Document:

Exhibit 10.1

Exhibit 10.1

TRUST AGREEMENT

BETWEEN:       ATWOOD MINERALS AND MINING CORP(Atwood)

AND:                 LAURENCE SOOKOCHOFF (Trustee). 

IT IS AGREED THAT:

LAURENCE SOOKOCHOFF currently owns holds personally the Mineral Rights to the STEP MINERAL CLAIM at Nicola Mining Division (NTS0921039/049)

Claim Name: Step (the Claim)

Cells 20

Tenure No. 513751

Expirv date May31, 2006

The Trustee, for a payment of US$ 5,000 hereby does declare and hold upon trust the aforementioned Claim on behalf of Atwood from this day forward. Atwood shall have the responsibility to keep the Claim in good standing in terms of filing and work and all other requirements.

DATED October 20, 2005 at Vancouver, B.C

ATWOOD MINERALS AND MINING CORP.

Per: WALTER BRENNER

LAURENCE SOOKOCHOFF

LAURENCE SOOKOCHOFFExhibit 4.1

                                                                                                                                                                                                       
      Exhibit 4.1

    
 

    THIS
      NOTE
      AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
      LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
      MAY
      NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
      APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO TM BIOSCIENCE CORPORATION THAT SUCH REGISTRATION IS NOT
      REQUIRED.

     

    UNLESS
      PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS NOTE AND
      THE
      COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE SHALL NOT TRADE THE NOTE
      AND
      THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE BEFORE MARCH 23,
      2006.

     

    SECURED
      CONVERTIBLE TERM NOTE

     

    FOR
      VALUE
      RECEIVED, Tm Bioscience Corporation, an Ontario corporation (the “Borrower”),
      hereby promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate
      Services Limited, P.O. Box 309 GT, Ugland House, South Church Street, George
      Town, Grand Cayman, Cayman Islands, Fax: 345-949-8080 (the “Holder”)
      or its
      permitted assigns or successors in interest, on order, on presentation and
      surrender of this Note, the aggregate principal amount of Nine Million Dollars
      in lawful money of the United States (US$9,000,000),
      together with any accrued and unpaid interest thereon, on the
      date
      which is the third anniversary of the date hereof (the “Maturity
      Date”)
      or at
      such other times as set out herein.

     

    Capitalized
      terms used herein without definition shall have the meanings ascribed to such
      terms in that certain Securities Purchase Agreement dated as of the date hereof
      between the Borrower and the Holder (as amended, modified or supplemented from
      time to time, the “Purchase
      Agreement”).

     

     

    ARTICLE
      I

    INTEREST
      & AMORTIZATION

     

     

        1.1 Interest

     

    
      	
            	(a)	
              Interest
                Rate.
                Subject to Sections 1.1(b), 4.12 and 5.7 hereof, interest payable
                on this
                Note shall accrue at a rate per annum (the “Interest
                Rate”)
                equal to the greater of (x) the “prime
                rate”
                published in The Wall Street Journal from time to time, plus two
                percent
                (2%) and (y) 8.5%. The prime rate shall be increased or decreased
                as the
                case may be for each increase or decrease in the prime rate in an
                amount
                equal to such increase or decrease in the prime rate; each change
                to be
                effective as of the day of the change in such rate. Interest shall
                be (i)
                calculated daily on the basis of a 360 day year, and (ii) payable
                monthly,
                in arrears, commencing on January 1, 2006 and on the first business
                day of
                each consecutive calendar month thereafter until the Maturity Date
                (and on
                the Maturity Date), whether by acceleration or otherwise (each, a
                “Repayment
                Date”).

            

    

     

    
      	
            	(b)	
              Interest
                Rate Adjustment.
                The Interest Rate shall be calculated on the last business day of
                each
                month hereafter until the Maturity Date (each a “Determination
                Date”)
                and shall be subject to adjustment as set forth herein. If the volume
                weighted average trading price of the Issuer’s common shares (the
                “Common
                Stock”)
                on the TSX for the five (5) trading days immediately preceding a
                Determination Date exceeds the then applicable Fixed Conversion Price
                by
                at least twenty five percent (25%), the Interest Rate for the succeeding
                calendar month shall automatically be reduced by 300 basis points
                (300
                b.p.) (3%) each incremental twenty five percent (25%) increase in
                the
                price of the Common Stock above the then applicable Fixed Conversion
                Price. Notwithstanding
                the foregoing (and anything to the contrary contained in herein),
                in no
                event shall the Interest Rate be less than zero percent
                (0%).

            

    

     

    
      	
            	(c)	
              Additional
                Interest. 

            

    

     

    
      	 	
              (i)

            	
              Any
                and all payments by the Borrower hereunder, including any amounts
                received
                on a conversion or redemption of the Note and any amounts on account
                of
                interest or deemed interest, shall be made free and clear of and
                without
                deduction for any and all present or future
                taxes, levies, imposts, deductions, charges or withholdings, and
                all
                liabilities with respect thereto, excluding taxes imposed on net
                income or
                franchise taxes of the Holder by the jurisdiction in which such person
                is
                organized or has its principal office (all such non-excluded taxes,
                levies, imposts, deductions, charges withholdings and liabilities,
                collectively or individually, “Additional
                Interest”).
                If the Borrower shall be required to deduct any Additional Interest
                from
                or in respect of any sum payable hereunder to the Holder, (i) the
                sum
                payable shall be increased by the amount (an “additional
                amount”)
                necessary so that after making all required deductions (including
                deductions applicable to additional sums payable under this Section
                1.4)
                the Holder shall receive an amount equal to the sum it would have
                received
                had no such deductions been made, (ii) the Borrower shall make such
                deductions and (iii) the Borrower shall pay the full amount deducted
                to
                the relevant governmental authority in accordance with applicable
                law.
                

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              In
                addition, the Borrower agrees to pay to the relevant governmental
                authority in accordance with applicable law any present or future
                stamp or
                documentary taxes or any other excise or property taxes, charges
                or
                similar levies that arise from any payment made hereunder or from
                the
                execution, delivery or registration of, or otherwise with respect
                to, this
                Note (“Other Additional Interest”). The Borrower shall deliver to the
                Holder official receipts, if any, in respect of any Additional Interest
                or
                Other Additional Interest payable hereunder promptly after payment
                of such
                Additional Interest or Other Additional Interest or other evidence
                of
                payment reasonably acceptable to the
                Holder.

            

    

     

    
      	 	
              (iii)

            	
              The
                obligations of the Borrower under this Section 1.1(c) shall survive
                the
                termination of this Note and the payment of the Note and all other
                amounts
                payable hereunder. 

            

    

     

    1.2 Minimum
      Monthly Principal Payments.
      Amortizing payments of the aggregate principal amount outstanding under this
      Note at any time (the “Principal
      Amount”)
      shall
      begin on April
      1,
      2006 and
      shall
      recur on the first business day of each succeeding month thereafter until the
      Maturity Date (each, an “Amortization
      Date”).
      Subject to Article 3 below, beginning on the first Amortization Date, the
      Borrower shall make monthly payments to the Holder on each Repayment Date equal
      to that portion of the Principal Amount set forth in the amortization schedule
      annexed hereto (the “Monthly
      Amount”),
      together with any accrued but unpaid interest thereon to such Repayment Date
      and
      any and all other unpaid amounts, if any, then due, accrued, payable or owing
      under this Note, the Purchase Agreement or any Related Agreement (as defined
      in
      the Purchase Agreement). Any Principal Amount that remains outstanding on the
      Maturity Date shall be due and payable on the Maturity Date. 

     

    1.3 Currency.
      All
      principal, interest and other amounts owing under this Note, the Purchase
      Agreement or any Related Agreement that, in accordance with their terms, are
      paid in cash shall be paid in US dollars. All amounts denominated in other
      currencies shall be converted in the US dollar equivalent amount in accordance
      with the Exchange Rate on the date of calculation. “Exchange
      Rate”
means,
      in relation to any amount of currency to be converted into US dollars pursuant
      to this Note, the US dollar exchange rate as published in the Wall Street
      Journal on the relevant date of calculation. 

     

     

    ARTICLE
      II

    CONVERSION
      REPAYMENT

     

     

    2.1

    
      	
            	(a)	
              Payment
                of Monthly Amount in Cash or Common Stock.
                If the Monthly Amount (or a portion of such Monthly Amount if such
                portion
                of the Monthly Amount would have been converted into shares of Common
                Stock but for Section 2.1(b) or Section 3.2) is
                required to be paid in cash pursuant to Section 2.1(b), then the
                Borrower
                shall pay the Holder an amount equal to 102% of the Monthly Amount
                due and
                owing to the Holder on the Repayment Date in cash. If the Monthly
                Amount
                (or a portion of such Monthly Amount if not all of the Monthly Amount
                may
                be converted into shares of Common Stock pursuant to Section 2.1(b)
                or
                Section 3.2) is required to be paid in shares of Common Stock pursuant
                to
                Section 2.1(b), the number of such shares to be issued by the Borrower
                to
                the Holder on such Repayment Date (in respect of such portion of
                the
                Monthly Amount converted into shares of Common Stock pursuant to
                Section
                2.1(b)), shall be the number determined by dividing (x) the portion
                of the
                Monthly Amount converted into shares
                of Common Stock, by (y) the then applicable Fixed Conversion Price.
                For
                purposes hereof, the initial “Fixed
                Conversion Price”
                means:

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

         

         

      

    

     

    
      	 	
              (i)

            	
              in
                respect of any portion of the Principal Amount to be converted into
                shares
                of Common Stock while the Principal Amount is greater than or equal
                to
                US$6,000,000 (and, for greater certainty, only in respect of the
                amount of
                such portion that does not cause the Principal Amount to fall below
                US$6,000,000), CDN$2.39, being equal to 110%
                of the volume weighted average trading price of the Common Stock
                on the
                TSX for the five (5) trading days immediately prior to the date of
                this
                Note (the
                “Closing
                Price”);

            

    

     

    
      	 	
              (ii)

            	
              in
                respect of any portion of the Principal Amount to be converted into
                shares
                of Common Stock while the total Principal Amount is less than US$6,000,000
                but greater than or equal to US$3,000,000 (and, for greater certainty,
                only in respect of the amount of such portion that does not cause
                the
                Principal Amount to fall below US$3,000,000), CDN$2.61, being equal
                to
                120%
                of the Closing Price; and

            

    

     

    
      	 	
              (iii)

            	
              in
                respect of any remaining portion of the Principal Amount to be converted
                into shares of Common Stock, CDN$2.83, being equal to 130%
                of the Closing Price.

            

    

     

     

    Notwithstanding
      paragraphs 2.1(a)(i), (ii) and (iii) above, if the price of the Borrower's
      Common Stock on the TSX exceeds Cdn. $4.00 on the date upon which any conversion
      hereunder is made, then for each additional Cdn.$0.10 increase in the Borrower's
      Common Stock price above Cdn.$4.00 on such applicable conversion date, the
      then
      applicable Fixed Conversion Price shall increase by Cdn.$0.03 if, and only
      if,
      the Borrower is required to withhold and pay any taxes on the amount
      representing the excess of such trading price of the Borrower's Common Stock
      over the then applicable Fixed Conversion Price at the time of conversion;
      provided, however, that the Borrower has utilized its best efforts to avoid
      or
      reduce (in each case only as permitted by law) any such withholding taxes.
      For
      greater certainty, the Borrower acknowledges that the foregoing sentence shall
      not apply to any conversions under this Note which have already been effected.
      

     

    
      	
            	(b)	
              Monthly
                Amount Conversion Guidelines.
                Subject to Section 2.2 and Section 3.2 hereof, the Holder shall be
                deemed
                to have exercised its right to convert into shares of Common Stock
                all or
                a portion of the Monthly Amount due on each Repayment Date if the
                following conditions are met: (i) the volume weighted average trading
                price of the Common Stock on the TSX for the five (5) trading days
                immediately preceding such Repayment Date is greater than or equal
                to 115%
                of the then applicable Fixed Conversion Price (the “Trading
                Price Condition”)
                and (ii) the amount of such conversion does not exceed twenty five
                percent
                (25%) of the aggregate dollar trading volume of the Common Stock
                for the
                twenty two (22) day trading period immediately preceding the applicable
                Repayment Date (the “Trading
                Volume Condition”).
                If the Trading Price Condition is satisfied but the Trading Volume
                Condition is not satisfied, the Holder shall be deemed to have exercised
                its right to convert only such part of the Monthly Amount that would
                permit the Trading Volume Condition to be satisfied. Any part of
                the
                Monthly Amount due on a Repayment Date that the Holder has not been
                able
                to convert into shares of Common Stock by reason of failing to meet
                the
                Trading Volume Condition (or otherwise as a result of Section 3.2),
                shall
                be paid by the Borrower in cash at the rate of 102% of the Monthly
                Amount
                otherwise due on such Repayment Date within three (3) business days
                of the
                applicable Repayment Date.

            

    

     

        2.2 Prospectus
      and Registration Exemptions Available.
      Notwithstanding anything to the contrary herein, no portion of the Principal
      Amount may be converted into Common Stock unless (i) an exemption from the
      prospectus and registration requirements of the Securities
      Act (Ontario)
      and the U.S. Securities
      Act,
      as
      applicable, is available to issue the Common Stock issuable upon such conversion
      and (ii) no Event of Default hereunder exists and is continuing, unless such
      Event of Default is waived in writing by the Holder in whole or in part at
      the
      Holder’s option.

     

        2.3 Optional
      Redemption in Cash.
      The
      Borrower will have the option of prepaying this Note (“Optional
      Redemption”)
      by
      paying to the Holder the Prepayment Premium (as hereinafter defined) together
      with accrued but unpaid interest thereon to the Redemption Payment Date (as
      hereinafter defined) and any and all other unpaid amounts, if any, then due,
      accrued, payable or owing to the Holder under this Note, the Purchase Agreement
      or any Related Agreement (the “Redemption
      Amount”).
      The
“Prepayment
      Premium”
shall
      be equal to one
      hundred and

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

         

         

      

    

    thirty
      percent
      (130%)
      of the
      Principal Amount at the time of such prepayment. The Borrower shall deliver
      to
      the Holder a written notice of redemption (the “Notice
      of Redemption”)
      specifying the date for such Optional Redemption (the “Redemption
      Payment Date”),
      which
      date shall be ten (10) business days after the date of the Notice of Redemption
      (the “Redemption
      Period”).
      A
      Notice of Redemption shall not be effective with respect to any portion of
      the
      Principal Amount for which the Holder has a pending election to convert into
      Common Stock pursuant to Section 3.1 or for conversions initiated or made by
      the
      Holder pursuant to Section 3.1 during the Redemption Period. The Redemption
      Amount shall be determined as if such Holder’s conversion elections had been
      completed immediately prior to the date of the Notice of Redemption. On the
      Redemption Payment Date, the Redemption Amount must be paid in cash to the
      Holder. In the event the Borrower fails to pay the Redemption Amount on the
      Redemption Payment Date as set forth herein, then such Redemption Notice will
      be
      deemed to be null and void.

     

     

    ARTICLE
      III

    CONVERSION
      RIGHTS

     

     

        3.1 Holder’s
      Conversion Rights.
      From
      and after the date hereof and until the Principal Amount under this Note is
      paid
      in full, the Holder shall have the right, but not the obligation, both before
      and after an Event of Default (as hereinafter defined), to convert all or any
      portion of the Principal Amount into shares of Common Stock subject to the
      terms
      and conditions set forth in this Article 3 and to receive any accrued and unpaid
      interest thereon to the Conversion Date (as hereinafter defined) and any and
      all
      other unpaid amounts, if any, then due, accrued, payable or owing under this
      Note, the Purchase Agreement or any Related Agreement; provided that
      any such
      conversion hereunder only applies to those amounts that have not already been
      deemed to have been converted in accordance with Section 2.1(b) above. The
      Holder may exercise such right by delivery to the Borrower of a written notice
      of conversion as contemplated by Section 3.3(a). The shares of Common Stock
      to
      be issued upon such conversion are herein referred to as the “Conversion
      Shares”.

     

     

        3.2 Conversion
      Limitation.
      Notwithstanding anything contained herein to the contrary, the Holder shall
      not
      be entitled to convert pursuant to the terms of this Note an amount that would
      be convertible into that number of shares of Common Stock which, when added
      to
      the number of shares of Common Stock otherwise beneficially owned by the Holder
      including those issuable upon the exercise of convertible securities, warrants
      or options held by the Holder, would exceed 4.99% of the outstanding shares
      of
      Common Stock of the Borrower at the time of conversion. For the purposes of
      the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities
      Exchange Act of 1934
      (the
“Exchange
      Act”)
      and
      Regulation 13d-3 thereunder. The conversion limitation described in this Section
      3.2 shall automatically become null and void without any notice to the Borrower
      upon the occurrence and during the continuance of an Event of Default or upon
      75
      days prior notice to the Borrower, except that at no time shall the beneficial
      ownership exceed 19.99% of the Common Stock. For
      the
      purposes of the immediately preceding sentence, beneficial ownership shall
      be
      determined in accordance with Section 90(1) of the Securities
      Act
      (Ontario).

     

     

        3.3 Mechanics
      of Holder’s Conversion.

     

    
      	
            	(a)	
              In
                the event that the Holder elects to convert any portion, or the whole,
                of
                the Principal Amount under this Note into Common Stock, the Holder
                shall
                give notice of such election by telecopying or delivering to the
                Borrower,
                in accordance with Section 5.2, an executed and completed notice
                of
                conversion (“Notice
                of Conversion”)
                to the Borrower and such Notice of Conversion shall set out the Principal
                Amount being converted; provided that
                any such conversion hereunder only applies to those amounts that
                have not
                already been deemed to have been converted in accordance with Section
                2.1
                (b) above. On each Conversion Date and in accordance with its Notice
                of
                Conversion, the Holder shall make the appropriate reduction to the
                Principal Amount, accrued interest and other amounts due, if any,
                accrued,
                payable or owing as entered in its records and shall provide written
                notice thereof to the Borrower within one (1) business day of the
                Conversion Date. Each date on which a Notice of Conversion is delivered
                or
                telecopied to the Borrower and deemed effectively received by the
                Borrower
                in accordance with the provisions of Section 5.2 shall be deemed
                a
                Conversion Date (the “Conversion
                Date”).
                A form of Notice of Conversion to be employed by the Holder is annexed
                hereto as Exhibit A.

            

    

     

    
      	
            	(b)	
              Pursuant
                to the terms of the Notice of Conversion, the Borrower will issue
                instructions to its transfer agent accompanied by an opinion of counsel
                within three (3) business days of the Conversion Date and shall cause
                the transfer agent to deliver certificates representing the Conversion
                Shares to or to the order of the Holder within
                three (3) business days of the Conversion Date (the “Delivery
                Date”).
                Upon the exercise of the Holder’s conversion rights set forth herein, the
                conversion privilege shall be deemed to have been exercised and the
                Conversion Shares issuable upon such conversion shall be deemed to
                have
                been issued upon the date of receipt by the Borrower of the Notice
                of
                Conversion. The Holder shall be treated for all purposes as the record
                holder of such Common Stock, unless the Holder provides the Borrower
                with
                written instructions to the
                contrary.

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

         

         

      

    

     

     

        3.4 Conversion
      Mechanics.

     

    
      	
            	(a)	
              The
                number of shares of Common Stock to be issued upon each conversion
                of the
                Principal Amount under this Note shall be determined by dividing
                that
                portion of the Principal Amount to be converted, if any, by the then
                applicable Fixed Conversion Price as set out in Section 2.1(a). In
                the
                event of any partial conversions of Principal Amount pursuant to
                this
                Article 3, such conversions shall be deemed to constitute conversions
                of
                Principal Amount corresponding to (and, for greater certainty, satisfying
                the Borrower’s obligation to amortize) Monthly Amounts for the remaining
                Amortization Dates in chronological order.

            

    

     

    
      	
            	(b)	
              The
                Fixed Conversion Price and number and kind of shares or other securities
                to be issued upon conversion is subject to adjustment from time to
                time
                upon the occurrence of certain events, as
                follows:

            

    

     

        A. Stock
      Splits, Combinations and Dividends.
      If the
      shares of Common Stock are subdivided or combined into a greater or smaller
      number of shares of Common Stock, or if a dividend is paid on the Common Stock
      or any preferred stock issued by the Borrower in shares of Common Stock, the
      Fixed Conversion Price shall be proportionately reduced in the case of
      subdivision of shares or stock dividend or proportionately increased in the
      case
      of combination of shares, in each such case by the ratio which the total number
      of shares of Common Stock outstanding immediately after such event bears to
      the
      total number of shares of Common Stock outstanding immediately prior to such
      event.

    

     

        B. Reservation
      of Stock, Etc. Issuable on Conversion.
      During
      the period the conversion rights exist, the Borrower will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to provide
      for the issuance of Common Stock upon the full conversion of the Principal
      Amount under this Note. The Borrower represents that upon issuance, such shares
      will be duly and validly issued, fully paid and non-assessable. The Borrower
      agrees that its issuance of this Note shall constitute full authority to its
      officers, agents, and transfer agents who are charged with the duty of executing
      and issuing stock certificates to execute and issue the necessary certificates
      for shares of Common Stock upon any conversions under this Note.

    

     

        C. Reclassification,
      etc.
      If the
      Borrower at any time shall, by reclassification or otherwise, change the Common
      Stock into the same or a different number of securities of any class or classes,
      this Note (as to the Principal Amount) shall thereafter be deemed to evidence
      the right to purchase an adjusted number of such securities and kind of
      securities as would have been issuable as a result of such change with respect
      to the Common Stock immediately prior to such reclassification or other
      change.

     

        3.5
      Issuance
      of New Note.
      Upon
      any partial conversion of this Note, a new Note containing the same date and
      provisions of this Note shall, at the request of the Holder, be issued by the
      Borrower to the Holder for the balance of the Principal Amount, interest thereon
      and other amounts payable under this Note which shall not have been converted
      or
      paid. Subject to the provisions of Article 4, the Borrower will pay no costs,
      fees or any other consideration to the Holder for the production and issuance
      of
      a new Note.

     

     

        3.6 Holder
      Not a Shareholder.
      Nothing
      in this Note shall, in itself, confer or be construed as conferring upon the
      Holder any right or interest whatsoever as a shareholder of the Borrower,
      including, but not limited to, the right to vote at, to receive notice of,
      or to
      attend, meetings of shareholders or any other proceedings of the Borrower,
      or
      the right to receive dividends and other distributions.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

         

         

      

    

     

    ARTICLE
      IV

    EVENTS
      OF DEFAULT AND DEFAULT RELATED PROVISIONS

     

    

     

    Upon
      the
      occurrence and continuance of an Event of Default (as defined below), the Holder
      may by notice in writing to the Borrower declare the Principal Amount and all
      accruing interest thereon, and all other amounts, if any, accruing, payable
      or
      owing under this Note, the Purchase Agreement or any Related Agreement to be
      immediately due and payable. In the event of such an acceleration, the amount
      due and owing to the Holder shall be 115% of the Principal Amount at such time
      together with accrued and unpaid interest thereon and any and all other amounts
      due, accrued, payable or owing under this Note, the Purchase Agreement or any
      Related Agreement (the “Default
      Payment”).
      The
      Default Payment shall be applied first to any amounts due, accrued, payable
      or
      owing to the Holder under this Note, the Purchase Agreement or any Related
      Agreement, then to accrued and unpaid interest due on this Note and then to
      the
      Principal Amount.

     

    The
      occurrence of any of the following events set forth in Sections 4.1 through
      4.11, inclusive, constitutes an “Event
      of Default”:

     

    4.1 
      Failure
      to Pay Principal, Interest or other Amounts.
      The
      Borrower fails to pay when due any instalment of principal, interest or other
      amounts in accordance herewith, or the Borrower fails to pay when due any amount
      due under any other promissory note issued by Borrower, and in any such case,
      such failure shall continue for a period of five (5) business days following
      the
      date upon which any such payment was due.

     

    4.2 
      Breach
      of Covenant.
      The
      Borrower breaches any covenant or any other term or condition of this Note
      or
      the Purchase Agreement in any material respect, or the Borrower or any of its
      Subsidiaries breaches any covenant or any other term or condition of any Related
      Agreement in any material respect and, in any such case, such breach, if subject
      to cure, continues for a period of twenty (20) business days after the
      occurrence thereof.

     

    4.3 
      Breach
      of Representations and Warranties.
      Any
      representation or warranty made by the Borrower in this Note or the Purchase
      Agreement, or by the Borrower or any of its Subsidiaries in any Related
      Agreement, shall, in any such case, be false or misleading in any material
      respect on the date that such representation or warranty was made or deemed
      made.

     

    4.4 
      Collateral.
      Any
      portion of the Collateral (as defined in each of the Share Pledge Agreement,
      the
      Master Security Agreement and the U.S. Master Security Agreement) is (i)
      subjected to loss, theft, substantial damage, destruction, sale or encumbrance
      unless such loss is covered by insurance proceeds which are used to replace
      the
      item or repay the Holder; (ii) any portion of the Collateral is subjected to
      levy of execution, attachment, distraint or other judicial process; or (iii)
      any
      portion of the Collateral is the subject of a claim (other than by the Holder)
      of a lien or other right or interest in or to the Collateral and such levy
      or
      claim shall not be cured, disputed or stayed within a period of fifteen (15)
      business days after the occurrence thereof. 

     

    4.5
      Receiver
      or Trustee.
      The
      Borrower or any of its Subsidiaries shall make an assignment for the benefit
      of
      creditors, or apply for or consent to the appointment of a receiver or trustee
      for it or for a substantial part of its property or business; or such a receiver
      or trustee shall otherwise be appointed.

     

    4.6 Judgments.
      Any
      monetary judgment, writ or similar final process shall be entered or filed
      against the Borrower or any of its Subsidiaries or any of their respective
      property or other assets for more than USD$100,000
      and
      shall remain unvacated, unbonded or unstayed for a period of ninety (90)
      days.

     

    4.7 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law for the relief of
      debtors shall be instituted by or against the Borrower or any of its
      Subsidiaries, unless in any case such proceeding or process is stayed,
      withdrawn, dismissed or vacated, as the case may be, within ninety (90)
      days.

     

     

    4.8 Cease
      Trade.
      A cease
      trade order or trading suspension of the Common Stock shall be in effect for
      five (5) consecutive days or five (5) days during a period of ten (10)
      consecutive days, excluding in all cases a suspension
      of all trading on the TSX, provided that the Borrower shall not have been able
      to cure such trading suspension within thirty (30) days of the notice thereof.
      

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

         

         

      

    

     

        4.9 Failure
      to Deliver Common Stock or Replacement Note. The Borrower shall fail (i) to
      timely deliver Common Stock to the Holder pursuant to and in the form required
      by this Note, the Purchase Agreement or any Related Agreement, if such failure
      to timely deliver Common Stock shall not be cured within five (5) business
      days
      or (ii) to deliver a replacement Note to the Holder within seven (7) business
      days following the required date of such issuance pursuant to this Note, the
      Purchase Agreement or any Related Agreement (to the extent required under such
      agreements).

     

     

        4.10 Default
      Under Related Agreements or Other Agreements. The occurrence and continuance
      of any Event of Default (as defined in the Purchase Agreement or any Related
      Agreement) or any event of default (or similar term) under any other
      indebtedness for an amount in excess of USD$100,000.

     

     

         4 .11  Change
      in
      Control. The occurrence of a change in Control of the ownership of the
      Borrower. As used herein, “Control” shall mean either (i) the beneficial
      ownership, either directly or indirectly, of more than fifty percent (50%)
      of
      the equity interests in the Borrower or (ii) the carrying of more than fifty
      percent (50%) of the votes for the election of the directors of the Borrower,
      in
      each case otherwise than by way of security only. 

     

     

         4.12 Default
      Interest Rate. Following the occurrence and during the continuance of an
      Event of Default, the Borrower shall pay interest on this Note in an amount
      equal to one percent (1%) per month in lieu of the interest payable on this
      Note
      under the provisions of Section 1.1, and all outstanding obligations under
      this
      Note, including unpaid interest, shall continue to accrue such interest from
      the
      date of such Event of Default until the date such Event of Default is cured
      or
      waived. 

     

     

          4.13 
      Cumulative Remedies. The remedies under this Note shall be
      cumulative.

     

     

    ARTICLE
      V

    MISCELLANEOUS

        

     

        5.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

     

        5.2 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and shall
      be
      deemed effectively received: (a) upon personal delivery to the party notified,
      (b) when sent by confirmed telex or facsimile on the business day of the sending
      (provided it was sent before 4:30 p.m. New York time), if not, then on the
      next
      business day, and the applicable printed facsimile record shall be definitive
      evidence of the time and date of such telex or facsimile transmission, or (c)
      one day after deposit with a nationally recognized overnight courier, specifying
      next day delivery, with written verification of receipt. All communications
      shall be sent to the Borrower at the address provided in the Purchase Agreement
      executed in connection herewith, and to the Holder at the address provided
      in
      the Purchase Agreement for such Holder, with a copy to John E. Tucker, Esq.,
      825
      Third Avenue, 14th Floor, New York, New York 10022, facsimile number (212)
      541-4434, or at such other address as the Borrower or the Holder may designate
      by ten (10) days advance written notice to the other parties hereto. A Notice
      of
      Conversion shall be deemed given when made to the Borrower pursuant to the
      Purchase Agreement.

     

     

        5.3 Amendment
      Provision.
      The
      term “Note” and all reference thereto, as used throughout this instrument, shall
      mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented, and any successor instrument
      issued pursuant to Section 3.5 hereof, as it may be amended or
      supplemented.

     

     

        5.4 Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and assigns, and
      may
      be assigned by the Holder in accordance
      with the provisions of the Purchase Agreement. This Note shall not be assigned
      by the Borrower without the consent of the Holder.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

         

         

      

    

        5.5 Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of New York, without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      New
      York or in the federal courts located in the State of New York and the parties
      agree to waive any option of trial by jury. Both parties and the individual
      signing this Note on behalf of the Borrower agree to submit to the jurisdiction
      of such courts. The prevailing party shall be entitled to recover from the
      other
      party its reasonable attorney’s fees and costs. In the event that any provision
      of this Note is invalid or unenforceable under any applicable statute or rule
      of
      law, then such provision shall be deemed inoperative to the extent that it
      may
      conflict therewith and shall be deemed modified to conform with such statute
      or
      rule of law. Any such provision which may prove invalid or unenforceable under
      any law shall not affect the validity or enforceability of any other provision
      of this Note. Nothing contained herein shall be deemed or operate to preclude
      the Holder from bringing suit or taking other legal action against the Borrower
      in any other jurisdiction to collect on the Borrower’s obligations to the
      Holder, to realize on any collateral or any other security for such obligations,
      or to enforce a judgment or other court ruling in favour of the Holder. The
      Borrower acknowledges that legal counsel participated in the preparation of
      this
      Note and, therefore, stipulates that the rules of construction that ambiguities
      are to be resolved against the drafting party shall not be applied in the
      interpretation of this Note to favour any party against the other
      party.

     

     

        5.6 Judgment
      Currency.

     

    
      	
            	(a)	
              If
                for the purpose of obtaining or enforcing judgment against the Borrower
                in
                any court in any jurisdiction it becomes necessary to convert into
                any
                other currency (such other currency being hereinafter in this paragraph
                5.6 referred to as the “Judgment Currency”) an amount due in US dollars
                under this Note, the conversion shall be made at the Exchange Rate
                prevailing on the business day immediately
                preceding:

            

    

     

    
      	 	
              (i)

            	
              the
                date actual payment of the amount due, in the case of any proceeding
                in
                the courts of New York or in the courts of any other jurisdiction
                that
                will give effect to such conversion being made on such date: or
                

            

    

     

    
      	 	
              (ii)

            	
              the
                date on
                which the foreign court determines, in the case of any proceeding
                in the
                courts of any other jurisdiction (the date as of which such conversion
                is
                made pursuant to this paragraph 5.6(a)(ii) being hereinafter referred
                to
                as the “Judgment Conversion Date”).

            

    

     

    
      	
            	(b)	
              If
                in the case of any proceeding in the court of any jurisdiction referred
                to
                in paragraph 5.6(a)(ii) above, there is a change in the Exchange
                Rate
                prevailing between the Judgment Conversion Date and the date of actual
                payment of the amount due, the applicable party shall pay such adjusted
                amount as may be necessary to ensure that the amount paid in the
                Judgment
                Currency, when converted at the Exchange Rate prevailing on the date
                of
                payment, will produce the amount of US dollars which could have been
                purchased with the amount of Judgment Currency stipulated in the
                judgment
                or judicial order at the Exchange Rate prevailing on the Judgment
                Conversion Date.

            

    

     

    
      	
            	(c)	
              Any
                amount due from the Borrower under this provision shall be due as
                a
                separate debt and shall not be affected by judgment being obtained
                for any
                other amounts due under or in respect of this
                Note.

            

    

     

    5.7 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum permitted by such law, any payments in excess
      of
      such maximum shall be credited against amounts owed by the Borrower to the
      Holder and thus refunded to the Borrower.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

         

         

      

    

            

     

              
5.8 
      Security
      Interest and Guarantee.
      The
      Holder has been granted a security interest (i) in certain assets of the
      Borrower and its Subsidiaries as more fully described in (i) the Master Security
      Agreement dated as of the date hereof, (ii) the U.S. Master Security Agreement
      and (iii) the Share Pledge Agreement dated as of the date hereof. The
      obligations of the Borrower under this Note are guaranteed by certain
      Subsidiaries of the Borrower pursuant to the Subsidiary Guaranty dated as of
      the
      date hereof.

     

       5.9 
      Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against the other.

     

       5.10
       Cost
      of Collection.
      If
      default is made in the payment of this Note, the Borrower shall pay to Holder
      reasonable costs of collection, including reasonable legal fees. 

     

       5.11 Calculation
      of Interest.
      For the
      purposes of this Note, whenever interest is calculated on the basis of a year
      of
      360 days, the rate of interest determined pursuant to such calculation expressed
      as an annual rate for the purposes of the Interest
      Act
      (Canada)
      is equivalent to such rate as so determined multiplied by the actual number
      of
      days in the calendar year in which the same is to be ascertained and divided
      by
      360.

     

    

     

    IN
      WITNESS WHEREOF,
      the
      Borrower has caused this Note to be signed in its name effective as of this
      22nd
      day of November, 2005.

     

    
      	 	 	 
	 	
              TM
                BIOSCIENCE CORPORATION

            
	 
 	 
 	 
 
	Date: 	By:  	/s/
              James Pelot 
	 	
              

              Name: James
                Pelot 

            
	 	Title: Chief
              Financial Officer 

    

     

     

     

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

         

      

    

    EXHIBIT
      A

     

    NOTICE
      OF CONVERSION

     

    (To
      be
      executed by the Holder in order to convert all or part of the Note into Common
      Stock)

     

    To:
      Tm Bioscience Corporation

     

    The
      undersigned hereby converts $_________ of the principal due on
      __________________ [specify
      applicable Amortization Date]
      under
      the Convertible Term Note issued by Tm Bioscience Corporation dated November
      22,
      2005 by delivery of shares of Common Stock of and subject to the conditions
      set
      forth in Article III of such Note.

     

    1. Date
      of
      Conversion   _______________________

     

    2. Shares
      To
      Be Delivered: _______________________

     

                                    By:     
      ______________________________________    

     

                                    Name: ______________________________________

     

                                    Title:  _______________________________________

     

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    

      AMORTIZATION
        SCHEDULE

       

      

       

      
        	
                Repayment
                  Date

                 

              	
                Monthly
                  Amortization

                 

              
	
                The
                  first day of each calendar month from and including 

                April
                  1, 2006 to and including November 1, 2008

                 

              	
                US$281,250.00

                 

              
	
                Maturity
                  Date

                 

              	
                Balance
                  of Principal Amount

                 

              

      

     

    

    
      
        
        

      

      
        11

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