
the Company (on a consolidated basis) or communications indicating that the
same may be threatened or contemplated.

6.2                               Non-Completion
Fee

(a)                                  The
Company shall pay to the Parent as liquidated damages for the Parent’s rights
under this Agreement the sum of $19.5 million (the “Non-Completion Fee”) if:

(i)                                     this
Agreement is terminated in the circumstances set out in Section 8.1(d), 8.1(e),
8.1(f) or 8.1(g);

(ii)                                  this
Agreement is terminated pursuant to Section 8.1(h) as a result of the Company
being in default of any of its covenants or obligations contained in Section
6.3 of this Agreement;

(iii)                               the
Board of Directors fails to disseminate or file the Directors’ Circular or
Schedule 14D-9, or any amendment thereto, in accordance with Section 2.4; or

(iv)                              (A)
prior to the termination of this Agreement, an Alternative Transaction is
publicly announced; (B) an Alternative Transaction is consummated during the period
commencing on the date hereof and ending 12 months following the termination of
this Agreement, or the Board of Directors approves or recommends an Alternative
Transaction during such 12 month period and such Alternative Transaction is
subsequently consummated at any time thereafter, or the Company enters into a
definitive agreement with respect to an Alternative Transaction during such 12
month period and such Alternative Transaction is subsequently consummated at
any time thereafter, and (C) the Effective Time has not occurred.

For
greater certainty, the Company shall not be obligated to make more than one
payment under this Section 6.2 if one or more of the events specified herein
occurs.

(b)                                 Payment
of the Non-Competition Fee shall be due: (i) 
forthwith (and in any event within 5 Business Days) following the
termination of this Agreement, but prior to or concurrently with termination in
the case of a termination pursuant to Section 8.1(f); and (ii) in the case of
the circumstances specified in Section 6.2(a)(iv), prior to or concurrently
with the consummation of the Alternative Transaction.  Such payments shall be made in immediately
available funds to an account designated by the payee.

 28
 

 

6.3                               Non-Solicitation

(a)                                  The
Company shall immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any third parties or any agent or
representative thereof, conducted on or on behalf of the Company before the
date of this Agreement with respect to any Alternative Transaction, and shall
as soon as practicable request the return or destruction of all confidential
information previously provided to any other person in connection therewith
(subject to the right of the recipient to retain a copy solely for archival or
compliance purposes pursuant to the terms of any confidentiality between the
Company and such party), except as contemplated by Section 2.5(b). The Company
agrees not to release or permit the release of any third party from any
confidentiality or standstill obligation set forth in any agreement with the
Company to which such third party is a party or bound; it being understood
however that such standstill obligation (i) may, in some circumstances be
terminated unilaterally by the third party in accordance with the terms of the
applicable confidentiality agreement and  
(ii) may be terminated by the Company in order to permit the
implementation of a Superior Proposal where the Board of Directors determines
that such third party has made or is reasonably likely to make a Superior
Proposal.

(b)                                 The
Company and its Subsidiaries shall not, and shall instruct and direct and use
reasonable efforts to cause their respective Employees, financial advisors,
counsel or other representatives or agents, directly or indirectly, not to:

(i)                                     solicit,
initiate or encourage any Alternative Transaction;

(ii)                                  participate
in any discussions or negotiations with any Person (other than the Offeror and
its Subsidiaries and their respective directors, officers, employees, agents,
financial advisors, counsel or other representatives) in respect of any
Alternative Transaction;

(iii)                               permit
access to the Company’s electronic data room or provide any confidential
information relating to the Company or its Subsidiaries to any Person in
connection with any Alternative Transaction; or

(iv)                              otherwise
co-operate in any way with any effort or attempt by any other person to do or
seek to do any of the foregoing;

provided,
however, that the Company shall not be bound by the foregoing restrictions in
paragraphs (ii), (iii) and (iv) of this Section 6.3(b) in respect of any
proposal that could reasonably be expected to lead to (in the determination of
the Board of Directors) a Superior Proposal received by the Company from
another Person, provided it was not solicited by the Company, any Subsidiary of
the Company, or any of their respective Employees, financial advisors, counsel
or other representatives or agents after the date hereof provided the Company
complies with the requirements of Section 2.5.

 29
 

 

6.4                               Board
of Directors of the Company

Immediately following the acquisition pursuant to the Offer by the
Offeror of at least such number of Shares as represents a majority of the then
outstanding Shares, and from time to time thereafter, the Company shall
co-operate with the Offeror and upon request, use reasonable efforts subject to
the provisions of the CBCA, to (i) secure the resignations of such number of
Company directors as may be required to enable the Offeror’s designees to be
elected or appointed to the Board of Directors, such representation to be
effective at such time as may be required by the Offeror, to cause the election
or appointment of the Offeror’s nominees to fill the vacancies so created in
order to effect the foregoing without the necessity of a shareholder meeting,
and (ii) expand the size of the Board of Directors.

6.5                               Pre-Acquisition
Reorganization

Upon request by the Offeror, the Company shall (i) effect such
reorganizations of its business, operations and assets or such other
transactions as the Offeror may request, acting reasonably (each a “Pre-Acquisition Reorganization”) and (ii) co-operate with
the Offeror and its advisors in order to determine the nature of the
Pre-Acquisition Reorganizations that might be undertaken and the manner in which
they might most effectively be undertaken; provided that the Pre-Acquisition
Reorganizations are not prejudicial to the Company in any material respect, do
not result in any breach by the Company of any of its covenants,
representations or warranties under this Agreement (unless the Offeror has
waived such breach in respect of such request) and is not materially
prejudicial to the Shareholders.  The
Offeror shall provide written notice to the Company of any proposed
Pre-Acquisition Reorganization at least ten Business Days prior to the Expiry
Time.  Upon receipt of such notice, the
Offeror and the Company shall work co operatively and use commercially
reasonable efforts to prepare prior to the Expiry Time all documentation
necessary and do all such other acts and things as are necessary to give effect
to such Pre-Acquisition Reorganization. 
The completion of any such Pre-Acquisition Reorganization shall be
effected immediately prior to any take-up by the Offeror of Shares tendered to
the Offer.

6.6                               Accuracy
of Representations

The Offeror covenants and agrees that the Offeror shall not take any
action, or fail to take any action, within its control which would result in
any representation and warranty set out in Article 3 being untrue in any
material respect at any time while the Offer is outstanding.

6.7                               Directors’
and Officers’ Insurance

From and after the Effective Time, the Offeror agrees that for the
period from the Expiry Time until six years after the Expiry Time, the Offeror
will cause the Company or any successor to the Company to use commercially
reasonable efforts to maintain (subject to the limitation below) the Company’s
current directors’ and officers’ insurance policy or a policy reasonably
equivalent subject in either case to terms and conditions no less advantageous
to the directors and officers of the Company than those contained in the policy
in effect on the date hereof, for all present and former directors and officers
of the Company and its Subsidiaries, covering claims made prior to or within
six years after the Expiry Time or, alternatively, the Parent shall cause the
Company to, 

 30
 

 

or the Company may, purchase as an extension to the Company’s current
insurance policies, pre-paid non-cancellable run-off directors’ and officers’
liability insurance providing such coverage for such Persons on terms
comparable to those contained in the Company’s current insurance policies, in
either case, provided that the aggregate cost of such run-off policy shall not
be greater than 300% of the annual premium under the Company’s current
insurance policy.   From and after the
Effective Time, the Offeror shall, and shall cause the Company (or its
successor), to, indemnify the current and former directors and officers of the
Company and its Subsidiaries to the fullest extent to which the Company is
permitted to indemnify such officers and directors under its charter, by-laws,
existing contracts of indemnity and under applicable Law.

6.8                               Employment
Agreements

Parent and Acquisition Company covenant and agree that, after the
Effective Time, Parent and Acquisition Company will cause the Company, and any
successor to the Company (including any surviving entity), to agree to honour,
perform or cause to be performed all existing employment, retention and change
of control agreements of the Company as are previously disclosed to the Offeror
and all arrangements for the benefit of the officers or employees of the
Company party thereto, provided for therein or contemplated thereby and will
make available to the Company or any successor to the Company (including any
surviving entity) any financing required in order to make payment of amounts
payable under any employment and retention agreements and incentive plans or
arrangements as are previously disclosed.

ARTICLE 7

MUTUAL COVENANTS

7.1                               Additional
Agreements and Filings

Subject to the terms and conditions herein provided, each of the parties
agrees to use its reasonable efforts to take, or cause to be taken, all
reasonable actions and to do, or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and to co-operate
with each other in connection with the foregoing, including using reasonable
efforts:

(a)                                  to
obtain all necessary waivers, consents and approvals from other parties to the
Material Contracts identified in the Company Disclosure Letter;

(b)                                 to
obtain all necessary consents, approvals and authorizations as are required to
be obtained under any Law;

(c)                                  to
defend all lawsuits or other legal proceedings challenging this Agreement or
the consummation of the transactions contemplated hereby;

(d)                                 to
cause to be lifted or rescinded any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby;

(e)                                  to
effect all necessary registrations and other filings and submissions of
information requested by Governmental Authorities or required under any 

 31
 

 

applicable Securities Laws, or any other Law
relating to the transactions contemplated herein; and

(f)                                    to
fulfil all conditions and satisfy all provisions of this Agreement and the
Offer.

7.2                               Investment
Canada

(a)                                  Without
limiting the generality of Section 7.1, if determined to be required by counsel
of the Offeror, the Offeror will make an application for review required under
Part IV of the Investment Canada Act and/or any
other submissions, notifications or filings pursuant to such Act as may be
appropriate and advisable as promptly as reasonably practicable and to supply
as promptly as reasonably practicable any additional information and
documentary material that may be reasonably requested by the Director of
Investments or the Minister of Industry or their designates and to take all
other reasonable actions necessary, proper or advisable (including without
limiting the generality of the foregoing, reasonable written undertakings to
Her Majesty in right of Canada) and to obtain as soon as reasonably practicable
the notice from the Minister stating that he is satisfied that the investment
is likely to be of net benefit to Canada.

(b)                                 Other
than to the extent any Laws expressly require the Company or any of its
Subsidiaries to obtain any consent, clearance or approval of any Governmental
Authority or to make any filing with any Governmental Authority, the Offeror
shall be solely responsible for making all such filings and otherwise pursuing
all required consents, clearances and approvals from Governmental Authorities
which are required to consummate the transactions contemplated by this
Agreement and shall advise the Company of any filings or notices made or other
communications given or received in connection with such consents, clearances
and approvals.

(c)                                  All
filing fees required in connection with the notification of the transactions
contemplated by this Agreement or the application for or prosecution of any
consent, clearance, approval, authorization, registration, filing or submission
in accordance with this Section 7.2 shall be borne by the Offeror.  Unless otherwise provided, all other fees,
expenses and disbursements (including the costs of preparation of any such
filings and fees and expenses of legal counsel) incurred in connection with the
matters referred to in this Section 7.2 shall be borne by the Offeror if
incurred by or on its behalf and by the Company if incurred by or on behalf of
the Company.

(d)                                 Each
of the Offeror and the Company shall promptly notify the other if at any time
before the Expiry Time it becomes aware that the Bid Circular, the Directors’
Circular, an application for an order, any registration, consent, circular or
approval, or any other filing under applicable Laws contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading in the light of the circumstances in which they are made, or that
otherwise requires

 32

 

an amendment or supplement to the Bid
Circular, the Directors’ Circular, such application, registration, consent,
circular, approval or filing, and the Offeror and the Company shall co-operate
in the preparation of any amendment or supplement to the Bid Circular, the
Directors’ Circular, application, registration, consent, circular, approval or
filing, as required.

7.3                               Access
to Information

Subject to the Confidentiality
Agreement, the Company shall afford the Offeror’s officers, employees, counsel,
accountants and other authorized representatives and advisers reasonable
access, during normal business hours and at such other time or times as the
Offeror may reasonably request from the date hereof and until the expiration of
this Agreement, to its properties, books, contracts and records as well as to
its management personnel, and, during such period, the Company shall furnish
promptly to the Offeror in writing all information concerning its business,
properties and personnel as the Offeror or its representatives may reasonably
request.  The Company agrees to provide
its reasonable cooperation to the Parent in connection with the preparation of,
and provide reasonable access to its books and records in connection with, (i)
any disclosure document relating to any financing undertaken or proposed to be
undertaken by the Parent, or (ii) any filing made by the Parent with any
applicable Securities Authorities.  The
Company further agrees to assist the Offeror in all reasonable ways in any
investigations which it may wish to conduct. 
Any investigation by the Offeror and its representatives after the date
of this Agreement shall not mitigate, diminish or affect the representations
and warranties of the Company contained in this Agreement or any document or
certificate given pursuant hereto.

7.4                               Privacy
Issues

(a)                                  For
the purposes of this Section 7.4 following definitions shall apply:

(i)                                     “Applicable Law” means, in relation to any
person, transaction or event, all applicable provisions of laws, statutes,
regulations, by-laws, statutory rules, orders, ordinances, protocols, codes,
guidelines, notices, directions and terms and conditions of any grant of
approval, permission, authorities or license of any Authorized Authority by
which such person is bound or having application to the transaction or event in
question, including Applicable Privacy Laws.

(ii)                                  “Applicable Privacy Laws” means any and all
Applicable Laws relating to privacy and the collection, use and disclosure of
Personal Information in all applicable jurisdictions, including but not limited
to the Personal Information Protection and Electronic
Documents Act (Canada) and/or any comparable provincial law
including the Personal Information Protection Act
(British Columbia).

(iii)                               “Authorized Authority” means, in relation to
any person, transaction or event, any (A) federal, provincial, municipal or
local governmental body (whether administrative, legislative, executive or
otherwise), both 

 33
 

 

domestic and foreign, (B) agency, authority,
commission, instrumentality, regulatory body, courts central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, (C) court,
arbitrator, commission or body exercising judicial, quasi-judicial,
administrative or similar functions, and (D) other body or entity created under
the authority of or otherwise subject to the jurisdiction of any of the
foregoing, including any stock or other securities exchange, in each case
having jurisdiction over such person, transaction or event.

(iv)                              “party” means the Company or the Offeror, as
applicable, and “parties” means
any of them.

(v)                                 “Personal Information” means information
about an individual transferred to the Offeror by the Company in accordance with
this Agreement and/or as a condition of the Offer.

(b)                                 The
parties hereto acknowledge that they are responsible for compliance at all
times with Applicable Privacy Laws which govern the collection, use and
disclosure of Personal Information acquired by or disclosed to any party
pursuant to or in connection with this Agreement (the “Disclosed Personal Information”).

(c)                                  No
party shall use the Disclosed Personal information for any purposes other than
those related to the performance of this Agreement and the completion of the
transactions contemplated in this Agreement.

(d)                                 Each
party acknowledges and confirms that the disclosure of Personal Information is
necessary for the purposes of determining if the parties shall proceed with the
transactions contemplated in this Agreement, and that the disclosure of
Personal Information relates solely to the carrying on of the business and the
completion of the transactions contemplated in this Agreement.

(e)                                  Each
party acknowledges and confirms that it has and shall continue to employ
appropriate technology and procedures in accordance with Applicable Law to
prevent accidental loss or corruption of the Disclosed Personal Information,
unauthorized input or access to the Disclosed Personal Information, or
unauthorized or unlawful collection, storage, disclosure, recording, copying,
alteration, removal, deletion, use or other processing of such Disclosed
Personal Information.

(f)                                    Each
party shall at all times keep strictly confidential all Disclosed Personal
Information provided to it, and shall instruct those employees or advisors
responsible for processing such Disclosed Personal Information to protect the
confidentiality of such information in a manner consistent with the parties’
obligations hereunder.  Each party shall
ensure that access to the Disclosed Personal Information shall be restricted to
those employees or advisors of the 

 34
 

 

respective party who have a bona fide need to
access to such information in order to complete the transactions contemplated
by this Agreement.

(g)                                 Each
party shall promptly notify the other party to this Agreement of all inquiries,
complaints, requests for access, and claims of which the party is made aware in
connection with the Disclosed Personal Information.  The parties shall fully co-operate with one
another, with the persons to whom the Personal Information relates, and any
Authorized Authority charged with enforcement of Applicable Privacy Laws, in
responding to such inquiries, complaints, requests for access, and claims.

(h)                                 Upon
the expiry or termination of this Agreement, or otherwise upon the reasonable
request of either party, the counterparty shall forthwith cease all use of the
Personal Information acquired by the counterparty in connection with this
Agreement and will return to the party or, at the party’s request, destroy in a
secure manner, the Disclosed Personal Information (and any copies).

ARTICLE 8

TERMINATION, AMENDMENT AND WAIVER

8.1                               Termination

This Agreement may be
terminated by written notice given to the other party, at any time prior to
completion of the transactions contemplated hereby:

(a)                                  by
mutual written consent of the Company and the Parent;

(b)                                 by
the Company, if the Take-up Date has not occurred within 80 days of the Latest
Mailing Time (the “Offer Deadline”);
provided, however, that if the Offeror’s take-up and payment for Shares
deposited under the Offer is delayed by  
an injunction or order made by a court or regulatory authority of
competent jurisdiction, or   the Offeror
not having obtained any regulatory waiver, consent or approval which is
necessary to permit the Offeror to take up and pay for Shares deposited under
the Offer, then, provided that such injunction or order is being contested or
appealed or such regulatory waiver, consent or approval is being actively
sought, as applicable, this Agreement shall not be terminated by the Company
pursuant to this Section 8.1 until the earlier of (A) 110 days after the Offer
is commenced and (B) the tenth Business Day following the date on which such
injunction or order ceases to be in effect or such waiver, consent or approval
is obtained, as applicable;

(c)                                  by
the Offeror, if any condition of the Offer set forth in Schedule A is not
satisfied or waived by the Expiry Date;

(d)                                 by
the Offeror if: (i) the Board of Directors of the Company or any committee
thereof withdraws, modifies or changes its recommendation in favour of the
Offer; or (ii) the Board of Directors or any committee thereof approves or
recommends acceptance of an Alternative Transaction;

 35
 

 

(e)                                  by
the Offeror, if the Board of Directors or any committee thereof fails to
publicly affirm its approval or recommendation of the Offer within two Business
Days of any written request to do so from the Offeror;

(f)                                    by
the Company, if the Company, having complied with the requirements of Section
2.5 and provided that the Company has not breached any of its covenants,
agreements or obligations in this Agreement, proposes to enter into a
definitive agreement with respect to a Superior Proposal, provided that the Company
has previously or concurrently will have paid the Parent the Non-Completion
Fee;

(g)                                 by
either the Offeror or the Company, if the Offeror has been notified in writing
by the Company of an Alternative Transaction in accordance with Section 2.5
and: (i) the Offeror does not amend the Offer within the time contemplated for
providing the notice under Section 2.5(c); or (ii) the Board of Directors
determines, acting in good faith and in the proper discharge of its fiduciary
duties, that after the lapse of such period the Alternative Transaction
continues to be a Superior Proposal in comparison to the amended Offer of the
Offeror;

(h)                                 by
the Offeror, if there has been a breach or non-performance by the Company of a
material obligation or covenant contained in this Agreement or if any
representation or warranty of the Company contained in this Agreement is or has
become untrue or incorrect after the date hereof such that the condition
contained in paragraph (e) or (f) of Schedule A would not be satisfied and such
breach, non-performance or untruth or incorrectness is not curable or, if
curable, is not cured by the earlier of such date which is 30 days from the
date of notice of such breach from the Offeror, and the Expiry Time (or any
extension of the Expiry Time made within such 30 day period);

(i)                                     by
the Company, if there has been a breach or non-performance by the Offeror of a
material obligation or covenant contained in this Agreement or if any
representation or warranty of the Offeror contained in this Agreement is or has
become untrue or incorrect in any material respect after the date hereof and
such breach, non-performance or untruth or incorrectness is not curable or, if
curable, is not cured by the earlier of such date which is 30 days from the
date of notice of such breach from the Company, and the Expiry Time (or any
extension of the Expiry Time made within such 30 day period);

(j)                                     by
the Offeror, any time on or prior to the Latest Mailing Time, if any condition
to making the Offer is not satisfied or waived by such date other than as a
result of the Offeror’s default hereunder; or

(k)                                  by
the Company, if the Offeror does not mail the Offer within the time prescribed
by Section 2.1 or if the Offer does not comply with the provisions hereof in
any material respect.

 36
 

 

8.2                               Effect
of Termination

In the event of the
termination of this Agreement as provided in Section 8.1, this Agreement shall
forthwith have no further force or effect, and there shall be no obligation on
the part of the Offeror or the Company hereunder except as set forth in Article
1, Section 6.2, Section 9.7 and this Section 8.2, which provisions shall
survive the termination of this Agreement. 
In the case of termination, nothing herein shall relieve any party from
liability for any breach of any covenant, agreement, representation or warranty
under this Agreement.  For greater
certainty, the compensation or damages to be paid to the Parent pursuant to
Section 6.2 is the Parent’s sole remedy in compensation or damages for a breach
of the Agreement relating to the matters described in Sections 2.5, 6.2 and
6.3; provided, however, that nothing contained in this Section 8.2, and no
payment of an amount under Section 6.2, shall relieve or have the effect of
relieving any party in any way from liability for damages incurred or suffered
by a party as a result of an intentional or wilful breach of this
Agreement.  Nothing herein shall preclude
a party from seeking injunctive relief to restrain any breach or threatened
breach of the covenants or agreements set forth in this Agreement or otherwise
to obtain specific performance of any such covenants or agreements, without the
necessity of posting bond or security in connection therewith.

8.3                               Amendment

This Agreement may be amended
by mutual agreement in writing between the parties.

8.4                               Waiver

Each of the Offeror, on the
one hand, and the Company, on the other hand, may:

(a)                                  extend
the time for the performance of any of the obligations or other acts of the
other;

(b)                                 waive
compliance with the other’s agreements or the fulfilment of any conditions to
its own obligations contained herein; or

(c)                                  waive
inaccuracies in any of the other’s representations or warranties contained
herein or in any document delivered by the other party;

provided, however, that any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.

ARTICLE 9

GENERAL PROVISIONS

9.1                               Disclosure

Except as expressly
contemplated herein or as required by applicable Laws or by any Governmental
Authority or Securities Authority, no party shall make any press release or
filing with any Securities Authority with respect to this Agreement or the
transactions contemplated herein without consulting with the other party;
provided that any subsequent disclosure of 

 37
 

 

information included in any
previously consulted upon press release or filing shall not require further
consultation with the other party.  The
parties agree to consult with each other prior to issuing any public announcement
or statement with respect to this Agreement or the transactions contemplated
herein.  The parties hereby agree to the
dissemination of the press releases attached as Schedule D hereto as soon as
practicable after the execution hereof.

9.2                               Notices

Any notice, consent, waiver,
direction or other communication required or permitted to be given under this
Agreement by a party shall be in writing and shall be given by personal
delivery, facsimile transmission or by delivery addressed to the party to which
the notice is to be given at its address for service herein.  Any notice, consent, waiver, direction or
other communication aforesaid shall, if delivered, be deemed to have been given
and received on the date on which it was delivered to the address provided
herein (if a Business Day, if not, then the next succeeding Business Day) and
if sent by facsimile transmission be deemed to have been given and received at
the time of receipt (if a Business Day, if not, then the next succeeding
Business Day) unless actually received after 4:00 p.m. (Vancouver time) at the
point of delivery in which case it shall be deemed to have been given and
received on the next Business Day.

The address for service for
each of the parties hereto shall be as follows:

(a)                                  if
to the Company:

200 — 20353 64th Avenue

Langley, British Columbia

V2Y 1N5

	
  Attention:

  	
   

  	
  Chairman and Interim Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Fax No.:

  	
   

  	
  (604) 530-0976

  

 

with a copy to but not as
notice to:

Farris, Vaughan, Wills & Murphy LLP

25th Floor

700 West Georgia Street

Vancouver, British Columbia

V7Y 1B3

	
  Attention:

  	
   

  	
  R. Hector MacKay-Dunn, Q.C.

  
	
   

  	
   

  	
   

  
	
  Fax No.:

  	
   

  	
  (604) 661-9349

  

 

and to:

Dorsey & Whitney LLP

1605 — 777 Dunsmuir Street

Vancouver, British Columbia

V7Y 1K4

 38
 

 

 

	
  Attention:

  	
   

  	
  Daniel M. Miller

  
	
   

  	
   

  	
   

  
	
  Fax No.:

  	
   

  	
  (604) 687-8504

  

 

(b)                                 if
to the Parent:

40 Landsdowne Street

Cambridge, Massachusetts

02139

	
  Attention:

  	
   

  	
  General Counsel

  
	
   

  	
   

  	
   

  
	
  Fax No.:

  	
   

  	
  617-374-0074

  

 

with a copy to but not as
notice to:

McCarthy Tetrault LLP

1300 — 777 Dunsmuir Street

Vancouver, British Columbia

V7Y 1K2

	
  Attention:

  	
   

  	
  Tim McCafferty

  
	
   

  	
   

  	
   

  
	
  Fax No.:

  	
   

  	
  (604) 622-5780

  

 

and to:

WilmerHale

60 State Street

Boston, Massachusetts,

02110

	
  Attention:

  	
   

  	
  Michael LaCascia

  
	
   

  	
   

  	
   

  
	
  Fax No.:

  	
   

  	
  (617) 526-5000

  

 

9.3                               Entire
Agreement

Except for the Confidentiality
Agreement, this Agreement constitutes the entire agreement between the parties,
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.

 39
 

 

9.4                               Enurement

This Agreement shall be
binding upon and enure to the benefit of the parties and their respective
successors and assigns.

9.5                               Third
Parties

This Agreement shall not be
interpreted or construed to give any other Person any right or recourse
whatsoever against the parties hereto, provided however that Section 6.8 is
intended for the benefit of the officers and employees of the Company that are
or will be party to or participants in the employment, retention or change of control
agreements and arrangements referred to in Section 6.8 and Section 6.7 is
intended for the benefit of the directors and officers of the Company and such
sections will be enforceable by each of such persons and his or her heirs,
executors, administrators and other legal representatives (collectively, the “Company Beneficiaries”) and the Company and any successors
to the Company (including any surviving entity) will hold the rights and
benefits of Section 6.7 and 6.8 and this Section 9.5 in trust for and on behalf
of the Company Beneficiaries and the Company hereby accepts such trust and
agrees to hold the benefit of and enforce performances of such covenants on
behalf of the Company Beneficiaries and such rights are in addition to, and not
in substitution for, any other rights that any the Company Beneficiary may have
by contract or otherwise, provided however that no approval of any beneficiary
of such trust will be required in connection with an amendment or variation of
Section 6.7 and 6.8 or this Section 9.5 prior to the Effective Date.

9.6                               Assignment

Except as expressly permitted
by the terms hereof, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
express written consent of the other parties. 
Notwithstanding the foregoing provisions of this Section 9.6 (i) the
Parent may, prior to making the Offer, designate, by written notice to the
Company, a direct or indirect wholly-owned Subsidiary of the Parent to be a party
hereto and to be deemed the Acquisition Company hereunder, in which event all
references herein to the Acquisition Company shall be deemed references to such
Subsidiary, except that all representations and warranties made with respect to
the Acquisition Company shall be deemed made as of the date of such
designation, and (ii) the Offeror may assign all or any part of its rights or
obligations under this Agreement to a direct or indirect wholly-owned
Subsidiary of the Parent, to a corporation which directly or indirectly
wholly-owns the Parent, or to a direct or indirect wholly-owned Subsidiary of
such a corporation, provided that any such assignment will have no material
adverse tax or other effects to the Company or the holders of Shares, and
provided further that if such assignment takes place, the Parent shall continue
to be liable to the Company for any default in performance by the assignee.

9.7                               Expenses

Except as provided in Sections
6.2 and 7.2(c), all fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fee, cost or expense, whether or not the Offer is consummated.

 40
 

 

9.8                               Severability

Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable Law. 
Any provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall be ineffective only to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

9.9                               Counterpart
Execution

This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one and the same agreement effective
as of the date hereof.

 41
 

 

IN WITNESS WHEREOF, each of
the Company and the Parent have caused this Agreement to be executed as of the
date first written above by their respective officers thereunto duly
authorized.

	
   

  	
  ANORMED INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth Gailbraith

  	
   

  
	
   

  	
   

  	
  Name: Kenneth
  Galbraith

  
	
   

  	
   

  	
  Title: Chairman
  and Interim CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  MILLENNIUM PHARMACEUTICALS,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Laurie B. Keating

  	
   

  
	
   

  	
   

  	
  Name: Laurie B.
  Keating

  
	
   

  	
   

  	
  Title: Senior
  Vice President, General

  
	
   

  	
   

  	
  Counsel and
  Secretary

  
					

 

 42

 

SCHEDULE
A 

CONDITIONS OF THE OFFER

The
Offeror will have the right to withdraw the Offer and not take up and pay for,
or extend the period of time during which the Offer is open and postpone taking
up and paying for, the Shares deposited under the Offer unless all of the
following conditions are satisfied or the Offeror has waived them at or prior
to the relevant Expiry Time:

(a)                                  there
shall have been validly deposited under the Offer and not withdrawn as at the
Expiry Time of the Offer, such number of Shares which, together with any Shares
directly or indirectly owned by the Offeror or its Affiliates, represents at
least 66 2/3% of the issued and outstanding Shares calculated on a Diluted
Basis;

(b)                                 all
requisite governmental or regulatory consents, approvals or decisions
(including, without limitation, those of any Securities Authorities) that are
necessary in connection with the Offer shall have been obtained on terms
satisfactory to the Offeror, acting reasonably, and all waiting periods imposed
by applicable Laws shall have expired or been terminated;

(c)                                  no
act, action, suit, demand or proceeding shall have been threatened in writing
or taken before or by any Canadian or foreign Governmental Authority or by any
elected or appointed public official or private person (including, without
limitation, any individual, corporation, firm, group or other entity) in
Canada, the United States or elsewhere whether or not having the force of Law;
and   no Law, regulation or policy shall
have been proposed, enacted, promulgated or applied:

(A)                              to
cease trade, enjoin, prohibit or impose material limitations or conditions on
the purchase by or the sale to the Offeror of any of the Shares or the right of
the Offeror to own or exercise full rights of ownership of the Shares; or

(B)                                which,
if the Offer was consummated, would reasonably be expected to lead to a
Material Adverse Change or which would materially and adversely affect the
ability of the Offeror to effect a Subsequent Acquisition Transaction;

(d)                                 there
shall not exist any prohibition at Law against the Offeror making the Offer or
taking up and paying for any Shares deposited under the Offeror;

(e)                                  the
Company shall not have breached or failed to perform a material obligation or
covenant set forth in this Agreement that would result in or cause a Material
Adverse Effect;

(f)                                    each
of the representations and warranties of the Company set out in this Agreement
shall be true and correct at and as of the Expiry Time, as if made at and as of
such time (except for those expressly stated to be at or as of an earlier time)
in all respects except, if qualified by reference to a Material Adverse

 

Change, to the
extent of such qualification, and, except for all untrue or incorrect
representations and warranties not qualified by reference to a Material Adverse
Change, which individually or in the aggregate (and disregarding for this
purpose any other qualifications based on materiality contained within such
representations and warranties) would not result in or cause a Material Adverse
Effect;

(g)                                 the
Offeror shall have received, immediately prior to the Expiry Time, a
certificate of the Company, signed by two senior officers satisfactory to the
Offeror, acting reasonably, certifying the matters set out in paragraphs (e)
and (f), after due inquiry;

(h)                                 the
Shareholder Support Agreements shall not have been terminated;

(i)                                     there
shall not have occurred any Material Adverse Change since the date of this
Agreement;

(j)                                     the
Company shall have: (i) deferred the separation of the rights under the Rights
Plan; and (ii) waived or suspended the operation of or otherwise rendered the
Rights Plan inoperative in respect of the Offer;

(k)                                  the
Company shall not have (i) deferred the separation of the rights under the
Rights Plan for any Person other than the Offeror or Genzyme Corporation and
its Affiliates, or (ii) waived or suspended the operation of or otherwise
rendered the Rights Plan inoperative in respect of an Alternative Transaction
other than the take-over bid for the Company commenced by Genzyme Corporation
or its Affiliate on September 1, 2006;

(l)                                     the
Board of Directors shall not have withdrawn any recommendation made by it that
Shareholders accept the Offer or issued a recommendation or communication that
has substantially the same effect as such withdrawal;

(m)                               the
Support Agreement shall not have been terminated, and no event shall have
occurred that, with notice of lapse of time or both, gives the Offeror the
right to terminate the Support Agreement; and

(n)                                 all
of the necessary waivers, consents and approvals from other parties to the
Material Contracts shall have been obtained, on terms satisfactory to the
Offeror.

The
foregoing conditions shall be for the exclusive benefit of the Offeror, and may
be asserted by the Offeror, in its sole discretion, at any time.

Except
for the condition in paragraph (a) above (which may be varied or waived only
with the prior written consent of the Company), the Offeror may waive any of
the foregoing conditions in whole or in part at any time and from time to time,
both before and after the relevant Expiry Time, without prejudice to any other
rights which the Offeror may have.

 A-2
 

 

The failure by the Offeror at any time to exercise any
of the foregoing rights will not be deemed a waiver of any such right, and each
such right will be deemed an ongoing right which may be asserted at any time
and from time to time.

 A-3

 

SCHEDULE
B 

REPRESENTATIONS AND WARRANTIES OF THE PARENT

1.                                      Organization and Qualification

The
Parent is a corporation duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.  The Parent has the requisite corporate power
and authority to own the assets it currently owns and to carry on its business
as it is now being conducted.

2.                                      Authority Relative to this
Agreement

The
Parent has the requisite corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder. 
The execution and delivery of this Agreement and the consummation by the
Parent of the transactions contemplated hereby have been duly authorized by its
board of directors, and no other corporate proceedings to be completed or
consent to be obtained by the Parent are or will be necessary to authorize this
Agreement or the transactions contemplated hereby.  This Agreement has been duly executed and
delivered by the Parent and constitutes the legal, valid and binding obligation
of the Parent enforceable against it in accordance with its terms, subject to
bankruptcy and insolvency and other laws affecting the enforcement of creditors’
rights generally and subject to the qualification that equitable remedies may
only be granted in the discretion of a court of competent jurisdiction.

3.                                      No Violations

(a)                                  None of the execution and delivery of this
Agreement by the Parent, the consummation by the Parent or, if applicable, the
Acquisition Company of the transactions contemplated hereby nor compliance by
them with any of the provisions hereof will:

(i)                                     violate, conflict with, or result in a breach
of any provision of, require any consent, approval or notice under, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) or result in a right of termination or acceleration
under, any of the terms, conditions or provisions of:

(A)                              the certificate of incorporation or by-laws of
the Parent or, if applicable, the Acquisition Company or their equivalent
organizational or constitutional documents; or

(B)                                any material 
contract to which the Parent or any of its Subsidiaries is a party; or

(ii)                                  subject to compliance with the Laws referred to
in Section 3(b) below, violate any judgment, ruling, order, writ, injunction,
award, decree, statute, ordinance, rule or regulation applicable to the Parent
or any of its Subsidiaries.

 

(b)                                 Other than in connection with or in compliance with the provisions
of applicable Securities Laws, the Investment Canada Act, and as otherwise
contemplated herein, (i) there is no legal impediment to the Offeror’s
consummation of the transactions contemplated by this Agreement; and (ii) no
filing or registration by the Offeror with, or authorization, consent or
approval of, any domestic or foreign public body or authority need be obtained
by the Offeror in connection with the making or the consummation of the Offer.

4.                                      Funds Available

The
Offeror has made, prior to the execution of this Agreement, adequate arrangements
to ensure that the required funds are available to the Offeror to effect
payment in full for the Shares to be acquired pursuant to the Offer.  The Offeror will provide the Company, prior
to the execution of this Agreement, with evidence of such funding arrangements.

5.                                      Knowledge

As
of the date of this Agreement, the Offeror does not have knowledge of any fact
or circumstance relating to the Offeror that would adversely affect its ability
to make or consummate the Offer hereunder.

6.                                      Shareholdings of Offeror

The Offeror
does not beneficially own, or have control or direction over, any Shares.

 B-2

 

SCHEDULE
C 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

1.             Organization and Qualification

Each of the Company and its Subsidiaries is a
corporation duly continued, incorporated, or amalgamated, and organized and
validly existing under the laws of its jurisdiction of continuance,
incorporation or organization, has the requisite corporate power and authority
to own or lease its property and assets and to carry on its business as it is
now being conducted, and is duly registered to do business and is in good
standing in each jurisdiction in which the character of its properties (owned
or leased), or the nature of its activities make such registration necessary,
except for failures to be so registered or in good standing which would not,
individually or in the aggregate, reasonably be expected to constitute a
Material Adverse Change.  The copies of
the Company Governing Documents contained in the Data Room Information are
accurate and complete as of the date hereof and have not been amended or
superseded, and the Company has not taken any action to amend or supersede such
documents.

2.             Subsidiaries

Except as previously disclosed, the Company
does not have any Subsidiaries nor an equity interest that is greater than 5%
in any Person.  The Company’s ownership
interest in each of its Subsidiaries and each Person in which the Company’s
equity interest is greater than 5% has been previously disclosed.  Except as previously disclosed, all of the
outstanding shares in the capital of each of the Subsidiaries of the Company
are (a) owned by the Company (or another of its Subsidiaries), (b) validly
issued as fully-paid and non-assessable shares, (c) free and clear of all
Encumbrances, and (d) free of other restrictions, including any restriction on
the right to vote, sell or otherwise dispose of such shares, except for
transfer restrictions imposed under applicable Securities Laws.

3.             Authority Relative to this
Agreement

The Company has the requisite corporate power
and authority to enter into this Agreement and to perform and carry out its
obligations hereunder.  The execution and
delivery of this Agreement by the Company and the completion by the Company of
the transactions contemplated hereby have been duly authorized by the Board of
Directors, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated
hereby.  This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as may be limited by bankruptcy, insolvency and other
laws affecting the enforcement of creditors’ rights generally and subject to
the qualification that equitable remedies may only be granted in the discretion
of a court of competent jurisdiction.

4.             No Violations

(a)           Except as set out in the Company Disclosure Letter, none of the
execution and delivery of this Agreement by the Company, the completion of the
transactions 

 

contemplated hereby or the
fulfilment and compliance by the Company with any of the terms and provisions
hereof will:

(i)            violate, conflict with, or result in breach of
any provision of, result in the creation of any Encumbrance upon any of the
Company’s assets or the assets of any of its Subsidiaries, require any consent,
approval or notice under, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default), result in a right
of termination, acceleration, amendment, penalty, “change of control” payment
or other payment obligation or a right of purchase or sale or a right of first
refusal or under any of the terms, conditions or provisions of:

(A)          the Company Governing Documents, or

(B)           any Material Contract or material Permit to which the Company or any of
its Subsidiaries are a party or by which the Company or any of its Subsidiaries
are bound or which the Company or any of its Subsidiaries requires to conduct
their respective businesses; or

(ii)           subject to compliance with applicable Securities Laws, violate any
judgment, ruling, order, writ, injunction, award, decree, statute, ordinance,
rule or regulation applicable to the Company or any of its Subsidiaries.

(b)           Other than in connection with or in compliance with the Securities Laws
and except as previously disclosed:

(i)            there is no legal impediment to the Company’s
consummation of the transactions contemplated by this Agreement; and

(ii)           no filing or registration with, or authorization, consent or approval
of, any public body or authority is necessary by the Company or any of its
Subsidiaries in connection with the performance of the Company’s obligations
hereunder, except for such filings or registrations which, if not made, or for
such authorizations, consents or approvals which, if not received, would not,
individually or in the aggregate, reasonably be expected to constitute a
Material Adverse Change.

5.             Capitalization

(a)           The authorized share capital of the Company consists of (i) an unlimited
number of Shares, of which, as at the date hereof, 41,977,011 Shares have been
duly authorized and are validly issued and outstanding as fully paid and
non-assessable shares in the capital of the Company, and (ii) an unlimited
number of preferred shares, of which none have been issued or are
outstanding.  As at the date hereof,
there are outstanding Options issued under the Stock Option Plans to purchase
an aggregate of 2,375,204 Shares.

 C-2
 

 

(b)           Except for the Rights Plan, the Stock Options Plan and the ESPP, all as
previously disclosed, there are no options, rights, warrants or other Contracts
of any character whatsoever requiring the issuance, sale or transfer by the
Company or any Subsidiary of the Company of any securities of the Company or
such Subsidiary (including Shares) or any securities convertible into, or
exchangeable or exercisable for, or otherwise evidencing a right to acquire,
any securities of the Company or such Subsidiary (including Shares).  No Shareholder is entitled to any pre-emptive
or similar right granted by the Company or any of its Subsidiaries to acquire
any Shares or other securities of the Company or any of its Subsidiaries.

(c)           A list of all of the holders of all outstanding Options, the number of
Options held by each of them, and the exercise prices and expiration date of
each grant to such holders has been previously disclosed.  All options have been duly and validly
approved and issued in accordance with all applicable Laws and the Plans and
all Shares issuable upon exercise of outstanding Options in accordance with
their respective terms will be duly authorized and validly issued, fully paid
and non-assessable.

(d)           All grants of share-based payments have been properly approved by the
Board of Directors or its delegated representatives, and such delegation of the
authority to grant share-based payments is within the Board’s of Director’s
legal rights.

(e)           Since April 1, 2001, all share-based payments made by the Company and
approved through the use of a unanimous written consent resolution were
substantively approved by the appropriate authorized party on or before the
measurement date or grant date used for accounting purposes under APB Opinion
No. 25, Statement of Financial Accounting Standards No. 123, or Statement of
Financial Accounting Standards No. 123(R), as appropriate. Dates indicated on
all unanimous written consent resolutions represent the date the appropriate
authorized party agreed to the corporate action indicated by the unanimous
written consent resolutions.

(f)            The Company has properly determined the
appropriate grant dates or measurement dates for all share-based payments in
accordance with APB Opinion No. 25, Statement of Financial Accounting Standards
No. 123, or Statement of Financial Accounting Standards No. 123(R), as
applicable and has recognized compensation cost, as well as liabilities for
income taxes, payroll taxes, minimum tax withholding obligations, penalties and
interest, as appropriate, under the applicable accounting standards.

(g)           The estimation methods and assumptions used in accounting for the
Company’s share-based payments are in accordance with APB Opinion No. 25,
Statement of Financial Accounting Standards No. 123, or Statement of Financial
Accounting Standards No. 123(R), as applicable. Fair value and intrinsic value
measurements under the foregoing literature are based on the grant date or
measurement date share price as specified therein. The assumptions used in fair
value measurements 

 C-3
 

 

made in accordance with
Statement of Financial Accounting Standards No. 123, or Statement of Financial
Accounting Standards No. 123(R), represent the Company’s estimates as of the
measurement date of expectations of future conditions.

6.             Company Reports

Documents or information filed by the Company
under applicable Securities Laws since and including March 31, 2001 to and
including the date hereof (collectively, the “Company
Reports”), as of their respective dates, (a) did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in light
of the circumstances under which it was made; and (b) complied in all material
respects with the requirements of applicable Securities Laws.  The Company has not filed any confidential
material change reports with the Securities Authorities which at the date
hereof remains confidential.

7.             Financial Statements

The Financial Statements were, and all
financial statements which are publicly disseminated by the Company in respect
of any subsequent periods prior to the Effective Time will be, prepared in
accordance with generally accepted accounting principles in Canada applied on a
basis consistent with prior periods, comply as to form in all material respects
with the published rules and regulations of the Securities Authorities, fairly
and accurately present the assets, liabilities (whether accrued, absolute,
contingent or otherwise) and financial condition of the Company and its
Subsidiaries on a consolidated basis as at the respective dates indicated thereon
and the revenues, earnings and results of operations of the Company and its
Subsidiaries on a consolidated basis for the respective specified period
covered thereby, except:

(a)           as otherwise indicated in such financial statements and the notes
thereto or, in the case of audited statements, in the related report of the
Company’s independent accountants; or

(b)           in the case of unaudited interim financial statements, subject to normal
year end adjustments that will not be material in amount or effect and the fact
such financial statements may not include notes or may be condensed or summary
statements.

8.             Undisclosed Liabilities

The Company and its Subsidiaries have no
liabilities or obligations (whether accrued, absolute, contingent, determined,
determinable or otherwise) except:

(a)           liabilities disclosed, reflected or provided for in the Financial
Statements;

(b)           liabilities and obligations as previously disclosed; and

(c)           liabilities and obligations incurred in the ordinary course of business
consistent with past practice and attributable to the period since March 31,
2006.

 C-4
 

 

9.             Books and Records

(a)           The books and records and accounts of the Company and its Subsidiaries:
(i)  have been maintained in accordance
with good business practices on a basis consistent with prior years; (ii) are
stated in reasonable detail and accurately reflect the transactions and
dispositions of the assets of the Company and its Subsidiaries; and (iii)  accurately and fairly reflect the basis for
the consolidated financial statements of the Company, in each case, in all
material respects.

(b)           The Company (A) has established and maintains disclosure controls and
procedures which have been designed to ensure that material information
relating to the Company and its Subsidiaries is made known to the Company’s
chief executive and chief financial officers by others within those entities,
particularly during the period in which annual and interim filings are being
prepared, and (B) has established and maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management’s general or specific
authorization; (ii) transactions are recorded as necessary (1) to permit
preparation of financial statements in conformity with generally accepted
accounting principles in Canada and (2) to maintain accountability for assets
and liabilities; and (iii) access to assets is permitted only in accordance
with management’s general and specific authorization.  To the knowledge of the Company, all material
facts related to any possible material fraud that involves management or other
employees who have a significant role in the Company’s internal controls have
been disclosed to the Company’s auditors and the audit committee of the Board
of Directors.

(c)           Since March 31, 2003, (i) the Company has received no (A) material
complaints from any source regarding accounting, internal accounting controls
or auditing matters or (B) expressions of concern from Employees regarding
questionable accounting or auditing matters, and (ii) no attorney representing
the Company or any of its Subsidiaries, whether or not employed by the Company
or any of its Subsidiaries, has reported evidence of a violation of any
Securities Laws, breach of fiduciary duty or similar violation by the Company
or any of its Subsidiaries or their respective officers, directors, employees
or agents to the Company’s chief legal officer, audit committee (or other
committee designated for the purpose) of the board of directors or the board of
directors.

10.          No Material Adverse Change

Since March 31, 2006, there has not been any
Material Adverse Change except as disclosed in the Company Reports.

11.          Brokerage Fees

Except for the fees payable to the Financial
Advisor as set out in the Company Disclosure Letter, neither the Company nor
any of its Subsidiaries has retained nor will any of them retain any 

 C-5
 

 

financial advisor, broker or finder, nor have
they paid or agreed to pay any financial advisor, broker or finder on account
of this Agreement or any transaction contemplated hereby.

12.          Conduct of Business

(a)           Since March 31, 2006, except as previously disclosed, neither the
Company nor any of its Subsidiaries has:

(i)            amended its Company Governing Documents;

(ii)           made any change in its accounting principles and practices as previously
applied including, without limitation, the basis upon which its assets and
liabilities are recorded on its books and its earnings and profits and losses
are ascertained;

(iii)          declared, paid or set aside for payment any dividend or distribution of
any kind in respect of any of its outstanding securities nor made any
repayments of capital to shareholders;

(iv)          transferred, assigned, sold, licensed or otherwise disposed of any of
its assets;

(v)           increased the compensation paid or payable to its Employees or changed
the benefits to which such Employees and former employees are entitled under
any Benefit Plan or created any new Benefit Plan or modified, amended or
terminated any existing Benefit Plan for any such employees other than
increases or changes made in the ordinary course of business consistent with
past practice;

(vi)          purchased, redeemed or otherwise acquired any of its Shares or agreed to
do so; or

(vii)         other than in the ordinary course of business and consistent with past
practice, entered into, amended or become bound by any Contract, or made or
authorized any capital expenditure, which may result in the payment of money by
the Company or any of its Subsidiaries of an amount in excess of $200,000 with
respect to all transactions.

(b)           Except as previously disclosed, since March 31, 2006, each of the
Company and its Subsidiaries has conducted its business in all material
respects in the ordinary course of business consistent with past practice.  The Company and each of its Subsidiaries
owns, possesses or has obtained, and has complied in all material respects with
and is in compliance in all material respects with, all material Permits of or
from any Governmental Authority required in connection with the ownership of
their respective assets or the conduct of their respective business and
operations as presently conducted.  All
such Permits are listed or contained in the Data Room Information.  None of the Company or any of its
Subsidiaries has received any notice, whether written or oral, of revocation or
non-renewal of any 

 C-6
 

 

such Permit or any intention
of any Governmental Authority to revoke or refuse to renew any such Permit
following completion of the transactions contemplated hereby.  To the knowledge of the Company, all such
Permits shall continue to be effective in order for the Company and its
Subsidiaries to continue to conduct their respective businesses as they are
presently being conducted.  No Person
other than the Company or its Subsidiaries owns or has any proprietary,
financial or other interest (direct or indirect) in any of such Permits.  Except as set out in the Data Room
Information, no approval or consent is required in respect of such Permits to
protect the rights of the Company or any of its Subsidiaries thereto as a
consequence of the transactions contemplated hereby.

13.          Material Contracts

All Material Contracts to which the Company or
any of its Subsidiaries is party are in full force and effect, and the Company
and such Subsidiaries are entitled to all of their respective rights and
benefits thereunder.  The Company has
made available to the Offeror for inspection true and complete copies of all
Material Contracts, and all such Material Contracts are contained in the Data
Room Information.  All of the Material
Contracts are valid and binding obligations of the parties thereto enforceable
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency and other laws affecting the enforcement of creditors’
rights generally and subject to the qualification that equitable remedies may
only be granted in the discretion of a court of competent jurisdiction.  The Company and its Subsidiaries have
complied in all material respects with all terms of such Material Contracts,
have paid all amounts due thereunder, have not waived any rights thereunder and
no material default or breach exists in respect thereof on the part of the
Company or any of its Subsidiaries or, to the knowledge of the Company or any of
its Subsidiaries, on the part of any other party thereto, and no event has
occurred which, after the giving of notice or the lapse of time or both, would
constitute such a material default or breach. 
As at the date hereof, the Company has not received notice that any
party to a Material Contract intends to cancel, terminate or otherwise modify
or not renew such Material Contract, and to the knowledge of the Company, no
such action has been threatened.  Except
as set out in the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is a party to any Material Contract that contains any
non-competition obligation or otherwise restricts in any material way the
business of the Company or any of its Subsidiaries.

14.          Litigation

Except as set out in the Company Disclosure
Letter, there are no actions, suits, proceedings or investigations commenced
or, to the knowledge of the Company, contemplated or threatened against or
relating to the Company or any of its Subsidiaries or the business of the
Company or any of its Subsidiaries, before or by any Governmental Authority,
nor are there any existing facts or conditions which may reasonably be expected
to be a proper basis for any such actions, suits, proceedings or
investigations, which in any case would prevent or hinder the consummation of
the transactions contemplated by this Agreement or which are, individually or
in the aggregate, material to the Company and its Subsidiaries, taken as a
whole.  Neither the Company nor any of
its Subsidiaries is subject to any outstanding order, writ, injunction or
decree which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.

 C-7
 

 

15.          Minute Books

The minute books of each of the Company and its
Subsidiaries have been provided to the Parent and are true and correct in all
material respects; they contain the duly signed minutes of all meetings, and
all resolutions, of the boards of directors and shareholders (but excluding
minutes of meetings and resolutions passed by committees of such boards).

16.          Officer Obligations

No Officer Obligation will become payable upon
completion of the Offer, except as set out in the Company Disclosure Letter,
and except for payments made to officers or directors in respect of their
Options as provided for in this Agreement.

17.          Absence of Guarantees

None of the Company or any of its Subsidiaries
has given or agreed to give, nor is it a party to or bound by, any guarantee,
surety or indemnity in respect of indebtedness or other obligations of any Person
(other than in respect of the Company or one of its Subsidiaries), or any other
commitment by which the Company or any of its Subsidiaries is, or is
contingently, responsible for such indebtedness or other obligations.

18.          Reporting Issuer Status

(a)           The Company is a reporting issuer under, and is in compliance in all
material respects with, Securities Laws of each of the Provinces of Canada.

(b)           None of the Company’s Subsidiaries is a reporting issuer or a “distributing corporation” as such term is defined in the
CBCA.

(c)           The Company is a foreign private issuer under the Exchange Act.

19.          Compliance with Laws

Except as set out in the Company Disclosure
Letter, the operations of each of the Company and its Subsidiaries have been
and are conducted in compliance in all respects with all Laws of each
jurisdiction in which the Company or its Subsidiaries carries on its business
except where the breach thereof would not have a Material Adverse Effect and
none of the Company or any of its Subsidiaries has received any notice of any
complaint, investigation, proceeding or action pending which involve
allegations of non-compliance with applicable Laws.  The Company and its Subsidiaries own, possess
or have obtained and are in compliance in all material respects with, all
material Permits necessary to conduct their business as now conducted.

20.          Employment Matters

(a)           All written Benefit Plans (or, where oral, written summaries of the
material terms thereof) and all current documents related to such Benefit Plans
are contained in the Data Room Information, including any current trust and
funding agreements and all insurance contracts and policies. Each Benefit Plan
permits assumption 

 C-8
 

 

thereof by the Offeror at the
Effective Time without the consent of the participants or any other Person.

(b)           The Company Disclosure Letter identifies each Benefit Plan that provides
for the deferral of compensation or any acceleration or enhancement of rights,
compensation or benefits due to the consummation of the transactions contemplated
hereby.

(c)           The Data Room Information contains an accurate and complete list of all
Employees along with the position, date of hire or engagement, compensation and
benefits (other than pursuant to Benefits Plans), accrued but unused vacation
leave and service credited for purposes of vesting and eligibility to
participate under any Benefit Plan with respect to such Employee.

(d)           Except as set out in the Company Disclosure Letter, there are no
employment contracts or arrangements which are not terminable on the giving of
reasonable notice in accordance with Law, nor are there any management,
employment, consulting, retention or like agreements providing for cash
payments or other compensation or benefits upon the consummation of the
transactions contemplated by this Agreement.

(e)           To the knowledge of the Company, no Senior Executive employed by the
Company or any of its Subsidiaries has communicated an intention to terminate
his or her employment.

(f)            Except as set out in the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to any
collective agreement, letters of understanding, letters of intent or other
written or oral communications with any trade union, council of trade unions,
employee association or other labour organization, which relates to any of the
Employees.  Except as set out in the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries is
subject to any application for certification, or to the knowledge of the
Company, threatened or apparent union organizing campaigns for employees not
covered under a collective bargaining agreement.  Neither the Company nor any of its
Subsidiaries is in material violation of any provision under any collective agreement
or under the Labour Relations Code.  There is no trade union, employee association
or other labour organization, which, pursuant to applicable Law, must be
notified, consulted or with which negotiations need to be conducted connection
with the transactions contemplated by this Agreement.

(g)           Since August 31, 2003,
neither the Company nor its Subsidiaries have experienced any labour strike,
picketing, slowdown, lockout, employee grievance process or other work stoppage
or labour dispute, nor to the knowledge of the Company is any such action
pending or threatened.  To the knowledge
of the Company, no event has occurred or circumstance exists that may give rise
to any such action, nor does the Company or its Subsidiaries contemplate a
lockout of any Employees.

 C-9

 

(h)                                 Except as disclosed in the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is subject to any claim
for wrongful dismissal, constructive dismissal or any other claim or complaint,
actual or, to the knowledge of the Company, threatened, or any litigation,
actual, or to the knowledge of the Company, threatened, relating to employment
or termination of employment of Employees.

(i)                                     The Company and its Subsidiaries are operating
in compliance in all material respects with all applicable Laws with respect to
employment and labour, including, but not limited to, employment and labour
standards, occupational health and safety, workers’ compensation, immigration,
human rights, labour relations and privacy and there are no current, pending,
or to the knowledge of the Company, threatened proceedings before any board,
court or Governmental Authority with respect to any of the areas listed herein.

(j)                                     Except as disclosed in the Company Disclosure
Letter, none of the Benefit Plans provide benefits beyond retirement or other
termination of service to Employees or former employees or to the beneficiaries
or dependants of such employees and no Benefit Plan is a pension plan, top up
pension plan or supplemental pension plan, “registered retirement savings plan”
(as defined in the Canadian Tax Act), “registered pension plan” (as defined in
the Canadian Tax Act) or “retirement compensation arrangement” (as defined in
the Canadian Tax Act).

(k)                                  There is no unfunded liability under any
Benefit Plan.  No event has occurred or
circumstance exists that may result (i) in an increase in premium costs of any
Benefit Plan that is insured or (ii) an increase in the cost of any Benefit
Plan that is self-insured.  Other than
routine claims for benefits submitted by participants or beneficiaries, no
claim against, or proceeding involving, any Benefit Plan or any fiduciary
thereof is pending or, to the knowledge of the Company, is threatened, which
could reasonably be expected to result in any liability, direct or indirect (by
indemnification or otherwise) of the Company or any of its Subsidiaries to any
Governmental Authority or any Person, and no event has occurred or circumstance
exists that may give rise to any such liability.

(l)                                     All of the obligations of the Company and its
Subsidiaries under the statutory Benefit Plans which the Company or any of its
Subsidiaries are required to participate in or comply with and under the
Benefit Plans have been satisfied in all material respects, and there are no
outstanding defaults or violations thereunder by the Company or any of its
Subsidiaries that could result in or give rise to any liability to the Company
or any of its Subsidiaries, nor does the Company or any of its Subsidiaries
have any knowledge of any such default or violation by any other party to any
statutory Benefit Plan which the Company or any of its Subsidiaries are
required to participate in or comply with or any Benefit Plan.  For greater certainty, all returns, filings,
reports and disclosures relating to the statutory Benefit Plan which the
Company or any of its Subsidiaries are required to participate in or comply
with and the Benefit Plans required pursuant to applicable Laws or the terms of
the Benefit Plans have been timely filed or 

 C-10
 

 

distributed in accordance with
all requirements and each statutory Benefit Plan which the Company or any of
its Subsidiaries are required to participate in or comply with and each Benefit
Plan is, and has been, established, registered, qualified, amended, funded,
administered and invested, in compliance with the terms of such Benefit Plan
(including the terms of any documents in respect of such Benefit Plan), all
Laws and any collective agreement, as applicable.

(m)                               All employer payments, contributions or
premiums required to be remitted or paid to or in respect of each statutory
Benefit Plan which the Company or any of its Subsidiaries are required to
participate in or comply with and each Benefit Plan have been remitted and paid
in a timely fashion in accordance with the terms thereof, all applicable
actuarial reports and all applicable Laws, and have been fully reflected in
line items in the Company’s financial statements.  Except as set out in the Company Disclosure
Letter, no Taxes, penalties or fees are owing or exigible under or in respect
of any statutory benefit plan which the Company or any of its Subsidiaries are
required to participate in or comply with or any Benefit Plan.

(n)                                 Since the date on which the Company first
became a reporting issuer, all stock options granted by the Company and its
Subsidiaries were granted using an exercise price of not less than the closing
board lot sale price per share of Shares on the TSX on the trading day
immediately preceding the grant date and if there was not a board lot sale on
such date, then the last board lot sale prior thereto.

(o)                                 Except as set out in the Company Disclosure
Letter, neither the execution of this Agreement nor the consummation of any of
the transactions contemplated in this Agreement (either alone or in conjunction
with any other event) will:

(i)                                     result in any payment (including without
limitation bonus, golden parachute, change of control, retirement, severance,
unemployment compensation, or other benefit or enhanced benefit) becoming
payable under any Benefit Plan, individual employment Contract or otherwise;

(ii)                                  increase any benefits otherwise payable under
any Benefit Plan or any compensation under any contract or agreement;

(iii)                               entitle any Employee to any job security or
similar benefit or any enhanced benefits; or

(iv)                              result in the acceleration of the time of
payment or vesting of any benefits otherwise payable under any Benefit Plan
(except for outstanding Options), or result in any Benefit Plan becoming
terminable other than at the sole and unfettered discretion of the Company.

(p)                                 There are no entities other than the Company or
its Subsidiaries participating in any Benefit Plan.

 C-11
 

 

(q)                                 The Company and its Subsidiaries are not
required, pursuant to a collective agreement, to contribute to a benefit plan
which is not maintained or administered by the Company, any of its Subsidiaries
or any of their Affiliates.

(r)                                    To the knowledge of the Company, no event has
occurred respecting any registered Benefit Plan which would result in the
revocation of the registration of such Benefit Plan (where applicable) or
entitle any Person (without the consent of the Company) to terminate any
Benefit Plan, in whole or in part, or which could otherwise reasonably be
expected to adversely affect the tax status of any such Benefit Plan.

21.                               Tax Matters

(a)                                  Each of the Company and its Subsidiaries has
duly and timely filed all its Tax Returns required to be filed on or before the
date hereof in accordance with applicable Laws with the appropriate
Governmental Authorities and has completely and correctly reported all income,
loss and all other amounts reported and information required to be reported
thereon and true copies thereof are contained in the Data Room Information.

(b)                                 Each of the Company and its Subsidiaries has
duly and timely paid all Taxes, including all instalments on account of Taxes
for the current year, that were due and payable by it on or before the date
hereof whether or not assessed by the appropriate Governmental Authority.  None of the Company or its Subsidiaries has
incurred a material liability for Taxes since the date of the Financial
Statements other than in the ordinary course of business, and their respective
books and records provide adequate accruals under generally accepted accounting
principles in Canada for all Taxes accrued as of the date hereof, whether or
not such Taxes are yet due or owing.

(c)                                  Neither the Company nor any of its Subsidiaries
has requested, offered to enter into or entered into any agreement or other
arrangement or executed any waiver providing for, any extension of time within
which:

(i)                                     to file any Tax Return covering any Taxes for
which the Company or any of its Subsidiaries is or may be liable;

(ii)                                  to file any elections, designations or similar
filings relating to Taxes for which the Company or any of its Subsidiaries is
or may be liable;

(iii)                               the Company or any of its Subsidiaries is
required to pay or remit any Taxes or amounts on account of Taxes; or

(iv)                              any Governmental Authority may assess, reassess
or collect Taxes for which the Company of any of its Subsidiaries is or may be
liable.

(d)                                 All Canadian federal and provincial income and
capital Tax liabilities of the Company and of each of its Subsidiaries have
been assessed by the relevant 

 C-12
 

 

taxing authorities and notices
of assessment have been issued to each such entity by all relevant taxing
authorities for all taxation years prior to and including the taxation year
ended March 31, 2006.

(e)                                  There are no material proceedings,
investigations, audits or claims now pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries in respect
of any Taxes, and there are no material matters under discussion, audit or
appeal with any Governmental Authority relating to Taxes.

(f)                                    The Company and each of its Subsidiaries has
duly and timely withheld from any amount paid or credited by it to or for the
account or benefit of any Person, including without limitation any Employees
and any non-resident Person, the amount of all Taxes and other deductions
required by any Laws to be withheld from any such amount and has duly and
timely remitted the same to the appropriate Governmental Authority.

(g)                                 No position has been taken on any Tax Return
with respect to the business or operations of the Company or any of its
Subsidiaries for a taxable period for which the normal reassessment period or
the statute of limitations for the assessment of any Taxes with respect thereto
has not expired that is contrary to any publicly announced position of a taxing
authority or that is substantially similar to any position which a taxing
authority has successfully challenged.

(h)                                 Neither the Company nor any of its Subsidiaries
is a party to or bound to any Tax sharing agreement, Tax allocation agreement,
Tax indemnity obligation or similar Contract or practice with respect to Taxes
(including any advance pricing agreement) or other Contract relating to Taxes
with any Governmental Authority).

(i)                                     Except as set out in the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries have applied to any
Governmental Authority for permission to change its taxation year or for any
tax ruling or technical interpretation.

(j)                                     There are no Encumbrances for Taxes upon any
properties or assets of the Company or any Subsidiary (other than Encumbrances
relating to Taxes not yet due and payable and for which adequate reserves have
been recorded on the most recent balance sheet included in the Financial
Statements).

(k)                                  Neither the Company nor any of its Subsidiaries
has revoked or rescinded any Tax election or made, revoked or rescinded any
settlement or compromise of any liability with respect to Taxes.

(l)                                     The residence of the Company and the
Subsidiaries for Tax purposes is set out below:

(i)                                     the Company is resident in Canada; and

(ii)                                  the Company’s Subsidiary is resident in the
United Kingdom.

 C-13
 

 

(m)                               All Benefit Plans have been duly registered
where required by, and are in good standing under, all applicable Laws
including, without limitation, the Canadian Tax Act, and all required employer
contributions under any such Benefit Plan have been made and the applicable
funds have been funded in accordance with the terms thereof and no past
services funding liabilities exist thereunder.

22.                               Non-Arm’s Length Transactions

No current or former director, officer or
Employee or any registered or, to the knowledge of the Company, beneficial,
Shareholder owning 5% or more of the Shares (an “Interested
Person”) is indebted to the Company or any of its Subsidiaries nor
is the Company or any of its Subsidiaries indebted to any Interested Person,
except such indebtedness as is expressly disclosed in the Company Disclosure
Letter, or the Financial Statements and except for usual employee
reimbursements and compensation paid in the ordinary and normal course of the
business.  Except for contracts of
employment, neither the Company nor any of its Subsidiaries is a party to any
Contract with any Interested Person. 
Except as set out in the Company Disclosure Letter, no Interested
Person: (a) owns, directly or indirectly, in whole or in part, any property
that the Company or any of its Subsidiaries uses in the operation of the
business; or (b) has any cause of action or other claim whatsoever against, or
is owed any amount by the Company or any of its Subsidiaries in connection with
the business, except for any liabilities reflected in the Financial Statements
and claims in the ordinary course of business such as for accrued expense
reimbursements, vacation pay and benefits under any Benefit Plans.  Except as set out in the Company Disclosure
Letter, since March 31, 2006 no payment has been made to any Interested Person
outside the ordinary course of business.

23.                               Regulatory Matters

(a)                                  Each product researched or developed by the
Company or any of its Subsidiaries has been and is being researched and
developed by the Company in compliance with all applicable Laws, including
applicable Laws promulgated by Health Canada or the FDA.  As of the date hereof, neither the Company
nor any of its Subsidiaries, nor any of its or its Subsidiaries’ licensees, has
received any notices or correspondence from Health Canada, the FDA or any other
Governmental Authority exercising comparable authority (i) contesting the
investigational or premarket clearance or approval of, the testing of, or the
uses of, any products of the Company or any of its Subsidiaries or (ii)
otherwise alleging any material violation applicable to any such products by
the Company or any of its Subsidiaries of any Law.

(b)                                 To the knowledge of the Company, there are no
facts, circumstances or conditions that would reasonably be expected to form
the basis for any audit, investigation, suit, claim, action or proceeding with
respect to a recall, withdrawal, suspension, seizure or discontinuance, or change
in the marketing classification or labeling, of any products of the
Company.  True and complete copies of all
material data of the Company with respect to the safety or efficacy of the
products of the Company are contained in the Data Room Information.

 C-14
 

 

(c)                                  Except as set out in the Company Disclosure
Letter, the studies, tests and preclinical and clinical trials conducted by or
on behalf of the Company and its Subsidiaries were and, if still pending, are
being conducted in all material respects in accordance with experimental
protocols, procedures and controls pursuant to generally accepted professional
scientific standards, institutional review board requirements and applicable
Laws and Permits.  The description of the
results of such studies, tests and trials submitted to Health Canada, the FDA
and other Governmental Authorities are true and complete in all material
respects and fairly present the data derived from such studies, tests and
trials, and neither the Company nor any of its Subsidiaries is aware of any
studies, tests or trials the results of which the Company reasonably believes
call into question the results of any studies, tests or trials conducted by or
on behalf of the Company or any of its Subsidiaries.  The Company has not received any notices or
correspondence from Health Canada, the FDA or any other Governmental Authority
exercising comparable authority requiring the termination, suspension or
material modification of any studies, tests or preclinical or clinical trials
conducted by or on behalf of the Company or any of its Subsidiaries.  The materials and information regarding
studies, tests and preclinical and clinical trials provided by the Company to
the Offeror do not fail to state a material fact regarding such studies, tests
and preclinical and clinical trials.

(d)                                 All reports, documents, claims, notices or
approvals required to be filed, obtained, maintained or furnished to any
Governmental Authority for each material product of the Company or any of its
Subsidiaries have been so filed, obtained, maintained or furnished, and all
such reports, documents, claims, notices and approvals were true and complete
in all material respects on the date filed (or were corrected in, or
supplemented by, a subsequent filing). 
As to each product of the Company or any of its Subsidiaries for which
any domestic or foreign regulatory application 
(including without limitation an investigational new drug application)
has been submitted, approved or cleared, the Company and its Subsidiaries are
in compliance with all legal requirements and applicable Laws and all terms and
conditions of such applications.

(e)                                  Neither the Company nor any of its Subsidiaries
has received any written notice that Health Canada, the FDA or any other
Governmental Authority has commenced, or threatened to initiate, any action to
withdraw its approval, request the recall or enjoin the production of any
product of the Company.

24.                               Technology

(a)                                  The Company Disclosure Letter sets forth a
complete list and a brief description of:

(i)                                     all patents and patent applications, registered
copyrights, and registered or applied for trade-marks that have been filed by
or on behalf of the Company or any of its Subsidiaries in any jurisdiction or
that are owned by or licensed to the Company or any of its Subsidiaries, and

 C-15
 

 

(ii)                                  all Material Company Technology that is not
listed pursuant to Section 24(a)(i).

(b)                                 Each of the patents and patent applications
listed pursuant to Section 24(a)(i) (the “Company Patents”)
does not fail to name an inventor, or name a Person not an inventor, of the
claims thereof, each inventor named on the Company Patents has executed an
agreement agreeing to assign or actually assigning to the Company or a
Subsidiary thereof his or her entire right, title, and interest in and to the
applicable Company Patent and the inventions embodied and claimed therein, and,
to the knowledge of the Company, no such inventor has any contractual or other
obligation that would preclude any such assignment or otherwise conflict with
the obligations of such inventor to the Company or such Subsidiary under such
agreement.

(c)                                  The Material Company Technology is owned by or
licensed to the Company and/or one of its Subsidiaries.  The Company and/or its Subsidiaries have the
right to use such Material Company Technology and, if applicable, grant
sub-licences in respect thereof, for the business of the Company and its
Subsidiaries as currently conducted and the Commercialization.

(d)                                 With respect to Material Company Technology
that is owned by a Person other than the Company or its Subsidiaries: (i) the
Company or the applicable Subsidiary, as the case may be, is using such
Material Company Technology with the written consent of or a written licence
from the owner of such Material Company Technology (or other authorized
person), all of which consents or licences are in full force and effect, and
(ii) no material default under such consents or licences exists on the part of
the Company or any of its Subsidiaries or, to the knowledge of the Company, on
the part of any of the other parties thereto.

(e)                                  To the knowledge of the Company:

(i)                                     all of the Intellectual Property listed in the
Company Disclosure Letter (the “Material Company
Intellectual Property”) is in full force and effect and no
proceedings have been commenced which allege or would result in its
abandonment, cancellation or unenforceability; and

(ii)                                  all Material Company Intellectual Property
consisting of issued registrations or, in the case of inventions, issued
patents have been validly issued and are in good standing.

(f)                                    Except as disclosed in the Company Disclosure
Letter:

(i)                                     there are no Claims by the Company or any of
its Subsidiaries relating to breaches, violations, infringements or
interferences with any of the Material Company Technology by any other Person
which, individually or in the aggregate, would be material to the Company and
its Subsidiaries, 

 C-16
 

 

taken as a whole, and the
Company does not have any knowledge of any facts upon which such a Claim could
be based,

(ii)                                  to the knowledge of the Company, no other
Person is using any of the Material Company Technology so as to breach,
violate, infringe or interfere with the rights of the Company or any of its
Subsidiaries, except for such breaches, violations, or interferences which would
not, individually or in the aggregate, be material to the Company and its
Subsidiaries, taken as a whole.

(g)                                 Except as disclosed in the Company Disclosure
Letter:

(i)                                     there are no Claims in progress or pending or,
to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries relating to the Material Company Technology which, individually or
in the aggregate, would be material to the Company and its Subsidiaries, taken
as a whole, and there is no valid basis for any such Claim, and

(ii)                                  to the knowledge of the Company, the carrying
on of the Company’s business and the carrying on of the business of each of its
Subsidiaries and the use and possession of the Material Company Technology by
the Company and its Subsidiaries in the business of the Company and its
Subsidiaries as currently conducted and for the Commercialization does not
breach, violate, infringe, or interfere with any rights of any other Person,
except for such breaches, violations, or interferences which would not,
individually or in the aggregate, be material to the Company and its
Subsidiaries, taken as a whole.

(h)                                 Except as disclosed in the Company Disclosure
Letter,

(i)                                     neither the Company nor any of its Subsidiaries
has entered into any exclusivity covenant or any other contractual restriction
that would restrict the use or Commercialization of any Material Company
Technology by the Company or its Subsidiaries; and

(ii)                                  neither the Company nor any of its Subsidiaries
has granted to any Person any Commercialization rights in respect of any
Material Company Technology.

(i)                                     The Company and its Subsidiaries have taken
reasonable steps to maintain their material trade secrets in confidence,
including entering into Contracts that generally require licensees, contractors,
and other Persons with access to such trade secrets to keep such trade secrets
confidential.

25.                               Real Property

The Data Room Information contains a true and
complete list of (i) all the real property owned in fee by the Company and its
Subsidiaries (the “Owned Real Property”)
and (ii) all leases, 

 C-17
 

 

subleases and other agreements under which the
Company or any of its Subsidiaries leases, subleases, uses or occupies or has
the right to use or occupy, any real property with annual base rent in excess
of $10,000 (collectively, the “Real Property Leases”)
and the property subject thereto (the “Leased Real Property”,
and together with the Owned Real Property, the “Real
Property”).  Except as
disclosed in the Data Room Information or except for failures of title or for
Encumbrances permitted by the Company’s loan documents (as contained in the
Data Room Information) or that do not materially adversely affect the
operations of the business or the ability to sell such property, the Company
and the Subsidiaries have good and sufficient title to their respective Real
Property interests, either as legal and beneficial owner in fee simple of the
Owned Real Property or as holder of a valid leasehold interest of Leased Real
Property, in each case free and clear of all other Encumbrances, and otherwise,
hold valid easements, rights of way, permits or licences from land owners or
authorities required to permit the operation of their businesses as presently
conducted.  Each Real Property Lease
constitutes a valid and legally binding obligation of the Company and its
Subsidiaries, enforceable against the Company and its Subsidiaries, as
applicable, in accordance with its terms, except as may be limited by
bankruptcy, insolvency and other laws affecting the enforcement of creditors’
rights generally and subject to the qualification that equitable remedies may
only be granted in the discretion of a court of competent jurisdiction.  With respect to each Real Property Lease
there is no default or event which, with the notice of or lapse of time or
both, would constitute a default on the part of the Company or its
Subsidiaries, or to the knowledge of the Company would constitute a default by
any other party to such Real Property Lease, except for such defaults,
individually or in the aggregate, that would not reasonably be expected to be
material to the Company.  No part of the
Owned Real Property is subject to any building or use restriction that prevents
the use and operation of the Owned Real Property as presently used and operated,
except for restrictions, individually or in the aggregate, that would not
reasonably be expected to be material to the Company.  No person has any right to purchase, option,
right of first refusal or other similar right with respect to the Owned Real
Property.

26.                               Insurance

The Company and its Subsidiaries are covered by
valid and currently effective insurance policies, and lists of such policies or
binders of insurance are contained in the Data Room Information.  The Company and its Subsidiaries are in compliance
in all material respects with the terms and conditions of such policies, and
all premiums with respect to such insurance policies have been paid through the
date hereof and no written notice of termination or cancellation has been
received by the Company or any of its Subsidiaries with respect to any such
policy.  There are no pending claims
against such insurance with respect to the Company or its Subsidiaries as to
which the insurers have denied coverage or otherwise reserved rights.

27.                               Shareholder and Similar
Agreements

Other than the stock option agreements entered
into pursuant to the Stock Option Plans, the Rights Agreement and the ESPP, the
Company is not a party to any material shareholder, pooling, voting trust or
other Contract relating to the Shares or any issued and outstanding shares of
any of the Company’s Subsidiaries.

 C-18
 

 

28.                               Environmental

Except as disclosed in the Company Disclosure
Letter:

(a)                                  All operations of the Company and its
Subsidiaries have been and are now in compliance in all material respects with
all applicable Laws relating to the protection of the environment and employee
and public health and safety (“Environmental Laws”);
and

(b)                                 Neither the Company nor any of its Subsidiaries
is subject to:

(i)                                     any material proceeding before, or order or
directive issued by, a Governmental Authority which relates to environmental,
health or safety matters and which may require any material work, repairs,
construction or expenditures; or

(ii)                                  any material demand or notice alleging a breach
with respect to any Environmental Laws applicable to the Company and its
Subsidiaries or the Owned Real Property including, any regulations with respect
to the use, storage, treatment, transportation or disposition or any pollutant,
contaminant, waste of any nature, hazardous substance, hazardous material,
toxic substance, dangerous substance or dangerous good as defined, judicially
interpreted or identified in any Environmental Law.

29.                               Data Room Information

All Data Room Information was accurate in all material
respects as at its respective date as stated therein, or, if any Data Room
Information is undated, as of the date of its delivery to the IntraLinks
website for purposes of the transactions contemplated by this Agreement or to
the Offeror on a compact disc or in documentary form.

 C-19

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